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Pray, what is the Point of Nigeria’s Finance Minister, Zainab Shamsuna Ahmed?

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Nigeria has tumbled from the majestic era of a highly cerebral and world-renowned economist as her finance minister, when her public debt was nearly zeroed out, to the travesty of an unremarkable misfit under whom the country’s economy has become remorselessly overleveraged.

By Chudi Okoye

She appears to think very little of publicly disagreeing with her professional superiors. So presumably she will not mind this little exercise in public reproach, despite its slightly irreverent approach.

A little less than two weeks ago, she got into a kerfuffle with the Central Bank of Nigeria (CBN) about the latter’s proposed remodeling of some Naira notes. Although her ministry’s permanent secretary is, by law, a member of the CBN Board, she claimed that her ministry had not been consulted about the proposed currency make-over and warned about the timing as well as some serious risks if the plan went ahead. This invited an immediate clapback from the CBN which insisted it had followed due process and secured needed approvals.

A little before this dustup, she had publicly disagreed with the president of the African Development Bank (AfDB), Akinwumi Adesina, over the problem of Nigeria’s public debt. The discord played out at a Nigeria International Economic Partnership forum in New York this September. In a pointed rebuttal of Dr. Adesina’s warning about the risks of Nigeria’s rising debt, she told the forum, without a hint of hesitation, that Nigeria did not have a debt problem, only a revenue problem. She had made the same claim earlier in an interview with a national newspaper, amid a surge in the country’s debt burden.

In the annals of peculiar statements made by supposed leaders of Nigeria, this one is right up there with Gen. Yakubu Gowon’s 1973 boast that Nigeria’s problem was not money but how to spend it. Perhaps, the then head of state wasn’t too far from the truth, given that Nigeria was earning a vast oil rent so soon after a traumatizing civil war, with the inflow of an unprecedented pile of petro-dollars which the country had probably not expected, much less planned for. But it was still an inarticulate and stupendously innocent – some think stupid, others arrogant – statement by a head of state, and it has haunted him ever since. Just as the military later assessed that Nigeria had a leadership problem in Gowon, leading to his overthrow in the coup of 1975, it is also clear that the country has a gargantuan finance minister problem in Zainab Shamsuna Ahmed. Gowon might be excused, if one were feeling generous, because the oil boom probably bamboozled the then 39-year old head of state who had just emerged from leading a war-worn country. But how can we excuse a 62-year old Zainab Ahmed making such a preposterous statement in the current zeitgeist?

Our finance minister’s claim that Nigeria does not have a debt problem appears to be based on a belief that the country has a relatively low debt-to-GDP ratio. According to data from the DMO (Debt Management Office), Nigeria’s total public debt stock as at June 30, 2022, including federal and state government debt, stood at $103.3 billion (₦42.8 trillion at the official exchange rate or about ₦94 trillion at the fast-falling parallel market rate). This clocks in at a 23.06% debt-to-GDP ratio, the DMO says, which the finance minister claims is well-within Nigeria’s self-imposed limit of 40%.

There are a couple of problems with this position. First of all, the DMO’s debt-to-GDP ratio seems to be at variance with data from multilateral institutions such as the IMF which estimates a ratio of 37.4%, a figure nudging the government-defined limit. Even so, the finance minister’s argument of a comfortable debt ratio ignores the fact that the debt limit set by government has been a moving target, growing consistently from 13.4% at the start of Muhammadu Buhari’s presidency in 2015. With a shifting target, it is nonsensical to argue that we are well within the imposed limit: we are, evidently because the ceiling keeps being raised!

Beyond this critique, however, it seems disingenuous to consider debt merely as a proportion of nominal GDP, ignoring its impact on the broader economy, especially with a tumbling Naira. The finance minister’s argument that Nigeria has a revenue problem might be correct, in the sense that it speaks to the country’s ability to pay, particularly given the burden of debt servicing on revenues. But it is ludicrous to deny the intrinsic risk of the country’s current debt burden. In a mono-modal economy such as ours which is highly susceptible to external shocks and which, additionally, is passing through a hyper-inflationary phase, a rising debt profile represents a huge economic drag. A high and growing debt level hinders long-term economic growth by preventing or minimizing capital investment, as we are seeing currently in Nigeria with a rising proportion of government loan dedicated to debt servicing and other recurrent expenditure. Fiscal disarticulations and real economic shrinkage could result where, as in our case, the burden of external debt repayment outstrips the net real benefits of external borrowing. High debt also depresses wages, and in this way destimulates the economy, again stalling growth.

A finance minister with a solid background in economics who understands these deleterious effects of debt would be more exercised and would pursue an aggressive deleveraging of the economy, especially if they had the clout to resist political pressure. We haven’t seen much of this with Zainab Ahmed, and this is perhaps why she compares most unfavorably to her penultimate predecessor, the cerebral Dr. Ngozi Okonjo-Iweala.

Ngozi vs. Zainab
It might seem somewhat improper to venture a comparison of these two subjects, Dr. Okonjo-Iweala and Ms. Ahmed, considering that one is so far outside the orbit of the other to justify a juxtaposition. Still, you can’t measure deviation if you don’t have a norm. You can’t know how far you’ve fallen if you don’t measure the distance from your previous altitude. To borrow from statistics, this is not so much about propinquity, a measure of nearness, as a measure of dispersion.

With that, let’s turn to our two subjects.

Zainab Ahmed became Nigeria’s minister of finance after the unceremonious exit of Kemi Adeosun on September 14, 2018. About a year later, on August 19, 2019, Ahmed was made Minister of Finance, Budget and National Planning, her portfolio thus expanded. In the four years she has been at the helm, Nigeria’s external debt grew 86%, from $21.6 billion in September 2018 to $40.1 billion as of June 2022. In the same period, the domestic debt grew 70% from ₦12.3 trillion to ₦20.9 trillion. Total debt, if we accept the DMO’s estimate, is 23.06% of GDP, as indicated earlier.

Trends in Nigeria’s Public External Debt

Contrast this with Nigeria’s debt profile under the illustrious Okonjo-Iweala. The external debt dropped by a factor of 10 from $35.9 billion in 2004, not long after she became finance minister, to $3.5 billion in 2006, the year she left office in her first tour of duty under President Olusegun Obasanjo. By the time Okonjo-Iweala returned, in 2011, to serve in the administration of President Goodluck Jonathan, Nigeria’s external debt stood at $5.6 billion and domestic debt was ₦5.6 trillion. The external debt would grow to $10.3 billion and domestic debt to ₦8.4 trillion by the time she left in 2015, but total debt still represented 13.4% of GDP, as we saw above.

These highly contrasted records are probably explained by the vicissitudes of the policy environment. But they also point up the stark differences in the backgrounds of the two finance ministers.

Ngozi versus Zainab. They share almost the same birthday, though six years apart, and both attended elite high schools. One was at Queens School Enugu, as well as St. Anne’s School and the International School at Ibadan. She went on to the Ivy League Harvard University where, in 1973, she graduated magna cum laude (“with great praise”) in Economics, aged 19. She proceeded to obtain a Masters degree, aged 24, from another of the world’s top colleges, the Massachusetts Institute of Technology (MIT), and a doctoral degree in Regional Economics, also from MIT, aged 27.

The other attended Ahmadu Bello University, Zaria where she obtained an accounting degree in 1981, aged 21, and then went on to secure an MBA in 2004, aged 44, from a state university in Ago-Iwoye, Ogun State (now named Olabisi Onabanjo University), an institution founded in 1982.

One has a professional resume that stretches from here to Timbuktu. She is a highly respected player in the most rarefied circles of global finance, trade and development. She was appointed finance minister by two presidents of southern Nigerian origin, one himself not without regard in global circles and the other a PhD holder. She came from professional renown and global celebrity to help rescue her home country. And what a success she was!

The other had various stints in Kaduna State ministry of finance and varied parastatals before being fetched up as finance minister by a president of northern Nigerian origin, a president with doubtful academic provenance. She was plucked from obscurity to the highest perch of national finance. And what a disaster she has turned out to be!

The difference in the accomplishments of these finance ministers is clear as day. Not only did one lead efforts to secure relief from Nigeria’s $30 billion Paris Club debt, she also set up an ‘Excess Crude Account’ where surpluses from crude oil revenues were lodged and used in ways that helped to reduce macroeconomic volatility in Nigeria. Perhaps most spectacularly, she led the National Bureau of Statistics to re-base the Nigerian GDP, thus establishing the country as the largest economy in Africa, with the prestige attending upon that distinction. The list of her accomplishments stretches from here to Timbuktu.

The other? Well, in her time Nigeria’s debt has ballooned, inflation is raging, the Naira has tanked, the Nigerian economy is sinking, and she appears to have little command over fiscal or broader macroeconomic policy.

Nigeria has had 22 finance ministers since independence (serving 24 terms), from Festus Okotie-Eboh (1960-66) to Zainab Ahmed (since 2018). The last three finance ministers have been women, Ngozi Okonjo-Iweala being the gender trailblazer. But we have gone from the incomparable Dr. Okonjo-Iweala to the confused and over-promoted Kemi Adeosun (she of the forged NYSC certificate fame), to the absolute train wreck that is Ms. Ahmed. The last two were appointed by Muhammadu Buhari. Go figure!

Ngozi versus Zainab. One used her influence in global finance to advance Nigeria’s independence from Western financial imperialism; the other has plunged the country deeper into debt. One is an avatar for Nigeria’s ascent in global respectability; the other, the emblem of her unmitigated decline.

When you elevate inferiority, you instigate mediocrity. That is the tragedy of Zainab Shamsuna Ahmed as Nigeria’s hapless and extremely unremarkable finance minister.

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