In defense of NOI v SR

I should do the usual disclaimers first. I am not an agent of the government or GEJ or PDP.

Now that we have that out of the way. I have been following a rather interesting series of articles on Sahara reporters about Nigeria being broke, attempts to raid the pension funds, and unfair attacks on NOI. I just thought to add my 2 cents on the matter.

First, is Nigeria broke? Answer: no one really knows. The FGs revenue is mostly from crude oil exports. No one can say with any authority how much crude oil we export. Yes oil theft is a problem and the insurgency in the northeast has probably not helped the FGs bank accounts. To go so far as to claim Nigeria is broke requires a lot more evidence. The evidence provided by SR is weak to say the least. To blame NOI for the weak evidence is not very interesting.

“Where is the promised $1bn a year savings she promised in 2007?”  Easy. Or are we all forgetting that the oil price crashed to $40 in 2008? Where do we think all the “stability” in those years came from. Throw in a set of governors who seem hell bent on sharing any proceeds to the ECA then its not difficult to see why the savings have not materialized. I might also like to point out that between 2006 and 2011 NOI was not even the finance minister so to blame any of that on her is interesting.

 

Where are the roads, hospitals, significant improvements in maternal healthcare, etc? Good questions. Although it is not difficult to see why those haven’t materialize either when the bulk of the FGs spending goes to fulfilling wage doubling election promises and trillion naira fuel subsidies. Again to blame NOI is unfair. The wage doubling promises were made by GEJ before NOI returned and fuel subsidy spending went out of control before NOI returned. To be fair NOI has tried to turn those around. Her rather modest efforts to cut recurrent expenditure are yielding some results and no one can forget the boldest attempt yet to cut fuel subsidies.

 

“In 2007 the exchange rate … was N120 to $1, now its N160 to a $1”. As much as I would like to go into details the easier thing to do would be to recommend a principles of macroeconomics course. The bottom line is if the value or volume of a countries exports crash then the local currency has to get weaker. If the rest of the world isn’t sending all those dollars because your oil exports are a lot cheaper then that is more naira chasing fewer dollars aka a weakening naira. Combine that with the capital flight during period (dollars leaving the system) and everything is clear. The proof is in the rapid drain of the CBNs external reserves during the period in a somewhat futile attempt to defend the currency. Again it is unfair to blame any of that on NOI. Not that she would have handled the crisis any better. It was a crisis after all. Now imagine if all that happened and there was no excess crude account.

 

Finally on the 6.5% jobless growth; it is not unexpected. 6.5% growth in Nigeria is not enough to reduce poverty or unemployment significantly. Especially since that growth has been driven by capital intensive sectors like telecoms. Growth needs to be higher and more inclusive for it to make a dent in the poverty and unemployment statistics. Indeed this is where my criticism of NOI is. She has proven herself to be an expert finance minister but the job creating – growth boosting ideas from her office have been weak. The less said about YOUWIN and SURE-P the better. Its all well and good fixing the budget and balancing the books but new ideas for growth are required. Unfortunately none have been pushed from her desk. Not publicly anyway. To be fair she is the finance minister and doing the job of a finance minister. Oh wait, she is also the coordinating minister.

 

To conclude, Nigeria is like a Volkswagen beetle competing in a formula 1 race. Hiring an expert driver will not turn the beetle into a champion. There is lot more to winning a race than the driver. There is a lot more to moving Nigeria forward than NOI or any finance minister for that matter. This is not to give NOI a free ride. There has to be room for sensible debates on policy choices but its important to keep them sensible and free of personal attacks.   

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