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Ngozi Okonjo-Iweala, Former finance minister, Nigeria

By Patrick Smith
Posted on Wednesday, 27 June 2018 14:50

Serving two terms as a finance minister in Nigeria could give you the compulsion, as well as the raw material, to write about grand corruption. It might also open the author up to charges of naïveté at best and complicity at worst.

The task suits Ngozi Okonjo-Iweala, a tough-minded former managing director of the World Bank and one of Africa’s longest-­serving finance ministers. Believing that attack is the best defence, she fights her corner relentlessly after serving four years as coordinating minister of the economy under President Goodluck Jonathan’s administration, with its recurring scandals of missing oil money and fraudulent arms contracts

Yet Okonjo-Iweala’s latest book, Fighting Corruption is Dangerous, is far more important for its analysis of how international and local corrupt networks function and how to stop them than for any defence of Jonathan’s administration. When they turn to tackling malfeasance, too many policy-makers are distracted by partisan imperatives, the former finance minister argues.

“The discussion on corruption has become very politicised,” she says. “It’s now a weapon with which you beat your opponents.” At the same time, she says, there is not enough focus on how corrupt networks operate and how institutions can fight them.

“We must build independent, strong institutions that have the authority to investigate”

“Politicisation trivialises corruption because it directs attention away from the real fight into attention-getting headlines,” says Okonjo-Iweala. “We have to build independent, strong institutions that have the authority to investigate and start a prosecution.”

Africa’s staunch anti-corruption czars – Kenya’s John Githongo, Nigeria’s Nuhu Ribadu, Sierra Leone’s Abdul Tejan-Cole and South Africa’s Thuli Madonsela – all came under pressure such as death threats, often from members of the government they were meant to be working with.

More constitutional protections are necessary to strengthen such commissions. Today, the chair of Nigeria’s Economic and Financial Crimes Commission, Ibrahim Magu, is the focus of a battle of wills between the presidency and the Senate, which refuses to confirm his appointment.

Recognising the power of ­national vested interests, Okonjo-Iweala concedes that there could be a role for a continental African anti-corruption court with the power to scrutinise procurement and resource deals. “I think an African court where you’d have truly independent judges outside the country could be a good dispute-­resolution mechanism and would show more transparency.”

This court could be asked to rule on citizens’ complaints that the commercial terms of certain deals were against the public interest. It might also be a deterrent to the co-option of state officials by powerful companies: “People know that they could be taken to this court […] and that would be a good thing.”

Crisis management

Her coordinating minister title notwithstanding, much of Okonjo-Iweala’s work was as much about leading a reform team, improving financial management systems, conducting crisis management and fending off vested interests targeting the treasury as it was about a traditional finance minister’s duties.

In Nigeria, the finance minister has little practical control over the government’s main revenue source: oil and gas exports. According to Okonjo-Iweala, finance ministers have no right to intervene in the affairs of the giant, state-owned Nigerian National Petroleum Corporation (NNPC). That is the preserve of the special relationship between the president and the oil minister – often the same person – together with the managing director of the NNPC, who is usually a technocrat. With oil and gas revenue running at more than $100bn per year, the state oil company is politically dominant.

It is also opaque. All efforts to reform the NNPC’s labyrinthine and opaque system of awarding oil blocks, managing crude oil sales and running one of the largest ‘social subsidy’ programmes in the world, sometimes topping $10bn a year, have been stymied or delayed. The descriptor ‘social subsidy’ is in inverted commas because in reality it was a huge subsidy for corporate interests.

Although Okonjo-Iweala heaps praise on the ‘Beyond Aid’ campaign launched by Ghana’s President Nana Akufo-Addo for focusing on the need to mobilise local resources, she forecasts a long uphill march. “I feel very good about the sentiment. You know that aid will not just go away. […] We still have 18 countries in Africa whose budget is 40% dependent on aid. Hopefully, this will fade.”

One way to move the dial, she says, is a massive revenue-­raising campaign by governments, particularly in resource-rich countries. After Nigeria rebased its national income, almost doubling it to $400bn, its tax revenue figured as just 6% of gross domestic product (GDP), compared to an average of around 25% in Asia and South America. She smilingly concedes that many governments are chary about the political fallout of a helter-­skelter drive for tax revenue but says the logic is inescapable if people want better public services.

Debt warning

But this veteran finance minister reserves her loudest warnings for mounting debts in Africa. She fears the gains from the World Bank and International Monetary Fund (IMF) debt-­reduction schemes could be squandered. A decade ago, those schemes meant Africa’s debts dropped to an average of about 25% of GDP. “Now, according to the IMF figures, that figure is about 45% moving towards 50%. For most countries, the safe area is around 40%. Some countries are already in debt distress,” she says.

Is Africa at risk of heading back to the bad old days of the 1980s, when crippling debt forced governments to impose swingeing adjustment programmes in exchange for emergency funding from the IMF? Okonja-Iweala argues: “Not yet. But we’re heading there if we don’t watch out – if people keep going for eurobonds at the kinds of yields they’re getting […].”

And she has a parting shot for China’s financial institutions, which stepped up lending hugely to Africa over the past decade: “The Chinese may have to take a haircut. In my time, the only [Chinese] loans we took were concessional. I said this is our policy […] it’s 3% or below. I was able to negotiate and get the funding. So you have to be strong and the Chinese will listen if you make your case.” Rushing off to her next meeting, Okonjo-Iweala left an impression that she would rather relish getting back into the negotiator’s chair.

This article first appeared in the June 2018 print edition of The Africa Report