Poor Perception Harms Nigeria’s Economy, Says Okonjo-Iweala
WHILE risks, as characterised by insecurity and unstable polity, cannot be over-empahsised, these risks, according to Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, are grossly exaggerated and there is need for investors to have a rethink and a fair assessment regime.
While speaking in one of the side events of the World Bank and International Monetary Fund (IMF) Spring Meetings holding in Washington DC, Okonjo-Iweala, underscored the importance of private sector in attaining economic stability.
Titled, Changing the Conversation on Development Finance, the discussion forum had in attendance, heads of the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the World Bank Group and the IMF.
The Minister said the key to unlocking finances from the private sector resources is, understanding this element. Okonjo-Iweala also berated multinational corporations for exploiting loophole in evading tax, and thereby, depriving the economy of much needed finances. According to her, “we are being very polite. Yes, it is true we cannot live without them. But the private sectors in Nigeria, especially the big multi-nationals, have a huge knowledge and expertise in how to do their taxes, so that they can take advantage of every loophole we have put in place. “We do not have that capacity (to match their expertise in tax matters) and so we lose a lot of money; through exploiting perfectly legal loopholes we lose a lot of money.
One of the ways we can overcome this is to have the same level of expertise the other side has. Let us not try being polite about this. And on the impolite side, sometimes, when you try to bring them to doing the right thing they just threaten you with moving to another country and this is where the race to bottom, alluded to by the President of the AfDB, starts from.
We really have to be open with some of these issues. How do we work with the private sector to really get a fair share of what we deserve?” The AfDB president, Mr. Donald Kaberuka, however, alluded to the risk the factors on the continent. He said, “some of the recent security issues are setting the continent backward.
Apart from the money spent in fighting the challenge, the disruption in the system is another.” But was quick to point out the cost of inaction on the part of the private sector, which is costlier than the action. Meanwhile, in joint statement from MDBs and IMF Head on Financing for Development 2015 marks a critical year for development, as the international community works towards agreeing on a set of Sustainable Development Goals (SDGs) to meet the dual challenges of overcoming poverty and protecting the planet.
With their welcome emphasis on issues such as the environment, employment, infrastructure, and inequality, the SDGs send a clear message to policy-makers and development practitioners. As leading sources of policy advice and financing for developing countries, International Financial Institutions (IFIs) fully support this comprehensive approach. However, the resources needed to implement such an ambitious agenda far surpass current development financial flows.
Achieving the SDGs, according to the statement, will require moving from billions to trillions in resource flows. Such a paradigm shift calls for a wide-ranging financing framework capable of channeling resources and investments of all kinds—public and private, national and global. There is no substitute for concessional resources, especially for the poorest, most fragile or conflict-torn countries.
But marshalling other types of financing at the levels needed would demand greater efforts to unlock, leverage, and catalyze more public and private flows. Financing from private sources, including capital markets, institutional investors and businesses, will become particularly important.
Countries also need to improve their institutional and policy environments to attract more private investment and financing, at the same time as they pursue truly sustainable and inclusive growth, so prosperity translates into poverty reduction and social progress. IFIs are well positioned to assist member countries in creating such an enabling environment.
“Guided by our institutional mandates and our member countries’ own development goals, we are committed to helping raise an important part of the required flows, either through direct financing, leveraging our capital or catalyzing other resources. We are determined to continue combining our knowledge and experience with our member countries’ perspectives, offering policy and technical advice tailored to local conditions, as well as building a global safety net by providing counter-cyclical support to economies affected by adverse shocks.”
They also pledged helping countries implement actions for climate change adaptation and mitigation and disaster risk management, working to strengthen domestic financial markets and deepen financial inclusion; promoting the highest social, environmental and governance standards, as well as, attracting more concessional funding to provide grants and concessional lending to low-income, fragile and conflict-affected countries.
“But we could and should do more. Within our respective mandates, we can and should do more to provide innovative financing and policy solutions customised to the particular needs of each country, sub national entity and region. We need to work harder on sharing the experiences, lessons learned and best practices acquired through our work. This will include working with member countries to translate the SDGs into national targets and introduce and implement the policies and programs needed to achieve them. We also need further improve coordination and complementarity among IFIs and with other public and private sector actors. And we have to enhance how we measure effectiveness in order to continue to learn from what works and what does not.”