Reforming The Unreformable

"The irrepressible Ms Okonjo-Iweala, who earlier this year fought and lost a battle to become the World Bank’s first developing country president, is back in her old job as finance minister, in theory with an expanded mandate to continue where she started. 

Reforming the Unreformable, her account of her previous stint in the post from 2003 to 2006, under former president Olusegun Obasanjo, provides a timely reminder that the case is far from hopeless.

Africa’s most populous nation has travelled a long way since the dark days of military rule. When a team of like-minded government technocrats stuck together with the support of the president, they were able to pursue a carefully calibrated reform strategy.

This is an insider’s account of three years when much of the progress on which Nigeria’s partial renaissance has been premised was made. It is written from the 10th floor of the finance ministry in Abuja in the language of government and the World Bank, where Ms Okonjo-Iweala was working as a vice-president when Mr Obasanjo called her home.

Nigeria was in a parlous state, struggling to shake off international pariah status, its once proud civil service a bloated extortion racket. “419” fraud via email and letter scams had overtaken the cocoa sector to become the second highest earner of foreign exchange.

“Oil money virtually destroyed the social and moral fabric of society,” Ms Okonjo-Iweala writes. From the mid 1970s to 2001, Nigeria earned more than $300bn from crude oil, accumulating $30bn in debt to the Paris Club of creditors. The proceeds of both found their way into the foreign bank accounts of top-ranking politicians and generals. Everything was upside down.

The book wastes little time going over the history of past misrule. Instead it reveals, with great clarity, the deleterious effects on the contemporary functioning of the state. It also provides a handbook for reformers anywhere on how to combat vested interests that oppose change.

In a relatively short period of time, a core team of six government reformers began to turn things round. Hundreds of lossmaking state enterprises were privatised, the successful auction of GSM licences sparked a boom in telecoms, pensions were reformed, and the banking sector took off after consolidation. State finances meanwhile were on the way to becoming sanitised with surplus revenues above the budgeted price of oil stashed in a rainy day account to protect the country against world price swings. Economic growth, which had averaged less than 3 per cent over the previous 10 years, accelerated to 7 per cent.

Ms Okonjo-Iweala argues that the crowning achievement of the period – since it would not have happened without progress on all the above – was to persuade the Paris Club that Nigeria was worthy of debt relief. The government cleaned the slate, markedly improving Nigeria’s prospects of attracting investment and of investing itself in fighting poverty. “The implementations of reforms in the second Obasanjo administration broke a cycle of despair and cynicism among Nigerians about the prospects and future of their country,” she writes.

Nevertheless, the government made mistakes. Among them, Ms Okonjo-Iweala argues, was to engage in so many battles at the same time that it missed an opportunity to lock in reforms. Back in the finance ministry, in a government struggling to establish reform credentials, she must be feeling that now and perhaps hoping her colleagues pay attention.

The writer is the FT’s Africa editor