Outside Ngozi Okonjo-Iweala’s office at the World Bank, a cardboard manikin holds a placard reading “Put Food First.” Food security was among her priorities as a managing director of the bank, a position she left recently to take over this week as finance minister of Nigeria – her second time in that role. Agriculture will still be among her top concerns. But in a recent conversation she spoke about the much broader problems faced in managing the finances of Africa’s most populous country – the tension, for example, to control government deficits that have become unusually large for an oil exporting country, while also making the investments needed to encourage a more diversified economy.
A rebellion in the oil-producing region waxes and wanes – calmer at the moment after a recent amnesty for rebels, but hardly gone. Growth is strong, but so is inflation. With its oil wealth and population, Nigeria could be an anchor for African prosperity, but has challenges to overcome. With expanded powers over the economy, Okonjo-Iweala sketched out some of her ideas in a recent interview:
The last three years have been consumed with the developed world’s problems – rescuing its banks, propping up its governments, rewriting the rules for financial regulation. What is at risk of being overlooked?
“The financial crisis and this maybe double dip that everyone is looking at has turned attention quite a lot to the developed world’s problems. It used to be the developing world that was looked at as the source of problem. We do need the developed world to perform well. Problems in the developed world hit the entire globe…So it is appropriate that we get growth back and recovery in the developed world. That should not shift attention away from actually some good signs from emerging market countries. The growth coming out of emerging markets – all this is helping to keep the world from tanking. We need to keep a balance on these other economies and see how we can support them to accelerate and grow. If we find ways to keep up growth in these parts of the world, that is ultimately helpful.”
Nigeria is benefiting from high oil prices. As the incoming finance minister, do you feel the money is being used as efficiently as it could?
“The biggest challenge we have is creating jobs for our youth. Twenty-five percent of the working-age population is outside of the labor force. Youth unemployment is rising. The priority is, how do we take care of that problem? We need several things to happen. We need to maintain macroeconomic stability. We could run a tighter fiscal policy. We have a serious power problem, which is a binding constraint on economic growth.”
We have seen countries before with a stable resource base struggle to translate that into development and job creation. How do you avoid the trap of just using the money to create a welfare state?
“One of the exciting things is the potential to spur that. Agriculture has been growing at seven to eight percent. And we have the ability to assure our own food security as well as develop a value chain for exports. But we need to do agriculture differently to create jobs and make it attractive to youth. We need to modernize agriculture. We need to take a value-chain approach going form farm to market and giving them access to improved technology in terms of seeds, fertilizer, water management. We have cases of things going to waste – tomatoes, potatoes, all sorts of products. If you modernize agriculture, it is much more attractive for youth to stay than the old subsistence hoe and machete approach. That is one place where we can create more jobs.”