Since the middle of 2014, when the price of crude oil fell dramatically, Nigeria’s finances became challenged. This is not hard to explain: we’ve historically depended on crude oil for as much as 70 per cent of government revenues, and 90 per cent of foreign exchange earnings. The outcome – pressure on government’s finances – was by no means unusual. A similar fate befell most oil-rich countries around the world.
Where Nigeria possibly stood out was in the fact that during the preceding three years, when oil prices were in excess of $100 per barrel, the government did little in terms of saving and investing for the future. Our Sovereign Wealth Fund, which was established in October 2012 with just US$1 billion, did not receive any further inflow during the oil price boom. Instead, billions of dollars were squandered through corrupt oil and defence contracts. It is a terrible thing for a country to fall on hard times without a savings buffer. There was nothing unexpected about our downturn. It was the inevitable result of the choices we made or didn’t make during the years of boom.
What is remarkable, yet not as talked about, is the way we have worked so hard to exit recession, reset the economy and reposition it for a brighter future for the present and future generations of Nigerians. The administration of President Muhammadu Buhari is laying the foundation for the kind of economic growth that makes a real impact in the lives of citizens. The downturn has inspired unprecedented levels of fiscal responsibility, in line with President Buhari’s determination to fight Nigeria’s endemic corruption.
Shortly after taking office, he issued a presidential order mandating the immediate implementation of the Treasury Single Account (TSA) system, consolidating thousands of government accounts scattered across deposit money banks into a unified system that is transparent and easy to centrally monitor and track. Under the old system, it was common for government accounts to be converted into personal use, but under the TSA this is impossible. Also, the proliferation of accounts encouraged rent seeking rather than questionable practices.
Budgetary reform has also taken a lot of our time and attention. We are pioneering the use of software to prepare our annual budgets, which allows greater transparency and the ability to track changes. We have insisted on using biometric verification in the deployment of our Social Investment Programme, which includes a job scheme for unemployed graduates, a School Feeding Scheme for primary school pupils, a Conditional Cash Transfer scheme targeting a million of our poorest citizens, and a micro-credit scheme for artisans, farmers, and traders. In the past, the social investment payments would have been done as cash handouts. A similar insistence on biometric verification for the federal payroll has resulted in the detection of tens of thousands of bogus beneficiaries – or ‘ghost workers’, as we often refer to them, in Nigeria – and savings running into billions of naira every month.
We are pursuing unprecedented cooperation with foreign governments and powers, as part of our transparency and anti-corruption drive. For the simple reason that a disproportionate amount of public funds looted in Nigeria end up in the United Arab Emirates (UAE), Nigeria has signed bilateral agreements with the UAE government on extradition, exchange of information, and repatriation of stolen public funds. One strong demonstration of our political will has been a whistle-blowing scheme we launched months ago that empowers citizens to report public corruption. The impact in terms of recoveries has exceeded our expectations. The tighter rein on public finances allowed us invest US$500 million in our Sovereign Wealth Fund, during a recession.
A lot of the work that has been done over the last two and half years has been focused on dismantling the old ways of doing things, rebuilding them, and empowering and fortifying our institutions with technology to block loopholes, discourage abuse, and prevent a relapse into the destructive ways of the past. The new Nigeria we seek will not happen without this kind of foundational reform that imposes on us new ways of thinking and of doing things. The early results are already being seen. A concerted focus on agriculture has seen our rice imports from Thailand dropping by 90 per cent between 2015 and 2016, and replaced by locally-grown variants. As oil has let us down, we have started to do what we should have done decades ago, invest in agriculture and mining. Throughout the recession, agriculture recorded healthy growth. As we emerge from the recession, its impact is certain to multiply and position Nigeria for a prosperous future.
Let me point out that the most important elements of any reform effort tend to be the least flamboyant. We are confident that in the months and years ahead, Nigerians and the world will see the full impact of the foundational resetting that the Buhari administration has been focused on since 2015.
There is, of course, a lot of resistance to reform by vested interests within and outside the system. But we are not fazed. The work of reform goes on. It is, to borrow from the Nigerian novelist, Chinua Achebe, morning yet on Creation Day. Not very long from now, Nigerians and the world will look back on this recession we have just emerged from, and realise that it was the turning point in Nigeria’s journey to true growth and greatness.
• Adeosun is Minister of Finance.