We Never Complained In 2008 When Oil Prices Drop From 148 To $38, Rather We Fixed It – Ngozi Okonjo-Iweala
No one heard of Nigeria in 2008 when oil prices fell from 148 to $38 because we fixed it. They kidnapped my 83yr-old mother, demanded I go to television station and announce my resignation because I tried to stop subsidy fraud. Ngozi Okonjo-Iweala was the guest of the World at the Grenoble geopolitical Festival which took place from 16 to 19 March. The “Iron Lady”, 61, served two governments as Minister of Finance from 2003 to 2006, under President Olusegun Obasanjo, then, from 2011 to 2015, under the presidency of Goodluck Jonathan. Between these two positions, she was Executive Director of the World Bank. It now has a consulting business with Lazard and chairs the board of the Global Alliance for Vaccines and Immunization (GAVI) based in Geneva, which has fifteen years of vaccination 500 million children. This interview is excerpted from her speech in the auditorium of the Festival of Grenoble. You are among the fifty world leaders in the magazine “Fortune” and among the twenty most influential women in the world, according to “Forbes”.
What it does when one comes from a modest family Nigeria? I have trouble seeing me as a world leader, while I appreciate that gives me this way! But when I get up in the morning, I do not think about it, I wonder how to solve the next problem. I grew up in a village in southern Nigeria where I grew up to 8 and a half years by my grandmother. My parents were scholarship students in Germany and did not have enough money to take me with them. I learned real life, fetching wood, water. At 5, I could cook. This life has given me strength and a strong character. The other experience from my childhood is the Biafran war (1967-1970). My parents lost everything. I knew what it was to have nothing more. You repeat that you are African-optimistic. How to stay after Ebola, falling commodity prices, the resurgence of Islamic terrorism in West Africa? Africa through cycles, and when it goes wrong, people get discouraged, they feel like dropping everything. Personally, I am an unrepentant Afro-optimist. Africa has experienced two lost decades, the years 1980 and 1990. But then for fifteen years, it has experienced a growth of at least 5%. The number of conflicts has declined during this period.
It was not a coincidence, it showed that good policies are bearing fruit. On several fronts, Africa has shown that it can do better than what was expected of her. Including in terms of poverty reduction and human development. All is not rosy. The growth was not enough shared, it has not created enough jobs. Now you enter a down cycle, it does what it laments, saying that it was written and that Africa is a basket case? I believe instead that we should learn from what has worked well, and continue. What African success stories feed your optimism? There is no perfect country. Everyone has had success in some areas. In terms of growth, the International Monetary Fund (IMF) estimated that it would be 3.4% worldwide in 2016, and 4% in sub-Saharan Africa. I pause: growth, this is not a dirty word. This is not a sufficient condition for the poor disappear, but without it, poverty may increase.
There are countries on the continent that are much more than the average: Ethiopia, Tanzania, Rwanda, Senegal and the Ivory Coast, for example. Other countries have had success primarily political. Ghana, where the alternation was made without objection or violence, has shown maturity. Nigeria, where one predicted a crisis in elections in 2015, while President I served very elegantly conceded defeat. There are also regional specificities. To the east and south of the continent, governments have begun to raise the logistical barriers to trade through agreements and infrastructure. To the west, countries have stood together against security threats and violations of democratic rules. We need every part of Africa to be inspired by recipes from the other.
Further development will require a lot of money. Where will it come in this bear market? On Lend African countries? Funds promised during the COP21? Financing is one of the most important points. Let me first recall that development is now funded largely by Africans themselves. There are more than twelve countries [of 54] in which the external development assistance represents 40% of the budget or more. The assistance of developed countries will decrease, it will move toward migrants and refugees. There are also scourges that Africa is not responsible but which it is the first victim, such as global warming. The rest of the world should help the continent, but I think it will not do enough. And that’s a good thing! Instead of lamenting, losing their time begging, African countries need to find more local resources. The IMF believes they can on average raise taxes to 4% of their GDP. We will need technical help to increase tax resources and gaps that multinationals use to hide their income. Furthermore, ten countries have a pension fund system that hold a total $ 380 billion [335.5 billion euros]. These funds must be invested in development. Will Africa be more selfish? Taxing imports more to develop domestic trade?
Africa does not trade enough with herself, that’s obvious. But this issue is often dealt with logistical issues. It’s very important to remove all these barriers for goods, capital and persons can circulate freely. For a truck no longer forced to stop as many times on the road between Abidjan and Lagos, between Nairobi and Kigali. But it is equally important to know what you want to exchange. If we produced all the same commodity, the same grains, what are we going to sell and buy? African countries must begin to specialize in industry, assembly or channels of food values. Some economists are very concerned for Nigeria, which could greatly suffer from the fall in oil prices. Others say the contrary, that its economy is strong enough to turn the corner … Both are right. But one thing saddens me. When I was finance minister the first time, the volatility of oil prices, and therefore state resources, cost at least three points of growth in the country.
We then established a stabilization mechanism and opened an account for the oil surplus. Who posted up to 22 billion. In 2008, when prices fell from 148 to $ 38 a barrel, no one has heard of Nigeria because the country has been able to tap into this fund. And that, I am very proud. When I returned to the department in 2011, he remained only 4 billion on this account while the price of oil was very high! I tried again to put money aside. The President agreed, but the governors have not accepted. I suffered a lot of attacks from them and now that the country would really need this account, these same people accuse me of not having saved! If Nigeria had been more careful, he would not be here today. It hurts me. We have the mechanism, we had the experience, but we were prevented to act. As minister, you have preferred to deal with Americans, Chinese or Europeans? I like to deal with everyone, but especially with the Africans! Indeed, investment is increasingly from Africa and emerging countries such as China, Mexico, Brazil, Turkey.
They ask the same conditions, but it is easier with them, they understand us better. France seems to have woken up. For two years, the Elysee Bercy or Medef multiply missions in Nigeria. President Hollande visits elsewhere in Abuja in May. What Nigeria to gain? I would put the question this way: what France has to gain? The answer: a lot. If you’re not in Nigeria, you’re not in Africa. Of course, Nigeria has problems, but it will work out. This is the first African economy, the consumer goods market is growing, as are the non-oil sectors. Africa accounts for only 5.8% of foreign trade of France and Nigeria 0.6%.
This is to say nothing! It has great potential to improve these figures and France is right to try. What are your failures and your successes in the fight against corruption? You answer would take a whole day. On my first experience as minister, I wrote a book, Reforming the unreformable (ed. The MIT Press, 2012). For the second, it was really difficult. Nigeria subsidizes fuel. About $ 6.7 billion that it costs, we found that 1.5 billion was fraudulent. One importer claimed that his boat was waging its oil while at the other end of the world, according to maritime classification society Lloyd’s Register Marine. I told the President that we would stop paying. What happened ? They kidnapped my mother 83 years. During the first three days, their only demand was my resignation. I was supposed to go on television and announce my resignation. This was one of the worst moments of my life. Can you imagine what happens in your head if you have to be responsible for the death of your mother? I will not go into details, but you must understand that in a country like this, if the fight against corruption, we must be prepared to pay a personal price. My father asked me not to resign. The president asked me not to resign. At the end, everyone began looking for him, and the kidnappers released.
Stop corrupt, that’s good. But we must put in place a system that prevents them from flying. The French are not more honest than Africans but, in France, there are strong mechanisms that prevent stealing and, if applicable, punish thieves. The payment of salaries of civil servants, for example, was done in cash, which opened the possibility of leaks. With the help of the World Bank and the British aid agency DFID, we have developed an integrated payment system and a biometric register of employees because we discovered that we were paying employees and ghost pensioners. Everything was almost ready in 2006, when I left, but when I came back in 2011, it