The just concluded Spring Meetings of the International Monetary Fund (IMF) provided the Nigerian delegation an immeasurable opportunity to interface with leaders of the Bretton Woods institutions – The World Bank Group and the IMF itself. It was also a venue for bilateral meetings with the Japanese International Cooperation Agency as well as delegations from Switzerland, Norway and a number of major private investors. The discussions were broad and diverse during which the Minister of Finance, Mrs Kemi Adeosun, who led the team emphasised the need for collaboration between the executive and the legislature to reduce leakages, prevent illicit financial flows, crack down on tax evasion and avoidance and so drive an increase in domestic revenues.
From the outcome of the meetings, there were agreements on a number issues that are pertinent to the enhancement of Nigeria’s economic development. Some of these include an agreement to focus on scaling up the level of disbursements to projects in the country especially those that have to do with enhancing the social safety net that has the potential to improve the general wellbeing of the people.
At one of those meetings, the Minister of Power, Housing and Works, made a presentation on Nigeria’s affordable housing scheme that attracted the commendation of the World Bank which acknowledged its expected impact on job creation and the role it can play in reducing corruption. Nigeria also received pledges of cooperation from the World Bank, the African Development Bank, the IMF and the International Finance Corporation, the private sector arm of the fund on the implementation of the Power Sector Recovery Plan (PSRP). The Nigerian delegation used the occasion of the meetings to outline the government’s focus on food and security to drive access to a balanced, domestically produced diet for all Nigerians and to reduce the country’s unacceptable reliance on imported food.
From all indications, the delegation’s engagements were geared toward advancing discussions with development partners on the accelerated implementation of critical projects contained in the Economic Recovery and Growth Plan. There were also discussions on women and access to micro credits which pilot phase is already in the works, the challenges of transmission of generated electric power, the use of recovered stolen money as well as the adoption of moral suasion in the anti-corruption campaign.
In all these, there was a consensus that for these discussions to yield the desired result of attracting the much talked about Foreign Direct Investments, policies and their sustainability are immensely critical. The international collaborators did not mince words in asserting that the country is in dire need of a broad set of policies and reforms that can engender the confidence that the investors seek as they carry out their own assessment of the economic and investment climate and the risk factors embedded in them. Adeosun admitted this much when she pointed out that the foreign investors are looking at the policy framework in the country as they make their business decisions. Of interest to them are the monetary and fiscal policies, security situations across the country especially in the North East and the Niger Delta.
Policy flip-flops have consistently remained the bane of the nation’s economic growth. In our opinion, the country must do well to get its acts together and do the needful in making the environment conducive for the local investors and their foreign counterparts. It is a fact that even the local investors respond to the call for participation in the economic growth and development of the country basically on patriotic terms and the investor outside is merely looking at those inside before deciding to make the move one way or the other. For them, it is not a moral issue but strictly legal and business decisions that do not make any room for sentiments.
Nigeria, on paper, is an investor’s haven to the extent that there are guarantees that investments are safe, the cost of doing business within acceptable limits, tax regime friendly and infrastructure, especially that, available at the touch of the button.
We are enamoured by the assurances of the Nigerian delegation to the international investing community that past hiccups remain in the past. But as pointed out in the IMF book “Fiscal Politics”, politics lie at the heart of the role that the state plays in the economy. Decisions to allocate resources, redistribute income or stabilise the economy have a strong political component. The book maintained that political developments can and do have powerful impact on economic outcomes just as it asserted matter-of-factly that sudden policy shifts, uncertainty from political gridlock, or stalled budget negotiations can lead to market volatility and bad economic outcomes. Four months into the year, Nigeria’s budget negotiations are still ongoing.