Global Policy Forum

Mobilizing Finance for Nation's Future

This Day, Lagos
March 4, 2002

Sourcing of funds to finance projects has been a key variable in Nigeria's developmental efforts over the years. But since the September 11 attacks on the United States, it has assumed a global concern with the industralised nations realising that poverty in the Third World is a threat to world security. This was the focus of a talkshop organised in Lagos last week. Adeniran Adedokun was there.

In making a point at an event last Tuesday, Mr. Isaac Aluko-Olokun, head of the New Partnership for African Develop-ment (NEPAD) nearly got physical. It was at the 'National dialogue on Financing for Development', held at Golden Gate Restaurant, Ikoyi, Lagos. The dialogue was packaged by Econet Wireless, BusinessDAY and the United Nations Information Centre (UNIC). The objective was to prepare Nigeria for an international conference on the same subject scheduled for Monterrey, Mexico, later this month.

The respected economist's anger was directed at Dr Doyin Salami, one of the major speakers at the event and indeed anyone who punches Nigeria's desperate moves at securing debt forgiveness and foreign aids. The older economist was angry that Salami suggested that Nigeria did not need aid from any developed country. Whether it comes in the name of Official Development Assistance (ODA), which is a percentage of the Gross National Product (GNP) of donor countries or in any other garb that may further commit the country.

Aluko-Olokun argued that the country needed ODA and indeed any other form of aid that was available to the developing world. He said 30 nations depend on the ODA and that Nigeria was very qualified to benefit from the facility. While he agreed that the country was not a resource- scarce one, he noted that Nigeria's debt profile was bigger than what she should face settling if there was an opportunity for forgiveness. He also noted that Mexico once got a substantial part of its foreign debt forgiven.

"We are truly not a resource scarce country, but Africa is owing debts that run into about $250 billion and it is not just sustainable. We are not saying that forgiveness is the only option, but it is surely an option that we must explore". He maintained, insisting that current efforts at the renewal of financial aids to developing countries was a direct consequence of the September 11 plane hijack incident in the United States.

Aluko-Olokun, who evidently has confidence in the current administration's efforts at achieving economic recovery, missed the point Salami tried to make.

Salami, Director of Programmes at the Lagos Business School, presented a paper on mobilisation of domestic and foreign financial resources in which he tried to convince his listeners that Nigeria's greatest problem was bad governance. He identified with the United Nation's objective of halving "extreme poverty" by the year 2015. This the UN hopes to achieve through improvements in social amenities and raising standard of living. Improvement in health care delivery and education would be important factors towards this end.

For the success of the plan, Salami said that a country's per capita income would have to grow at the rate of five per cent per annum and pointed out that on the contrary extreme, Nigeria's per capita income declines at a 0.3 per cent since 1992. This, amongst other factors, does not indicate that Nigeria was ready for the UN vision.

Since he was talking about finance mobilisation, the presenter noted that: "the challenge is more domestic. It is about getting our policies right" he advised saying further that economic policies in Nigeria were in a mess.

Salami noted that there were enough resources in the country for investment even as he conceded that foreign investment was a good means of turning an ailing economy around. But the situation in Nigeria makes it difficult for those who have resources at home to invest let alone Nigerians resident abroad and foreigners.

He explained that the situation that has caused so much devaluation of the naira also makes it more profitable for people to move their resources out of the country rather than invest in the uncertainty that the country has become. He advocated for good governance which has eluded Nigeria for close to two decades as a first step towards development. Good governance, the presenter noted, would ensure that the country was not governed arbitrarily but by rule of law. A corollary to this, Salami said would be a reduction in corrupt practices and the entrenchment of conditions that would be favourable for investments.

"A society that will attract investment must present conditions that are predictable, coherent and stable", Salami said and noted that Nigeria lacked all these. He cited examples in the country's economic policies where we never had harmony between fiscal and monetary policies. This situation, he pointed out also increases inflation and leads to inappropriate exchange rate.

The situation described above, would not only lead from the country, he noted but will also discourage private participation in economic activities. He informed that while 78 per cent of expenditure in the country came from the private sector in 1990, it had diminished considerably by 2001.

He therefore canvassed for governance which will win the confidence of the country and reverse the current trend where four per cent of Nigerians control 50 per cent of the country's income.

As part of domestic efforts at mobilising finance for development, Salami advised that government must move out of production. He described the billions of naira spent on the National Electric Power Authority as an instance of the wasteful expenditure that government engages in and counseled that it should restrict itself to regulatory duties.

Government should also improve human capacity in the country. A more humane government, which cares about the welfare of its people and would strive to ensure the provision of basic amenities was what the country would need immediately to arrive with the United Nations in 2015, he said.

Salami also identified some external policy challenges for the country in its match towards mobilising finance. He noted that "we recognise globalisation and work together within regional blocs to ensure effective participation in opportunities being opened up".

He sought that Nigerians must realise how much the nation's resources have been squandered and accept that "we have no right and does not deserve to be poor," hence the country should stop begging for debt cancellation and insist on governance as a pre-requisite.

And here was the point Aluko-Olokun disagreed with. That anyone would contemplate that Nigeria did not deserve aid from the developed world was simply not acceptable to him.

But Salami was not the only speaker whose submission Aluko-Olokun did not like. He also picked on Osa Asemota, who came from Continental Trust Bank to present a paper on 'Debt relief, international financial co-operation and official development assistance'.

Their disagreement was on Asemota's premise that Nigeria was attacking its problem wrongly. The banker traced the history of the nation's indebtedness noted that it came to a head after 1985 when the country had about $20 billion debt that mostly went into based imports.

Asemota recommended that Nigeria should exploit its goodwill with the United States at the moment to increase trade and forget the idea of debt forgiveness. He expressed the opinion that the $28 billion, which Nigeria is owning financial institutions was "a small burden loan" which the Nigerian economy, if properly managed, could deal with. He also solicited for good corporate governance that would encourage endowed Nigerians and foreigners to invest in the country.

Then Asemota rattled Alhaji Bamaga Tukur who chaired the occasion in his capacity, Executive President, Africa Business Round Table a bit when he spoke of the refusal of officials of the federal Ministry of Industry, which Tukur once headed, to adapt progressive ideas that would revolutionalise the economy. He expressed concern at the attitude of these bureaucrats and advised that those in positions to influence such policies should be more forward looking.

Asemota rounded off his presentation with an indictment of the Nigerian entrepreneurs, who are said to have obtained loans to finance businesses but would not pay back as agreed. He indicated that foreigners than Nigerian were more faithful to the agreements and charged business executives in Nigeria to change their attitude.

Asked to speak on agriculture, he suggested that the country must engage in the commercial production of grains like rice, maize , soya beans and others. He lamented that three years into the Obasanjo administration "our President, who is a farmer has not made his impact felt, not even in poultry farming".

The last paper on international trade was delivered by Dr. Mary Agboli of the Nigerian Economic Summit Group. She attributed Nigeria's economic problem to over dependence on primary commodities. Like, the two other speakers, she said that the country should build capacity for effective and informed participation by domestic and foreign investors.

Mr Bolaji Balogun, Chief Marketing Officer of Econet Wireless, said his company's involvement in the programme as borne out of its belief in the Nigerian economy. He agreed with previous speakers that financial resources were abundant in Nigeria for investment. Balogun said that more than $600 million has been raised by the company since it came into Nigeria,with more than $400 million out of this raised locally, an indication that, with the right conditions, finance for development could be raised locally.

"You may want to ask what brings Econet Wireless into 'Financing for development', but we are also in the business of development," Balogun explain-ed. He noted that every dollar invested in the GSM industry generates oe8.

"Econet Wireless, a company owned 95 per cent by Nigerian investors, has harnessed the Econet Wireless International experience, core values and excellence, commitment and a deep affinity with the needs of the host community to bring positive change to the lives of Nigerians," he said further.

Earlier in his welcome address, Mr Finjap Njinga, director of UNIC, explained that the dialogue was to prepare grounds for a national consensus on the Monterrey conference. He pointed out that the world has noted that the last fifty years have brought more poverty than wealth and that the rich nations have realised that the trend portends danger for the whole world. He explained that the conference in Mexico would look at ways in which the world should witness improved governance and economic management and urged the gathering to provide pragmatic solutions to the problems that face the nation.

This was re-echoed by Tukur in his opening remarks. The former minister lamented the poor state of most developing countries and urged participants at the conference to offer useful anticipation in advance of the conference, which holds between March 18 and 22.

The Finance for Development Conference was one of the direct results of the September 11 terrorist attack on the United States. After the attack, world leaders met to review trends in the world and established that the margin between poor and rich nations was indeed widening. They also agreed that it posed no peace for the world as the poorer nation would most likely continue to see the developed world as instrumental to their misfortune and resultantly, engage in spreading their problems through illegal migration and such.

That is besides the fact that they began to see the world as a global village where one country's poverty soon becomes another country's burden through lack of markets for finished good from comfortable countries, illegal migration, pollution, contagious diseases fanaticism and terrorism. They then agreed on some millennium goals that should halve "extreme poverty" in 13 years. This, a World Bank report noted, would cost a whopping $40 billion annually.

So the dialogue was to set a national agenda in motion, and that indeed happened. Participants agreed that a change of attitude in the governance of the country was a first step to the eradication of poverty in Nigeria and to that, even the external bodies like the World Bank agree.

Country Director for The World Bank in Nigeria, Mr. Mark Tomlinson stood up to hail the first two papers as not only brutally frankly but refreshingly different.

And recently, President of the Bank, Mr James Wolfensohn, released a document that emphasised on the need for nations that would benefit from the Millennium plans of the United Nations to think of more accountable ways of governance. The document that this was the only way to ensure that resources were judiciously utilised.

He noted that the challenges before the world in the next 13 years were daunting and that governments of developing countries would do well to provide trustworthy leadership that could confront the evils the world wants to battle.

Statistics reveal that there are about 4.6 billion people in the 63 countries that would benefit from the millennium project. More than 826 million are said to suffer from diseases that result from poor feeding. Eight hundred and fifty million others are illiterate while more than one billion lack access to good water. About 11 million children under the age of five die each year from diseases that are preventable while more that 1.2 billion people in these countries live on less than one dollar a day.

But the UN and Chief Economist of World Bank's Human Development Network, Shanta Deranya, also charged leaders of countries that benefit from the project to ensure effective management of available resources to, amongst other things, halve the number of people who live on less than one dollar, achieve universal completion of primary education and reduce maternal mortality rate by 2015. Achieving these goals is what the Mexico conference will discuss.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.