Jamaica can learn from Nigeria's economic reform challenges

[Richard Akindele]

IN INTRODUCING Nigeria's Minister of Foreign Affairs Dr. Ngozi Okonjo-Iweala, Bank of Nova Scotia Managing Director Bill Clarke advised that she had been described as "The woman who has the power to change Africa."

In a powerful presentation for Scotiabank's corporate lecture series to her large audience of Jamaicans and a surprising number of Nigerians, Nigeria's new Foreign Minister and globally-recognised former Finance Minister incisively compared the challenges of economic reform in Nigeria with the present challenges facing the Jamaica economy.

Quoting Nelson Mandela as having once remarked, "after climbing a great hill, one only finds there are many more hills to climb," she advised reform is a process and that "in Nigeria we believe we are still learning new things in this reform process every day."

The former Finance Minister described the four main components of their economic reform agenda in Nigeria, namely, macroeconomic reforms, structural reforms and anti-corruption measures, improving the business climate and the role of the economic team.

MACROECONOMIC REFORMS

Prudent fiscal and monetary policies are the centrepiece of Nigeria's economic reform programme. Stating Nigeria's history of macroeconomic instability (fiscal deficit, high inflation, unstable exchange rates) harmed economic growth, she stated that Nigeria had moved from an average deficit of 3.5 per cent of GDP to a surplus of 10 per cent of GDP by saving much of its oil revenues unlike in past administrations. Growth has averaged 7.8 per cent over the past three years, compared with an average of three per cent over the past two decades, but has been driven by strong growth rates in the non-oil sectors where jobs are created (Nigeria recorded an eight per cent growth rate in the non - oil sector in 2005.)

Major efforts have been undertaken to reduce debt, and she drew attention to the problem of Jamaica's very high debt of 135 per cent of GDP. In her view, a debt of this size creates macroeconomic uncertainty, crowds out the private sector and reduces the Government's fiscal space for capital investment.

STRUCTURAL REFORM

A key part of Nigeria's economic reform programme, which was only begun in 2003, centred on fighting corruption and increasing transparency in government business and reforming the public service. Arguing that no success could be claimed for reform unless anti-corruption measures were a strong element of the reform programme - "To fight corruption it is not sufficient to talk about it in vague terms" - she stated that leadership and commitment from the very top, that is, the President, was essential in this fight.

IMPROVING BUSINESS CLIMATE

While recognising that Jamaica was significantly ahead of Nigeria in terms of the ease of doing business according to the IFC/World Bank's doing business report, she noted that in the critical area of access to credit for small and medium-size enterprises "where high cost of capital and poor cash flows can make or break their business operations" the same report suggests that Nigeria and Jamaica have similar problems.

In particular, she notes, both countries have credit bureau coverage of the adult population of close to zero, despite Jamaica having looked at various ways to improve access to credit, such as establishing a credit bureau.

ROLE OF AN ECONOMIC TEAM

All the recent reforms in Nigeria, said the Nigerian minister, were not achieved overnight or by one individual, but were the result of a collective effort by a focused and committed government economic team, appointed by the President. She chaired the original team of 12 members, now 17, for the past three years, which, by working together as a dedicated team, had different members working on public sector reform, transparency, anti-corruption and privatisation issues, sharing common experiences and providing mutual support.

She noted that they could not have succeeded without the encouragement, leadership, and continuous backing of President Obasanjo.

Stating that "we must never get weary of keeping up with reform work," the dynamic Foreign Minister summed up: "In Nigeria, we set benchmarks, targets and timelines for ourselves in our reform programme. We aim not just to talk about reforms, but deliver the necessary goods." Quoting Winston Churchill she said: "It's no use saying, 'We are doing our best,' you have got to succeed in doing what is necessary."

Source: Jamaica Gleaner