Failing to Reform the Reformable: The Second Economic Adventure of Dr. Ngozi Okonjo-Iweala in Nigeria - Dr. Emmanuel Ojameruaye

Given the manner the Nigerian economy unraveled at the twilight of the Jonathan administration it became obvious that the greatest loser of the presidential election was Dr.  Ngozi Okonjo-Iweala, the ex-Minister of Finance and Coordinating Minister of the Economy (CME) who built her reputation on reforming  the “unreformable” Nigerian economy. This was evident at the Senate hearing on the fuel crisis on May 25  when the minister, almost in tears, alleged that “there is a deliberate attempt to sabotage the economy and bring it to a halt…some of the things that happen in this country are inexplicable...I do not want to be part of any accusation of fraud”.  While hear boss, ex-President Jonathan was being praised and called a “hero of democracy” for accepting defeat,  she was being vilified and blamed, sometimes unfairly, for the fuel and electricity crises, the inability of some state governments to pay salaries and the near collapse of the economy.  For example, about 2,000 Nigerians petitioned Yale University for awarding an honorary doctorate degree to Dr. Okonjo-Iweala on May 12, 2015 because of her alleged poor performance as CME. On the other hand, in his inaugural address, President Buhari praised ex-President Jonathan for “his display of statesmanship in setting a precedent for us that has now made our people proud to be Nigerians wherever they are”.  In fact, while ex-President Jonathan has earned a noble place in the Nigerian Democracy hall of fame, Dr. Okonjo-Iweala may be remembered as the “Super Minister” who failed in her much-trumpeted effort to reform the Nigerian economy.

Ostensibly in preparation for her “Second Coming” as Finance Minister, Dr. Okonjo-Iweala wrote a book titled “Reforming the Unreformable” which was published by MIT Press in September, 2012, just a year after she reported for duty as the Minister of Finance and Coordinating Minister of the Economy, a very powerful position which is close to that of a Prime Minister.  In the book she narrated the efforts of the economic team under her leadership to reform the Nigerian economy during her “First Coming” as Finance Minister from July, 2003 to June, 2006 under the Obasanjo administration.  She began the book by re-echoing what cynics say about Nigeria. According to her,

“Corrupt, mismanaged, and seemingly hopeless: that’s how the international community viewed Nigeria in the early 2000s. Then Nigeria implemented a sweeping set of economic and political changes and began to reform the unreformable. This book tells the story of how a dedicated and politically committed team of reformers set out to fix a series of broken institutions, and in the process repositioned Nigeria’s economy in ways that helped create a more diversified springboard for steadier long-term growth”.

In the book, she gave the impression that as a result of the efforts and policies implemented by her team, the “unreformable” Nigeria was on course to being reformed as at the time she left the Obasanjo administration in August 2006. In an endorsement of the book, the 2001 Nobel laureate in Economic Sciences, Joseph E. Stieglitz, praised Dr. Okonjo-Iweala, noting that  “This insider's account of the valiant attempt to reform Nigeria's economy will inspire anyone committed to changing the course of their country”. However, Nicolas van de Walle was not so generous in his review of the book. According to him, Dr. Okonjo-Iweala “helped persuade the country’s creditors to cancel 60 percent of the debt, making good use of her personal connections within the international financial community. But her attempts to enact economic reforms were less successful, at least in part because of the ambivalence of much of the Nigerian government. Fiscal … Nigeria has made very little progress on other pressing problems, from its woeful infrastructure, to its dysfunctional agricultural sector, to its growing social inequality and persistent poverty. Those issues receive only passing references in Okonjo-Iweala’s upbeat account”.

Dr. Okonjo-Iweala knew that the work of reforming the “unreformable” Nigerian economy was not complete by the time she was literally forced to leave the Obasanjo’s administration in August 2006 to join the Brookings Institution as a Distinguished Fellow. Even though she later became one of the Managing Directors of the World Bank from October 2007 to July 2011, she apparently looked for another opportunity to complete her unfinished agenda of reforming the “unreformable” Nigerian economy. This opportunity came in July 2011 when she was appointed as the Minister of Finance and CME. Some analysts wondered why she abandoned her prestigious job as a Managing Director of the World Bank given her experience under Obasanjo administration, but it appears that her patriotism and urge to complete her unfinished reform agenda trumped whatever ill-feeling or disappointments she had under Obasanjo. She was apparently encouraged by the additional portfolio of “Coordinating Minister of the Economy” which made her a “super minister” and gave her more controlling power. Some analysts saw this as a stepping stone to becoming the first female Vice-President or even President of Nigeria in the near future.  I think she initially saw her mission under the Jonathan administration as one of completing her unfinished agenda of reforming the “unreformable” Nigerian economy. Thus, one of her first major reform effort was to encourage President Jonathan to remove the notorious fuel subsidy in January, 2012 which failed due to mass protest.

When her book was released, many analysts hoped that by the end of the Jonathan’s tenure on May 29, 2015, the “unfinished agenda” would have been completed. But this did not happen. As at the time Dr. Okonjo-Iweala left office with ex-President Jonathan, the Nigerian economy was almost at a standstill with public electricity supply at its lowest level in recent history despite  the Roadmap for Power Sector Reform launched in August 2010 and the billions of dollars spent on the power sector since then; fuel shortage and queues reached an unprecedented level; the fuel subsidy regime was still very much alive; corruption was still endemic and worsening; and the naira exchange rate had depreciated from about N150 in 2011 to about N200 to the US dollar. In fact, it appeared that the so-called “transformation agenda” of the Jonathan administration did not result in any significant transformation or reform of the economy. Thus, the “Change” mantra of the APC party gained traction leading to the crushing defeat of the ruling PDP.

Dr. Okonjo-Iweala was painfully aware that her reputation and legacy would be adversely affected by the poor performance of the economy, especially during the last months of the Jonathan administration. She became very defensive, sometimes combative, and made every effort to respond to critics of the economic policies of the administration. She insisted that the “fundamentals of the economy were sound”. In the heat of the presidential campaign and even after the defeat of President Jonathan, she labored hard to list the achievements of the administration. For instance, speaking to journalists on May 10, 2015, she reiterated that that the Jonathan administration would be leaving “some solid economic legacies” for the Buhari administration and insisted that the allegation that the economy was in ruins was “absolutely untrue”. She said:

“We cannot take away the fact that the Jonathan administration in spite of the challenges caused by 50 per cent decline in the price of oil has made a clear and measurable difference in many important areas and anyone who says nothing has been done and nothing is being left behind is being very unfair to facts and to history…Attempts to rewrite history will not stand. You cannot just wipe the slate clean for political reasons. We are not perfect but no one can take away the fact that we are leaving some good legacies behind.”

She then gave a laundry list of achievements of the Jonathan administration during the last four years to include: a) increase in food production with attendant positive effect on food prices; b) the National Industrial Revolution scheme and the Automotive Policy whose implementation has led to the opening of factories for car manufacturing and assembly for the first time in the country;  c)  the impressive rise in the cement production due to positive government policies with Nigeria  now as a net exporter of cement;  d) the creation of about 1.4 million jobs a year out of the 1.8m needed; and  f) support for the creative industries, which has helped to strengthen the capacity of script writers, producers, directors and other professionals in the motion picture industry and led, in turn, to the production of higher quality films, and creation of more jobs.  She also took the opportunity to advise politicians and opinion leaders “not to talk down the economy because negative and unfactual comments on the economy can have negative impact the economy, the exchange rate and the stock market and reduced investor confidence”.

Some of the above-listed “achievements” have been challenged by Prof. Soludo and other analysts. Interestingly, the minister did not address the so called “transformation agenda” of the Jonathan administration point by point or some of the most important areas of reform where the people expected positive changes and where the administration failed. These include dealing with the recurrent fuel scarcity and burgeoning fuel subsidy, growing insecurity, continuing inadequate and unreliable power supply, reform of the oil industry and the NNPC (including failure of the administration to get the National Assembly to pass the Petroleum Industry Bill), worsening grand corruption, high “cost of governance” – a euphemism for the high proportion of (unproductive) recurrent and overhead expensive in total public spending and the crowding out of (productive) capital spending, uncontrolled leakages in public finance  and “missing” funds, growing impunity and continuing lack of or inadequate accountability and transparency in government.

D. Okonjo-Iweala resorted to “history will be the judge” on her record and that of the Jonathan administration. Unfortunately, economic historians are likely to conclude that Dr. Ngozi Okonjo-Iweala failed in her mission to reform the “reformable” Nigerian economy, if the Bukhara administration succeeds in the areas where the Jonathan administration failed. Therefore, it will be very instructive if she can write another book where she can highlight some of the achievements of her “Second Coming” and explain why she failed in her mission to reform the Nigerian economy, especially in the critical areas of fuel subsidy, electric power, corruption and governance. The reasons for the failures will no doubt serve as lessons for the economic team of the Buhari administration. While we await her book on this subject – if she will be courageous enough to write such a book - I will highlight some of those reasons which she may not admit to.

Firstly, it appears that she did not believe that the Nigerian economy was reformable. She hoped it was reformable but “hope” is not believing and is not a strategy. This is evident in the title of her book and the first chapter. Conviction and optimism matter in life as well as in leadership and reform management just as names matter in many African cultures. If you name your child “Smart”, he is likely to be smart; if you name him “Slave”, he is likely to behave like a slave. Dr. Okonjo-Iweala’s use of the term “unreformable” in her book was a subconscious acceptance of the hypothesis that Nigeria is unreformable, just as some analysts thought that France was unreformable in the mid 1990s and early 2000s due to resistance to changes, street protests and hostility to the market.  But Nigeria is not France, where a journalist said that President Chirac was “traumatised by street revolts, and ended up convinced that France is not able to tolerate any major reform” (See Special Report in The Economist of 26^th October 2006). You cannot reform an entity which you believe is unreformable because rather than pursuing the reform, you will be looking for reasons why the entity or system cannot be reformed. Perhaps this is why she gave up on the removal of subsidy after the January 2012 debacle, and this is why she attributed the most recent fuel scarcity to “sabotage” by the oil marketers and “inexplicability” of certain things that happen in Nigeria. An effective reformer must believe that his or her mission is achievable and that the system is reformable.  There is no system or country that cannot be reformed, including Nigeria. Because of her “lack of faith” in the Nigerian economy and Nigerians, Dr. Okonjo-Iweala was not bold and courageous enough in her pursuit of the needed reforms. In the Bible, Jesus told his disciples that “if you have faith as small as a mustard seed, you can say to this mountain, 'Move from here to there,' and it will move. Nothing will be impossible for you." (Matt. 17: 20).  Nigeria is a movable mountain as the Buhari/Idiagbon regime demonstrated during their 18-month rule in 1984/85.   

Secondly, Dr. Okonjo-Iweala appeared to have a low tolerance level for criticisms and had a tendency to shift blame for her shortcomings or failures to others. In responding to the minister’s response to his paper on the Nigerian economy under President Jonathan, Prof. Soludo noted that “It is not a virtue when you are quick to appropriate all the credit when things are going well, but shift the blame when they go wrong”. In fact, Dr. Okonjo-Iweala appeared very willing to appropriate credit for all good things and shift blame for all bad things. For instance, she takes credit for debt relief (of $30 billion, including $18 billion in outright cancellation) granted Nigeria by the Paris Club under the Obasanjo’s administration in 2004, even though it was a team effort. According to Prof. Soludo:

“Nigeria would have secured debt relief under anyone as Minister of Finance. President Obasanjo secured debt relief for Nigeria… With the groundswell of political support and Nigeria meeting all the ‘conditionalities’, debt relief was assured… Nigeria should have gotten far better terms than you (Okonjo-Iweala) negotiated. Of course, with your eyes on returning to the World Bank after office, I did not expect you to boldly stand up to the donor community in defence of Nigeria … By the way, can you tell Nigerians why you were eased out as Finance Minister and you cried like a baby begging OBJ to still allow you remain in the Economic Management team barely few weeks after the debt relief? Why were you eventually also removed from the economic management team if you were so important?  Ironically, President Jonathan has recycled you, with a bigger title and greater responsibilities. But the difference is that the team that did the actual work is no longer there, and the world has seen that the king is naked”.

Dr. Okonjo-Iweala also claimed credit when Nigeria “emerged” as the “largest economy in Africa and the 26^th largest in the world”, due to the rebasing (or recalculation) of the national accounts which she orchestrated.  Following the recalculation, announced on April 4, 2014, Nigeria’s GDP was revised to $509.9 billion in 2013 up from $285.56 billion (based on the “old methodology), an increase of 89.2% in the same year while GDP per capita has almost doubled from $1,437 to $2,688. This is how Nigeria overtook South Africa without producing more goods and services.

However, when the then Vice-President elect, Professor Osibanjo stated that the Buhari administration will inherit a debt of $60 billion from the Jonathan administration, Dr. Okonjo-Iweala responded by saying that it was wrong to “to characterise the Jonathan administration as leaving $63 billion debt since the country’s debt stock was accumulated over a long time by several administrations”. She further explained that the Jonathan administration incurred only $21.8 billion of $63 billion national debt and that the increase in the debt profile between 2012 and 2015 was triggered off by the 53 per cent wage increase implemented by the late Umaru Yar’Adua administration in a fell swoop. She also stated that at the time of the salary increase, she was still with the World Bank, and she wrote and warned on the consequences of acquiescing to such a huge increase. Furthermore, she said Nigeria still has one of the lowest fiscal deficits in the world with debt to GDP ratio of about 1.5 per cent of the budget. On the lingering fuel scarcity, she blamed the oil marketers who she claimed were blackmailing the government. She then called on Nigerians to rise up and ask why the marketers have reneged on their promise after they openly told the entire country that they were going to end the scarcity. She refused to blame the problem on the failure of the Jonathan administration to eliminate the fuel subsidy between 2012 and 2014, even when oil prices (and price of petroleum products on the spot market) plunged by more than 50% between June 2013 and Dec. 2014. Because of her intolerance to criticism, she responded rather angrily and abusively to any attempt to “blow the whistle” on the economy, even when done in good faith, by former colleagues and subordinates including former CBN governors Prof. Soludo and Mr. Sanusi – who as the incumbent governor raised the issue of the missing “$20 billion” for which he was fired by President Jonathan. The “media war of attrition” she waged with former colleagues and some state governors did not help her image as a reformer.

Thirdly, and related to her low tolerance of criticism, some critics say that she had a tendency to manufacture or exaggerate success. A reform that is based on manufactured or exaggerated success in the face of glaring failures or problems is bound to fail as evidenced from reforms in the then socialist/communist countries of Eastern Europe and the Soviet Union. Two examples of this tendency are the rebasing or recalculation of Nigeria’s GDP from 1990 to 2013 and the recalculation of Nigeria’s poverty ratios which she apparently orchestrated. When the rebased GDP data were released in April 2014, the minister remarked that “the information provides us with much more scope to know what the structure of the economy is”. But it was more than that. Since then, Nigerians, especially members of the Jonathan administration, have been suffering from “GDP illusion” or some form of “economic megalomania” even as the price of crude oil plunged and the electricity generating capacity of the country of about 180 people remained at only 10% of the electricity generating capacity of South Africa with a population of only 54 million. On the revised poverty rates, in his diatribe with the minister, Prof. Soludo said,

“What worries me is that this government is the first in our history to attempt to manipulate our national statistics under Okonjo-Iweala. When NBS published the poverty figures in 2011, she felt indicted and incensed. She called upon the World Bank to come and examine the ‘methodology’ and get NBS to ‘review’ its numbers. Oby Ezekwesili (as VP Africa Region) rejected the call to try to tamper with a country’s statistics). Once Oby left, the ‘World Bank’ started talking about ‘new figures’, without conducting any new surveys… I cautioned that it was a dangerous gamble that would damage the credibility of the NBS. .. No government in our history has tried it: even Sani Abacha allowed a poverty survey that put poverty at 67% under his regime. At this rate, who will believe statistics coming from the Nigerian government again? Is it now the World Bank that sits in Washington and allocates poverty numbers to Nigeria? Something smells here!”… Now that you decide which economic statistics published by NBS to accept and which ones to ‘change the methodology’ to give favourable figures, you can keep feeding your manipulated figures to your international media circus for the vain glorious awards to sustain an empty hype, while Nigerians groan under hardship. We can actually ask Nigerians whether they are getting better off now contrary to your bogus figures”.

With this type of “cloud of suspicion” hanging over some of the economic data under the Jonathan administration, measuring the success and failure of the reforms of the administration may prove difficult and polemic.

In spite of her shortcomings and glaring failure to reform the Nigerian economy, Dr. Ngozi Okonjo-Iweala will always be a great Nigerian who wanted the best for the country. Even in the face of her controversial performance in Nigeria, she was listed among the world’s 50 greatest leaders by the American magazine, Fortune, in its 2015 ranking of world leaders issued in early April, before the Nigerian presidential election. The magazine described Dr. Okonjo-Iweala, as “a fearless promoter of sound economic policies” and singled her out for “working hard to usher in a decade in which Nigeria’s gross domestic products trebled” (sic). She was recognized alongside such world leaders as the Liberian President, Ellen Johnson-Sirleaf, Pope Francis, Chinese President Xi Jinping, Indian Prime Minister, Narendra Modi, U.S. billionaire, Bill Gates, Facebook Founder, Mark Zuckerberg, and Apple Chief Executive Officer, Tom Cook. A graduate of two prestigious American universities, Harvard and MIT, she rose through the ranks to become one of the World Bank’s Managing Directors, and was a strong contender for the presidency of the World Bank in 2012. She received numerous honors and recognitions during her “First” and “Second” coming as Nigerian Finance Minister.  She has become the proverbial prophet who is not honoured or recognized in her own country. Although she has not said what her future work will be, I think she needs a break and time to write a new book titled “Failing to Reform the Reformable – Lessons from my Second Economic Adventure in Nigeria”.

Dr. Emmanuel Ojameruaye

Phoenix, USA