One week after the 2016 annual meetings of the International Monetary Fund (IMF)/World were concluded, the 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 with the media..
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 takeaway 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.
“For instance, between last Saturday and Sunday, we were on a panel, interviewing MD and CFO for the DBN as it must take off by January 2017.
It is very important because it is going to provide money for MSMES and for Nigeria that is really important because 50 per cent of our GDP is made up of small companies. These are small size, petty traders, so finding how to make money available to them is really an important way of getting out of the challenges we currently face. So getting DBN off ground is a big priority for us and we have set ourselves a very tight deadline.”
FG, States to meet on review of World Bank Projects in Nigeria
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.”
Fallouts from the Meetings
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”.
Speaking on the funding arrangement being put in place, the Minister maintained that “The government must lead, I think that is very important but government must not be the sole provider of infrastructure.”
On the status of the Public Private Partnership arrangement being sought for, Mrs. Adeosun stated, “We need to get to a point where PPP is working effectively and that is the area which, as I said, we are getting some technical helps from some of the other governments which succeeded in developing a very strong PPP platform.
What must be done is to allow the pension fund money to be invested in infrastructural assets on a policy basis. It is partial government money and partial private sector money and we are working very closely with the ministers of power and transport to identify some of the pilot projects that we will do under that. What that will do is to make our budget seem bigger because we won’t be spending only budget money but we will also be able to crowd in private money to add to that and accelerate the rate of infrastructure roll out which of course is what will get us growing again.”
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.
She explained that she would brief the National Economic Management Team and the Federal Executive Council on the outcomes of the meeting, saying the outcome would reflect in the 2017 budget.
“Today is the economic Management meeting, so one thing on the agenda is the briefing. We will go back and brief the Economic Management Team on what the outcome of the IMF/World Bank meetings are.
“We have said that as far as borrowing was concerned, we will always want to go for the cheapest. This is why when people are broke; they always ask their friends before they go to the banks.
World Bank is our friend. We are a member of the World Bank, we have been contributing over the years and so we must take the advantage. ‘
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 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.