IMF/World Bank parley: ‘How Nigeria secured investor’s assurance’

A week after the 2016 annual meetings of the International Monetary Fund (IMF)/World Bank were concluded, Minister of Fi­nance, Mrs. Kemi Adeosun has explained that Nigeria was able to secure a pro­found commitment of inter­national investors as a result of the specific requests presented by the Nigerian delegation to the meetings. Ad­eosun, who led the Nigerian delegations to the annual meetings, gave the clarifications during a live interview program, Good Morning Nigeria, aired by the Nigerian Television Authority, NTA 1 yesterday.

Speaking on the take-aways from the global event, the minister disclosed that from the Nigerian perspec­tive, what made the 2016 meeting of the multilateral institutions different from previous ones was the fact that Nigeria was able to get commitments on specific ar­eas of the nation’s economy in line with the economic agenda of the current ad­ministration.

According to her, apart from the commitment of the two Bretton Woods Institu­tions, the Nigerian delega­tion was able to secure the cooperation of representa­tives of other developed countries who were ready to share economic intelligence on how certain challenges in the Nigerian economy could be tackled.

The Minister said, ‘we took our infrastructure needs to them. Not only did they agree to support us, some of them were ready to share their experience and expertise with us. For instance, a Canadian representative said, oh, we have solved that problem, we will help you to scale up and be able to take advantage of our expertise.”

On what the last delegation did differently to get the ears of the investment community during the meeting, Adeosun stated, “I believe it is the approach you take to the meetings that will determine what you get from the IMF/World Bank meetings. We had gone to the World Bank meeting with a long drawn list of what we would do. We went there with spe­cific projects.

We took our housing projects to the meeting; they showed commitment to invest; we took some of our power projects to them, again, they said, look, we will support you.

“I think if you go with the mindset of “what do you have for us,” then it will be difficult. That was the situ­ation we found ourselves in the past by going for the project that was probably designed for other countries and it was brought to Nige­ria and then it failed. We took a different approach and asked, what are our pri­orities in Nigeria now? “

Another take away from the IMF/World Bank meet­ing alluded to by the Minis­ter is the need to ensure the take off of the Development Bank of Nigeria (DBN). Ni­geria was able to secure the commitment of the World Bank and its group with the pledge to release $1.3billion seed money without delay. In keying in to this positive development, the Minister disclosed that the Federal Ministry of Finance was al­ready shopping for the top management officers for the bank, disclosing that inter­views were conducted for candidates into the positions of Managing Director and Chief Operating Officer for the institution last weekend.

The Minister, who ex­plained that the current administration was keen at removing all the bottlenecks to the economic growth said, “For instance, although the Development Bank of Ni­geria (DBN) was conceived about three years ago, as good as the project is, we haven’t got anywhere. So, when we got to the meeting, we said, look what are the bottlenecks? Fortunately, we have been able to solve some of the problems.

The Minister also raised the prospect of a mutual agreement between the Federal Government and the states over some of the World Bank assisted proj­ects, saying there is room for a review.

She noted, “There are a number of other stalled projects. Some of them are health related. Some of these projects incidentally, are at state government level. So, one of the things we have to do is that I will be reporting to the National Executive Council meeting where state governors will be in atten­dance and the Federal Exec­utive Council on a quarterly basis.

“If a project is really fail­ing, and I think other gov­ernors have the right to tell the affected state governors that look, you are blocking everybody, let them cancel this project and bring it to my state. So there has to be a greater sense of responsi­bility because these monies are very cheap monies. The interest rate is as low as 1.5 per cent and you have about 20 years to pay. So if a state or department is fortunate enough to get a World Bank loan, I think it should have some urgency around how it is used. There are some projects in agriculture, and some on irrigations that are stalled.

“There is a $500 million for irrigation projects and that was held up because the counterpart funding, which is Nigeria’s contribution, just $4million hasn’t been paid, so we called the Minister of Water Resources and he said no, I just released the money and even the World Bank is very excited because it means that project will now be on course.

There is no doubt that the $500million irrigation project is going to improve agriculture and create jobs. So there are quite a few take­aways that are positive.”

On what Nigerians should look forward to as fallouts from the IMF/World Bank meetings, the Minister said Nigeria is going to tap from the immense opportunity created by the glut in the global capital market. She however pointed out that this development does not translate to a change in gov­ernment’s priorities. She stated, “There is no change in priorities because we re­ally want to borrow for our infrastructure. What we are looking is how can we take the advantage of the fact that the international capital market is awash with mon­ey?

“Nigeria has a very decent credit rating. We spent some time with rating agencies. So, how can we leverage Ni­gerian balance sheet to get money that we need for in­frastructure? What are the instruments that we can use? I earlier explained to you that we got some help from some Canadians. So they were able to create a PPP (Public Private Partnership platform that will be able to invest in roads, airports and ports to help them develop their economy”.

She also spoke on the $500 million World Bank social safety facility for rebuilding the Northeast devastated by insurgent activities. She said the executive was working with the legislature so that the fund can be accessed without delay.

According to the Minis­ter, “That again, is part of the borrowing plan that was approved by the Federal Ex­ecutive Council about four weeks ago. We now have to engage very quickly with the National Assembly for ap­proval so that we can draw down that money. The idea is to start disbursing so that we can rebuild family life in the North-east, which of course, has been devastated. We thank God for the prog­ress that has been made, but we need to rebuild and that region needs a lot of money to rebuild. The World Bank and indeed other develop­ment financial institutions are very keen to spur growth in the region.”

She said the legislature is being carried along in order to actualize the commit­ments secured at the IMF/World Bank meetings.

She disclosed that repre­sentatives of the national assembly were part of the Nigerian delegation to the meeting. She said, “the chairman of the Senate com­mittee on Finance and chair­man on House Committee on Finance were on the del­egation, which is usual be­cause there was a session for legislature. We all must align here.

Citing the case of China, the Minister said there is nothing wrong in borrowing as long as it is efficiently uti­lized. “When I asked them, which country draws down the most from World Bank, I was shocked to discover it was China. This is the same China that comes here and offers us loans. It actually drew down huge amount from the World Bank but they are very efficient with it as they have templates. 40% of them are actually poor even though China seems to be a rich country, 40 per­cent of the world’s poor are in China, so they qualify for these concessional facility and they take advantage of it. If China can have the highest disbursement rate, what will Nigeria’s excuse be for lag­ging behind?