There was a Finance Minister… By Mark Amaza

The 2015 General Elections three months ago signaled the end of one political era in Nigeria and the start of one, and for the past couple of weeks, all eyes have been fixated on the new government of President Muhammadu Buhari, as they ought to be.

The newspapers and social media is filled with speculations as to who will end up in President Buhari’s cabinet, with key positions such as the National Security Adviser and the Ministers of Finance and Petroleum the most keenly watched.


But before the new administration reveals its nominees for the cabinet, it will only be fair of us to do an appraisal of the immediate past Finance Minister, Dr. Ngozi Okonjo-Iweala and her achievements while in office.

The former Managing Director of the World Bank in her second coming as Finance Minister (the first was between 2003 and 2006 during the second term of former President Olusegun Obasanjo, where she helped secure debt relief for Nigeria from the Paris Club of creditor nations) was given a larger portfolio, as Coordinating Minister of the Economy, which meant she had massive influence in the economic direction of the country.

Her acceptance to join the administration of former President Goodluck Jonathan was much heralded and brought with it a large dose of international credibility, and although the inability of her former boss to solve the security challenge the Boko Haram insurgency threw at him proved to be his major Achilles’ heel, it should not dwarf the achievements of his Finance Minister.

First, the Finance Ministry under Dr. Okonjo-Iweala played a crucial role in supporting the job creation agenda of the Jonathan administration, kickstarting the Youth With Innovation Business Competition (YouWin) scheme which provides business grants of up to N10m for young Nigerians under 45 years to start or expand their businesses. Over three editions with one edition solely dedicated to female entrepreneurs, YouWin has provided about 4000 young Nigerians about N20bn in business grants. These businesses put together have the potential to create 800,000 jobs over the next five years.

Not done with this scheme, Dr. Okonjo-Iweala went ahead to set up the Micro, Small and Medium Scale Enterprise Fund (MSME Fund) to make loans available at a cheaper rate to entrepreneurs. The fund works by giving cheap loans to banks who shall in turn loan it to small and medium-size entrepreneurs who are their customers.

Although these banks are allowed to increase the interest rates on the loans, the interest rates are capped at 15%, much lower than the average 26% interest rates charged on normal loans. It also provides an incentive to the lenders to compete in attracting more borrowers by offering lower interest rates.

The fund has a bias for women entrepreneurs, as it is targeting 60% of the borrowers to be women, and also a bias for production and manufacturing rather than just trade, such as import and export businesses.

All this increases the availability of capital to help entrepreneurs start and grow their businesses, with the attendant multiplier effects of creating jobs and growing the economy.

But the most exciting policy that has come out in the area of financing from Dr. Okonjo_is the National Mortgage Refinancing Company.

While having a property to call one’s own is the one of the most highly sought after desires, it is a herculean task to achieve so in Nigeria, owing solely to the lack of finance. To acquire or build a property, one must either have the large sum already at hand, or save over as much as thirty years. As a result, most Nigerians that end up having their own properties acquire it towards their middle ages, or sometimes close to retirement ages. This is one of the major reasons why Nigeria has a housing deficit of 17million houses, subjecting millions of families to living in homes with high rents and all the attendant landlord wahala.

Mortgage financing which should help alleviate this problem is almost inexistent in Nigeria – banks are terrified of giving mortgage loans because of the high risk of default and their low liquidity. As such, mortgage loans make up little of their portfolio.

The NMRC aims to stop this by emboldening banks to step up their mortgage lending by buying up to 85% of their housing loans under N20million. Thus, it frees up the balance sheets of the banks and they are not saddled with debts that can put them under.

The benefits of these are enormous – Nigerians who can raise up to N2million get up to N20million for a housing loan, a long term loan payable over as much as 30 years. This means one does not have to scrape and save in order to be able to get a house of his own. This also means the increase in housing finance will spur more property development, and with it, lots of jobs will be created in that sector. The construction industry is a sector that can create jobs for highly skilled (architects, civil and structural engineers), middle-skilled (foremen, etc.) and low-skilled workers (laborers, etc.). In every way, this is a win-win idea.

These policies will not automatically solve the problems of access to finance for business and housing, but they lessen the problem in every way.

Besides, as they say, a journey of a thousand miles starts with a step, and these policies of the Federal Government has made us take several steps forward.

As a parting gift, Dr. Okonjo-Iweala applied her substantial political capital she had built up while working for years in the top echelons of the World Bank to lobby fellow Africa countries on behalf of her colleague in the cabinet, former Minister of Agriculture, Dr. Akinwunmi Adesina to be elected as president of the African Development Bank (AfDB).

Her efforts contributed to the tradition of Francophone countries being a roadblock to the ambitions of Anglophone countries on the continent being broken, and Dr. Adesina winning more than 50% of the vote to become the first Nigerian head of the pan-continental development bank that has taken the lead in the economic development of Africa.

As we move forward with the new administration, we should not forget the giant strides made by Dr. Ngozi Okonjo-Iweala in her four years as Nigeria’s Finance Minister.