WASHINGTON, Aug 12 (Reuters) – Ngozi Okonjo-Iweala departs the World Bank as managing director on Friday and said her biggest challenge as Nigeria’s new economic chief will be to develop an economy that is less dependent on oil and gas.
Okonjo-Iweala, who will take up the role of Nigeria’s Coordinating Minister for the Economy and Minister of Finance next week, has been a steady hand at the world’s largest development institution since 2007, where she has had unique insights into the growing role of developing nations in the global economy.
Nigeria is one of Africa’s most dynamic economies but it has enormous problems, including an over-reliance on commodity exports, mismanagement, low investment and a history of powerful vested interests.
“Nigeria has to make some fundamental changes, it has to really diversify its economy,” Okonjo-Iweala told Reuters in an interview on Thursday. “The time is now because investors are interested in the country,” she said.
She said the country’s manufacturing sector had lost competitiveness due to increasing power shortages and bureaucratic hurdles, while its agriculture and services sectors had a lot more room to grow, and a flourishing entertainment industry held great potential.
One lesson Okonjo-Iweala takes with her is that consistent policies and a stable political environment are essential for any economy to flourish.
“We have to show policy consistency in all kinds of ways. It builds trust in the economy, it builds resilience and that helps enormously,” Okonjo-Iweala said.
It is the second time in eight years that Okonjo-Iweala has left a World Bank job to return to Nigeria to help transform the huge oil-rich nation’s economy. See story:
In 2003 she shook up the country’s finances, fired corrupt officials, boosted transparency and negotiated the cancellation of nearly two-thirds of Nigeria’s $30 billion Paris club debt.
“Why am I going back? I ask myself that question too. I’m passionate about my country and if you have skills and your country calls on you to come and help, at the end of the day it’s very difficult to say no.”
Okonjo-Iweala said she was encouraged by President Goodluck Jonathan’s political commitment to reform Nigeria.
“That doesn’t mean I have all the answers. I don’t. The task is daunting,” she said. “I hope we’ll succeed but Nigeria is a tough country, and a tough environment, but it is also one of the most exciting countries to do things in.”
Okonjo-Iweala is also aware that the global economic environment has become more difficult over the past several months, with an escalating debt crisis in Europe and high public debt in the United States unsettling markets.
Some economists have warned the world economy could tilt back into recession, which would likely lead to a decline in demand for African exports and push commodity prices lower.
“We will need to look out for the impact on commodities,” Okonjo-Iweala said, adding that demand would be driven by emerging economies like India, China and Brazil that are more important to Africa.
She said African policymakers had increasingly maintained sound economic policies that were attracting more foreign direct investment. The region rebounded quickly after the 2008/09 global financial crisis with growth rates now equal to or exceeding pre-crisis levels of above 5 per cent.
HORN OF AFRICA FAMINE
Okonjo-Iweala said fewer African nations had turned to the World Bank for funding to deal with costlier food prices last year compared to the 2008/09 food and energy price crisis. While this was progress, she said more investments were needed to strengthen the region’s food security systems.
She said the famine in the drought-hit Horn of Africa was “something of a man-made disaster” and blamed it on the collective failure of the international community to bring peace to Somalia.
Somalia’s worst affected areas are controlled by al Shabaab militants, who have prevented food aid from getting to people. An African peacekeeping force has secured about 80 per cent of Mogadishu after al Shabaab withdraw at the weekend, opening the way for life-saving food and medicine to get to people who fled to the capital to seek help.
“There is a lack of political will by all actors worldwide to try to secure peace” in Somalia,” Okonjo-Iweala said. “You cannot help farmers, and you cannot help pastoralists, unless there is peace,” she added.
She said the situation in the Horn of Africa “should not color the success” Africa has had in recovering from the last financial crisis.