A reformed Nigeria awaits credit from the West
`I don't want to be talking about paying debt,'' says Chu S.P. Okongwu, Nigeria's minister of finance. ``It's too depressing.'' But talk he did during a recent interview. Dr. Okongwu complains that Nigeria has taken ``far-reaching, courageous adjustment measures'' to put its own economic house in order, as suggested by its creditors. But it has not been rewarded, as promised, with new credit that would alleviate the economic pain.
``We have done all the right things we have been asked to do, because we thought it was right for us,'' he said. ``We have done more than the [International Monetary] Fund, the World Bank, and our creditors have requested of us.''
Nigeria has devalued its currency and created a much freer foreign-exchange market. It has cut government subsidies; helped its farmers in the rural areas, where 80 percent of Nigeria's 100 million people live; and discouraged corruption by abolishing import licenses, import quotas, and other regulations that give government officials leverage for obtaining bribes. Capital controls have been liberalized. Some government-owned companies are to be taken private.
But the West, he says, has not responded with adequate credits, private investment, or other money that would enable the Nigerian economy to grow somewhat faster and escape hard times.
``We would like to get the show on the road,'' says the Boston-educated finance minister, maintaining that Nigeria's rich resources of lead, zinc, coal, tin, rare metals, and gold offer great potential for foreign investors. ``We want people to come now and invest.''
Nigeria owes $19.7 billion to foreign creditors. That was not a serious problem when this most populous of African nations was getting more than $30 a barrel for its vital oil exports, now running a bit above 1 million barrels per day. But when the price of petroleum dropped below $20, the Nigerian economy was in trouble.
Under the so-called Baker initiative, put forward two years ago by United States Treasury Secretary James Baker III, Nigeria was one of the nations that was supposed to get extra foreign funds to help maintain growth if it undertook difficult economic reforms.
Noting that this has resulted in no new foreign aid, Okongwu commented, ``We are becoming skeptical as to what is the substance behind the initiative. We don't want just pats on the back. We are being left to ourselves - just tighten, tighten, tighten. We hope the world will show that the sufferings of our people are not in vain.''
Okongwu continues, ``You may have an international crisis if the advanced countries don't respond to the needs of these [developing] countries with the mass of humanity. How can we keep telling our people to sacrifice, sacrifice? If you don't have the people happy, it is politically unsustainable.''
Okongwu expects Nigeria's real output of goods and services to grow a disappointing 2 percent this year, and would like 3.5 percent to 4 percent growth next year to make life more comfortable.
Actually, the World Bank has stepped up its loans to Nigeria. In the fiscal year ended June 30, the bank lent Nigeria an extra $500 million of adjustment assistance on top of regular loans for development projects of about the same amount. This fiscal year the bank also expects to provide about $1 billion in loans.
``We are behind [Okongwu],'' a bank official said. ``We feel [the Nigerians] have made tremendous strides.''
Nigeria, however, has been having trouble reaching agreement with its commercial bank lenders on a debt rescheduling plan that will also provide some $360 million in new loans. There had been hopes the deal would be completed last month. Negotiations are continuing.
``One year is gone. ... We haven't seen a penny,'' says Okongwu. ``The bankers have been very difficult.''
As for private money, Okongwu estimates that about $1.5 billion of flight capital owned by Nigerians themselves has returned because of the greater economic stability and reforms in the nation. But foreign investment has not yet come in any quantity. Investors are apparently still evaluating the permanence of the improved economic climate.
Meanwhile, Nigeria's austerity is having some benefits. Non-oil exports have increased, particularly of such agricultural crops as cocoa. Inflation has settled down.
``You have an improved sense of economic realism ... more cost consciousness ... more efficiency,'' says Okongwu.
Nigeria has been considering a friendlier code for foreign investment, but this hasn't been put in place yet. ``That shouldn't be a restraint,'' says Okongwu. ``We look favorably on any applications and send them on their way.'' He would like to see more small industry launched in Nigeria. ``Our wages are very cheap - $50 a month,'' he says. ``We are competitive with India and China. We are a good deal.''