Nigeria: Finance Minister seeks to reassure international community

Minister of Finance Ngozi Okonjo-Iweala has assured the international community of the government's seriousness over the issue of financial accountability.

The political and international nature of the NNPC dispute has become increasingly clear to Ngozi Okonjo-Iweala who is not only Minister of Finance but also a former senior World Bank official and former candidate for Bank leadership. According to some analysts, her position and reputation have been damaged by the affair despite her calls, which preceded Jonathan’s authorisation, for a forensic audit of NNPC financial affairs.  

She has even been accused of instituting a public relations “campaign” to protect her international and domestic reputation. This observation has been bolstered by her alleged use of the expensive US-based Mercury LLC public relations firm which has reportedly been used by President Jonathan’s administration since August 2013. 

This perception was perhaps bolstered by an Okonjo-Iweala piece that appeared in London’s Financial Times newspaper earlier this week. It opened with an assurance that despite “consternation in the markets” following Sanusi’s suspension and foreign exchange reserves below US$40 billion, the Naira has recovered and that the fundamentals are strong.  

Okonjo-Iweala - notably echoing Jonathan and Abati’s references to Sanusi’s three different estimates of the missing oil revenues - criticised him. She observed that Sanusi had first claimed that the figure was US$49.8 billion before he “accepted“ a finance ministry estimate of an unaccounted US$10.8 billion, before he “alleged” a “new figure” of US$20 billion. Besides the details, the minister also called for passage of the much-delayed PIB. It is clear that she was staying on message – even highlighting and supporting Jonathan’s announcement of a forensic enquiry – while also appealing to the international community.

Okonjo-Iweala was not the only senior high profile Nigerian appealing to foreign interests in London earlier this week. A large Nigerian delegation - including governors Isa Yuguda (Bauchi State), Emmanuel Uduaghan (Delta State) and Adams Oshiomhole (Edo State), former president Yakubu Gowon (1966-75) and Minister of Power Chinedu Nebo held court at the Institute of Directors. There they emphasised the attractiveness and openness of Nigeria to foreign investment and the length, admittedly including colonial rule, of the relationship between Nigeria and the UK.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2014 Menas Associates

Nigeria: Bank governor Sanusi keeps tight grip on money supply

Security risks, corruption and unemployment do not seem to have dented foreign optimism about Nigeria's economy. The country's US$1 billion Eurobond was four times oversubscribed at its launch in July and the capital markets continue to attract interest.

Central Bank of Nigeria governor Mallam Sanusi Lamido Sanusi's decision to maintain a tight monetary policy rate in spite of the prevailing favourable economic indices was designed to keep the Nigerian economy attractive as a destination for portfolio investors and raise the volume of foreign exchange.

 

But some analysts think that the hot money being pumped in through portfolio investments could do more harm than good if a stronger regulatory structure is not imposed on fund managers.

 

Even Kingsley Moghalu, the CBN Deputy Governor for Financial Stability, seemed to agree. "The monetary policy rate at this point in time is reasonably high," he recently said.

 

Tope Fasua, the chief executive officer of Global Analytics Consulting Limited in Abuja, thinks the reliance on foreign funds is a possible risk - the money could flee as quickly as it is now pouring in.

 

"In 2008/9 we had a crash in our stock market of about 70%, from which the market is still recovering," Fasua told Nigeria Politics & Security. "A lot of the market recovery is actually from foreign portfolio investment, which may also disappear in a jiffy" if conditions turn sour.

 

A lot of the monies playing in that market are from foreign portfolio managers.

 

The influx of foreign portfolio investments increases the reserves level and strengthens the naira, which means the central bank has to intervene in the market less often, Fasua said. Meanwhile, many Nigerian investors are watching the market from the sidelines, having been burnt in the past.

 

"When these investors are leaving they will demand foreign currency," said Fasua. "There is a huge risk that the naira will fall if these guys, for any reason, decided to exit their investments en masse, and we would be in a much worse shape than ever. The reserves we have accumulated may therefore be a mirage."

 

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2013 Menas Associates