(Editor's note: Originally posted on the website of the Council on Foreign Relations, former ambassador to Nigeria, John Campbell, writes about Nigeria's finance minister, Ngozi Okonjo-Iweala, and how the country's economy is affected by recent turmoil in the north.)
In a recent Wall Street Journal interview, Nigerian finance minister Ngozi Okonjo-Iweala reviewed Nigerian economic issues, notably, that the anticipated sovereign wealth fund would start operating during the next few months, with U.S. $1 billion from the Excess Crude Account to start. She promised a governing council including representatives from civil society, media, and academics would oversee the account “to ensure that the money is transparently invested.”
In other issues, she emphasized the importance of diversifying the economy to create more jobs. (Nigeria’s economy is growing at the rate of 7.4 percent; she said that most of the growth took place in the non-oil sectors of the economy.)
She also referred to the success of the overhaul of the banking system and defended Nigeria’s conversion of 10 percent of its foreign currency reserves from U.S. dollars to yuan last year because of the country’s growing trade with China.
On the controversial fuel subsidy, the finance minister said that the government remains committed to ending it completely. She did acknowledge, however, that the fuel subsidy “is a very emotional issue in Nigeria,” and that the Nigerian people had a “trust deficit” because of the government’s historical misuse of resources.
Her comments are promising. Okonjo-Iweala’s discussion of the “trust deficit” was frank, and if implemented in the way she describes, the governance of the sovereign wealth fund would introduce a new level of transparency.
Nevertheless, she said nothing about the growth of dire poverty over the past year or income inequality.
Only a few days after the finance minister’s interview, President Jonathan appealed for popular support in countering the Boko Haram insurgency in the North, and Nigeria’s leading opposition figure, Muhammadu Buhari, raised the specter of mayhem if the elections of 2015 are rigged, prompting calls for his arrest which would only further inflame his supporters.
The question remains: how long can the formal economy–as described by the finance minister–be seen in isolation from the insurrection in the north, ethnic and religious violence in the middle belt, and the prospect of renewed militant activity in the oil rich Niger delta?