The news of Nigeria’s immediate past Minister of Finance, Budgeting and National Planning picking up a job as an Alternate Executive Director (AED), reporting to another former Minister from South Africa has stirred up concerns in me, even if it has been overlooked by Nigerians. Whereas I don’t begrudge the former Minister of her good luck in landing a dollar-paying job in the comfort of Washington DC, USA, I think this appointment brings up issues of moral hazard and conflict of interest which should be brought to the front burner in our country. For one it is rather too early after a job had been completed for Nigeria – of course with disastrous consequences. I will list the issues. But I must say that personality-wise, the minister, Zainab Ahmed, is a fantastic person with whom I interacted in some of the open sessions with the public that she initiated and attended on issues relating to yearly budgets. I believe the incoming minister will continue the tradition.
So, this is not about Mrs Ahmed but to observe what is now a permanent trend which needs to be bucked if we are to make some progress in Nigeria. Other ministers of finance before Mrs Ahmed had taken refuge with the World Bank in particular, and the United States in general. Given the continuous tanking of our economy, patriots should speak up. There is need for an investigation. Mrs Ahmed’s immediate predecessor, who had to resign based on an investigation into certificate forgery, Mrs Kemi Adeosun, did not go back to the World Bank, but opened a foundation called ‘Dash Me Foundation’, with which she intends to mobilize cash and other donations for the poor. The foundation applied for and was granted a tough tax-free and charitable status by the US government, meaning that donations to that foundation are tax-deductible. See https://businessday.ng/news/article/us-grants-kemi-adeosuns-foundation-non-profit-tax-exempt-status/. This is a treasure trove for money to pour in as donors know that they can back out such donations from their taxes. Brilliant! Before Adeosun was Mrs Okonjo-Iweala, who did a first stint as Minister under President Obasanjo (perhaps on secondment from the World Bank), went back to the same bank, returned under President Jonathan, served for another 5 years after the first 8, and went back (again) to the World Bank, where she tried to run for president but ended up leading the World Trade Organization (WTO). Before Mrs Iweala was Mr Segun Aganga (ex-Goldman Sachs), who did not go to World Bank after his stint. But Mansur Mukhtar his predecessor did.
The dictionary defines moral hazard as ‘a situation where a party lacks the incentive to guard against a financial risk due to being protected from any potential consequences.’ Are some of our finance ministers able to take the best decisions for Nigeria given the fact that their own ‘downside risks’ (of potential penury and joblessness), are protected by a principal party that nations like ours have to deal with for a lot of things – chiefly major funding? Are we getting the best negotiations from these people that we appoint? The dictionary also defines conflict of interest as ‘a situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity.’ Could these ministers have secured these ‘juicy’ jobs and benefits if not for their elevation to the ministerial position and/or the performance of their official duties in that capacity? These are questions which course through the mind.
So, the issues are:
1. World Bank is a global behemoth with its reach in the furthest limits of the earth. Created in 1944 by the United States after it had won victory at the Second World War, it has been dominated by the same USA till today. All other countries are made to understand this fact and maintain their lanes. I recall that Dr Mrs Okonjo-Iweala had to quickly front her US citizenship when she vied for the leadership of that bank but they didn’t think she was American enough. The fact is, the World Bank is a BANK, with profit motives. This TED talk by one of our own, Dr Mrs Chika Ezeanya-Esiobu describe fully how the bank works. It is a profit-making institution with targets for its staff and all that – just like JPMorgan or Access Bank Nigeria. See https://www.ted.com/talks/chika_ezeanya_esiobu_how_africa_can_use_its_traditional_knowledge_to_make_progress?language=en. If this is so, is our interest as a nation protected by this closeness with our finance ministers and the offer of jobs and perks afterwards?
2. In most jurisdictions, industries are protected at the top because top executives have tremendous amounts of information that they can use with atomic effect against their former places of work. Even in Nigerian banking industry, when a Bank MD leaves one bank, the Central Bank of Nigeria says there must be a cooling-off period in which he cannot work in another bank because of how much information he has. He cannot also take customers away from his previous place of employment. But after a year or two, having received enough perks of office from his previous employer to stave off this period of dryness, he could get another job. Should Nigeria not now put this in place as regards top ministers who seem not to think anything of this critical issue? How many years before you get a job in the bank that has a huge loan portfolio with your country? Look at the last transaction under Minister Ahmed? It was the $800 million loan which was meant to be distributed to 10 million families. So close to the end of her tenure, it was beyond imagination that they pushed so hard to obtain and disburse that money. And indeed, we may hear one day – we just may – that the funds were actually obtained and disbursed before they left. We had distributed such monies over covid-19 pandemic with inflationary impact on the economy. We had distributed Tradermoni and Marketmoni and others without data or accountability. I recall going on TV to discuss the $800 million matter and I opposed it. When I left, a top director from the ministry called to let me know that they were not in support, but that the World Bank has been encouraging such meaningless disbursements.
3. Perhaps, looking at this matter from the ministers’ angle, indeed the remuneration of ministers is absolute rubbish such that only the very corrupt thrive. Most will fall into crass penury once they leave that seat. If we would expect them not to take up these appointments, which is in that job for them? Many of the smarter ones had to quit well-paying jobs to serve the country. I have seen ministers who became shabby a year after they served their appointments. Perhaps there needs to be a quid-pro-quo here, but leaving a sensitive and absolutely important national job to resume in a lender bank is totally unacceptable.
4. Nigeria’s economy has been tanking steadily. Are we under capture? How do we break the shackles? Is this what they mean by Economic Hitmen as popularized by John Perkins? People who push nations into debts and simply walk away? Not even Dr Mrs Okonjo-Iweala who served Nigeria first for 7 years as Minister of Finance and another 5 years as Coordinating Minister for the Economy, could say she left our economy better off. Granted that the last eight years under Buhari was the worst ever and we hope we never get anything that will be worse than that, but all our ministers of finance could as well line up and be shown the result of their tours of office. Disaster.
Where do we go from here?