Andrew Green, Acting Financial Editor
Nigeria Finance Minister, Dr. Ngozi Okonjo-Iweala. - CONTRIBUTED
The latest report from Transparency International shows that Nigeria is in a dead heat with several other countries for the title of third most corrupt country on earth. In an interview with the Financial Gleaner, the country's Finance Minister, Dr. Ngozi Okonjo-Iweala, says what she is doing to change this and outlines the parallels she sees between Africa's most populous country and Jamaica. This edited interview with the former vice-president of the World Bank is the second of a three-part series.
FG: In addressing the basic social needs of Nigerians, such as access to water and electricity, are you approaching that in terms of incorporating private sector participation in the provision of these services? And how much progress have you actually made?
Dr. Okonjo-Iweala: I think we have made some. Let me talk about the basic services first. We have recognised that public sector cannot tackle all what we need. Remember that Nigeria is a country of approximately 130 million people and we are a poor country with income per capita of US$300, compared to Jamaica's which is US$2,700 per capita. Jamaica is really regarded as a lower middle income country. Nigeria is a poor country, but Nigeria has enormous potential. We have the oil and gas reserves, enough to last for 30 years, at the current rate of extraction of 2.5 million barrels.
FG: You said US$300 per capita, but in terms of purchasing power parity, isn't that a little different?
Dr. Okonjo-Iweala: The purchasing power parity will, of course, be much higher. I think it's US$999, but it would still be lower than Jamaica. But we have a very large country with a poor population, and so delivering services is a huge challenge. It means putting in a lot of invest-ment. We estimate that we need to invest about US$1 billion a year for the next five years in power, in order to be able to make any substantial gain in meeting the demand for power in the country. We are generating 4,000 mega-watts at the moment, and we aim to get up to 10,000 by 2007. South Africa is generating 40,000 mega-watts and it has a population of 45 million, so that will give you some idea.
Roads are a big issue in Nigeria. People just want to see good roads because we move around a lot. We estimate we need US$700 million a year for the next five years to keep the present roads that we have.
Realising that challenge is huge, we have to call in the private sector. We've put together a private public partnership bill, which is before our own parliament. That bill will permit the private sector to come in and invest in bridges, in roads, in power. We already have several partnerships going, even before this legislation is carried through. The legislation will enable private companies to charge tolls on bridges and roads, and it will also create a regulatory authority that will then be able to regulate this sector and make sure that the consumer is not completely taken advantage of.
FG: Does that include water?
Dr. Okonjo-Iweala: We haven't got there as yet. The public sector is investing a lot in water. In Lagos state, we are trying to see what can be done. Remember that Nigeria as a federation and the states have a lot of autonomy. So they too are bringing investors to look at this option.
Where there is no public water supply, you have private water tankers that bring water to the people.
When you compare what they pay for this water to what the government is charging, it's like night and day. If we can find a way to provide that water at lower cost than what they are paying now, but higher than what the government is charging, it would be a win-win result.
And coming back to the real sectors, we have great potential in agriculture, because only 40 per cent of our arable land is being used, and we really want to focus away from oil, because oil and gas sectors do not create jobs.
FG: I find it difficult to imagine a country like Nigeria where just 40 per cent of the arable land is being used. Is the rest forest?
Dr. Okonjo-Iweala: I think there are several reasons. One is that when the oil money came in, people left the land and migrated to the cities. We have one of the highest rates of urbanisation in the world. As well, the level of mechanisation is low. So we have a lot of potential if we can mobilise people, machinery and capital.
FG: To get agriculture to work, it seems to me what you really need is an economic environment where it make sense to farm.
Dr. Okonjo-Iweala: That is absolutely right. The other thing is that because of the oil money, in terms of relative prices, agriculture was discriminated against, and the exchange rate at one point in time was also overvalued. But now that is okay. We have now a managed float in the exchange rate which is working quite well, so we think all the conditions are there now.
We do have some issues with markets and storage that have to be solved, and those too haven't gone away. Often you have a surplus of agricultural goods in one part of the country and in another there is not enough.
Agriculture grew at seven per cent per annum in the past two years, and it is because of this concerted focus now. We have developed a cassava initiative. We are the largest producers of cassava in the entire world, and we consume a lot of it, but we are now looking to export, for animal feed and cassava chips. The yam is a which is a basic staple we have. We don't really export our yams, but I think we are the biggest producers and the biggest consumers globally.
We also started a rice initiative, because we eat a lot of rice and import a lot. We eat a lot of bread, but we are not trying to grow wheat, because we have no comparative advantage there. But what we are trying to do is use cassava flower to blend into wheat, so we reduce the amount of wheat in the bread.
I have fallen in love with a cassava bread that I found here. You call it bammy. We don't make it in that form, and I am wondering whether can we move into this cassava bread. My colleagues tell me that is too much of a stretch but we are going to try. What we want is to reduce reliance on imported food. We think we'll be self sufficient in rice in the next five years.
FG: How are other sectors doing
Dr. Okonjo-Iweala: We have lots of solid minerals, bitumen,granite, marble, gemstone, which we've not exploited. We have a huge mapping project, and once it is done, we can point out the resources to the private sector.
We have got our manufacturing sector, and it has not been doing well in the past few years. Capacity utilisation has fallen as low as 30-40 per cent. Now it's about 40 per cent and we are aiming to get it up to 75 per cent within the next five years, which is a stretch target.
We also have to look at certain government policies in terms of our tariffs and trade, because we have a big problem with dumping. We have an intellectual property, a Nigerian pattern in textiles. This is a national outfit that has been copied by other countries, and manufactured cheaply and dumped back in our market. And so we have to look at how do we protect some of these industries without making them totally uncompetitive.We are struggling with this area of reform.
