Lessons From Okonjo-Iweala’s Appointment

South African President, Cyril Ramaphosa, early this month announced the appointment of Dr Ngozi Okonjo-Iweala as a member of the expanded Presidential Economic Advisory Council (PEAC) put together by his government to rescue the country from its third recession since 2008. The country relapsed into recession at the end of December, 2019.
The council, chaired by Ramaphosa himself, and comprising local and international economic experts, was initially constituted on September 27, 2019, to “ensure greater coherence and consistency in the implementation of economic policy and ensure that government and society in general is better equipped to respond to changing economic circumstances”. It is also expected to advise the president and government more broadly, facilitating the development and implementation of economic policies that spur inclusive growth.
South Africa, the second largest economy on the continent has, in recent years, been rattled by a plethora of challenges, driven by lull in investor sentiment and lingering policy uncertainty, weak power, telecom and transportation sectors, and worsened by crisis in mining and manufacturing sectors. The problem is exacerbated by rising rate of official corruption, divisions in the ruling African National Congress (ANC), xenophobia nurtured by heightened unemployment and increasing insecurity.
Indeed, South Africa’s perilous public finance crisis has been engineered by four forces: stagnant economic growth; consistent tax revenue collection below forecasts; rising debt burden – the highest levels in post-apartheid era; and poor performance of state-owned enterprises, necessitating large-scale bailouts from lean government funds.
These have been triggered by three dynamics: slow recovery from shock of the 2008 global financial crisis; poor economic and public finance performance negatively affected by entrenched institutional destabilisation of Jacob Zuma’s presidency; and continued deterioration of economic indicators (growth and employment) along with further underperformance of revenue collection and public finances under the Ramaphosa government even with expansionary fiscal spending far above revenue generation. It is to address these challenges that Ramaphosa tapped Okonjo-Iweala to help rescue the country from economic doldrums.
The Tide joins millions of Nigerians and leaders across all continents in congratulating one of the world’s best economists and development experts on her meritorious appointment by Ramaphosa. We are proud to commend Okonjo-Iweala not just because she is a Nigerian and brilliant, but because her appointment represents a testament to her competence and experience. We say so because we are convinced that her pedigree and impeccable footprints in monetary and economic administration in Nigeria, many developing countries and at the World Bank stood her out for this sublime assignment.
The 1981 PhD graduate in Regional Economics and Development from Massachusetts Institute of Technology (MIT) spent 25 years of her career at the World Bank as a development economist, scaling the ranks to Number 2 position of managing director, Operations (2007-2011), with oversight responsibility for the bank’s $81 billion operational portfolio in Africa, South Asia, Europe and Central Asia. She spearheaded several World Bank initiatives to assist low-income countries during the 2008 – 2009 food crises and later during the financial crisis, and helped many recover from slow growth to robust economic state.
In 2010, she was Chair of the IDA replenishment, the World Bank’s successful drive to raise $49.3 billion in grants and low interest credit for the poorest countries in the world, and was also member of the Commission on Effective Development Cooperation with Africa. In the last two decades, she has served as senior adviser, executive director, director, chair or co-chair of more than 30 boards of world-class banks, academic and research institutions, development-driven organizations across all continents, including Harvard, Oxford, the Brookings Institution, African Union, World Economic Forum, United Nations, Rockefeller Foundation, Mercy Corps International; and in 2012, ran as the first-ever female candidate for president of the World Bank.
Okonjo-Iweala was a two-time minister of finance, serving under Olusegun Obasanjo (2003-2006), and Goodluck Jonathan (2011-2015). She was the first female to hold that position in Nigeria and her performance speaks for her.
During her first term, she spearheaded negotiations with the Paris Club of Creditors that led to the wiping out of $30 billion of Nigeria’s debt, including the outright cancellation of $18 billion. In 2003, she led efforts to improve Nigeria’s macroeconomic management, including implementation of an oil-price based fiscal rule where revenues accruing above benchmark oil price were saved in special “Excess Crude Account” which helped reduce macroeconomic volatility.
She also introduced the practice of publishing each state’s monthly financial allocation from the Federation Accounts in the newspapers, which increased transparency in governance. With support of the World Bank and IMF, she helped build an electronic financial management platform – the Government Integrated Financial Management and Information System (GIFMIS), including the Treasury Single Account (TSA) and the Integrated Payroll and Personnel Information System (IPPIS), helping to curtail corruption in the process.
As at December 31, 2014, the IPPIS platform had eliminated 62,893 ghost workers from the system and saved government about $1.25 billion in the process. Under the present administration, more than 70,000 ghost workers have been eliminated from the payroll system, and billions of Naira saved for investment in development initiatives. She was also instrumental in helping Nigeria obtain its first-ever sovereign credit rating (BB minus) from Fitch Ratings and Standard & Poor’s in 2006.
Under her leadership, the National Bureau of Statistics carried out a re-basing exercise of the Gross Domestic Product (GDP), the first in 24 years, which saw Nigeria emerge as the largest economy in Africa.
With her record, we think that Ramaphosa made the right decision by appointing Okonjo-Iweala as a member of the country’s PEAC, to help fix its economy and inspire growth and development by advising stable policies that encourage investment.
We, therefore, urge her to pragmatically bring her wealth of experience to bear in helping the South African Government make history by reviving an economy that has been in limbo for about 12 years. She had done it for Nigeria before; she can as well do it for South Africa.
On the other hand, we challenge all tiers of government in Nigeria to emulate the South African Government in placing merit and competence far and above nepotism and tribalism in recruitment and appointment into various offices in order to fast-track development of the country.
We think that the nation’s economy can do better if governments eschew parochial sentiments and implement inclusive policies that recognise hardwork and excellence.