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NIGERIA
A new business climate |
 Business - Economy - Lean and clean - Core issues - Home truth -
Oil business - Private sector - Banking
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INTERVIEW
WITH:
MALAM ADAMU CIROMA
THE HONORABLE MINISTER OF FINANCE
July 30 rd 1999 |
Forbes: nigerian is currently attracting the international attention due to its democratic process within this process what will be the role of the Ministry of Finance?
Mallam Ciroma: As you are aware the Ministry of Finance primarily prepares and manages government finance and in relation to other players in the economic sectors and influences the development in the economy. Right at this time we are involved in the provision of the budget. 1999 budget in order to eliminate the problems of that is out of the 1999 budget, what has happened is that instead of a budget which makes provision if a deficit of 34 billion in the end of the year. When we came into government we discovered that the system had already choked up a deficit of 256 billion. This has undesirable consequences on the economy, it influences in an adverse way the exchange rate, Naira vis-a-vis dollar. It has produced an immediate effect on inflation we were running single digit on inflation as a result of this inflation, we have gone into double digit inflation, that means that macro stability has been somewhat accepted. We are lucky that oil prices have started picking up, so in a way we enter the revision of the budget with more resources than what was predicted at the end of the year. We have to now deal with first the effect of wage increase, wages minimum wages rose from N 800 to over N 3,000, that means that the current expenditure will have to be allowed and money will have to be obtained to augment the difference. We have to do that because we want to ensure that the services that are being given are maintained that the staff who are doing government work remain doing their duties. But apart from that we also wanted to ensure that all the credible programs that ought to be taking place are financed for the rest of the year. In the area of public works and infrastructure, we have ensured that work does not stop and that will provide for the resources to continue. As you will be aware our educational establishment really have collapsed more or less and we want to improve them and also the health sector and of course of the generality of nigerians up to 60% or more are farmers or do farm related work – we have to increase investments in agriculture. And we had to go back to supplying fertilizers because we know that there is a problem regarding fertilizer prices and supply but by and large we want to re-establish integrity and discipline in the management of government finances and this cooperate with others to lay the foundation for improvement in the economy, we wish to create, we have a target, the effort to ensure that in flow of investment into this country in the next four years is more or less equal to the in flow of petroleum. We want to diversify the economy and in this regard we are looking at other countries that are in the market along with us for the limited investment funds in the world and compete with them in the conditions of being investor friendly so we are looking at immigration to facilitate people coming in and going out and bringing stuff to look at how easily they can transfer money in and out. In other words to create the atmosphere that will be just as attractive as other countries; we of course have the added advantage over other countries because we have substantial population of 120 million and then we are bang in the middle of our west African sub-region and that is related to us in an economic committee and so their market will be the extension of our market and it will take advise from our friends in order to ensure to offer as good conditions as any other.
Forbes: You were talking about investment and foreign investors, as far as the banking sector is concerned, though liberalized it seems like the banking industry has not being able to attract many foreign banks. What is the strategy of the ministry to change this situation?
Mallam Ciroma: I think we have not been able to attract foreign banks because of the limitation at the level of participation. There were a number of American and European banks that divested but since we have changed the investment law to allow foreign companies to own even up to 100% any company may wish to set up here. So that problem has actually been eliminated, it only remains to improve the conditions generally. And what has happened is that a number of foreign companies that partially divested have now even introduced new money in order to re-assume the position of majority in the companies in which they were unable before to according to the law to won a majority. This has happened in a number of cases and I think the business world is now becoming aware of this possibility in this country.
Forbes: Will the privatization program create investment opportunities for local and international banks?
Mallam Ciroma: Yes, this I believe it is bound to be so. To send the right message we have just decided to divest government interest from banking in a certain industrial operations and so on but the important thing will be opening up the gain of private investment into other areas of the economy, electricity generation, distribution and so on in the communication sector. These are likely to attract large scale foreign investors and therefore more in flow banking link ups and you get improvement in the securities and stock exchange and so on. We are confident that the situation will be more attractive, especially when we establish a track record of keeping to agreement and keeping to target as far as management of the economy is concerned. To such an extent that the IMF is willing to consider stand by finance towards the end of this year and once we can get this certificate of good health from the IMF, then we expect development with regards to debt reduction, debt re-scheduling, debt forgiveness and also the rest of the business community will develop more confidence because of IMF certification.
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Forbes: The government is seriously planning to work a readjustment with the IMF?
Mallam Ciroma: We have already been working with them and we have had consultations with them , we just finished day before yesterday and our relationship has been absolutely amicable and I must say we have been very happy about the state of our relationship.
Forbes: Another way is through specific incentives. Is your ministry planning to introduce incentives to attract investors, such as through tax rebates, etc.?
Mallam Ciroma: We want to have coordinated approach. As you know there a body that was set up, the nigerian Investment promotion Corporation, what we want to do is to offer facilities and advantages so that somebody can pick at one point so you can’t do that unless there is cooperation and coordination, that is what we are doing.
Forbes: Many industry players complain that the banking sector remains very conservative as far as exports and manufacturing are concerned. Would you agree that boosting domestic production would generate greater opportunities for banks.
Mallam Ciroma: The first port of call is the IMF and the world bank because business people and governments the world over base their judgement and judgement on IMF , this is understandable because the consultations are thorough, they are extensive by the time you finish they really are in a position to make a judgement. So I can understand why businessman and governments do rely on what the IMF says. And this is a very important relationship for us and I believe we are going to get it right this time.
Forbes: This is the main target of the government, i.e. to promote international investment to nigeria?
Mallam Ciroma: Yes the other conditions are given, population, other things and so on . In fact we know Th people will hold judgments and give them and what IMF is telling them.
Forbes: Can you give us a bit more of your personal background?
Mallam Ciroma: I went to university to study history and I did nigerian, European and world y, at the end of it I became a civil servant in the administration and management unit. Suddenly I was invited by friend to become a newspaper editor, from 1967 right up to 1974. I edited a newspaper and ran a newspaper group. The New nigerian, it used to be the most authoritative newspaper in this country, and when I was editor of that paper I was also a director of the Central Bank Of nigeria, as an outside director. So in 1975 there was a change in government, and I was invited to become the governor of the central bank of nigeria, it was not something I was trained to do but I was required to re-establish confidence and integrity to the central bank which I did. But just as I was working as governor of central bank there was an agreement in this country that there will be hand-over from a civilian to military rule, that a new constitution should be drawn up by the constitutional assembly which would be elected and people in my area wanted me to participate so I had to resign from being the governor of the central bank to become a member of the constitution, 1979 constitution and because this is a collection of people who are interested in politics we started talking about a forming a political party so I became the secretary of the party. When we went for the election we were the biggest party so the president appointed me the minister of industries, and after 2 years he then put me in charge of agriculture. And we went for another election and we won so he appointed me the minister of finance but I was there for only 3 months when there was a military take-over and I went on to my private business until 1993, when I was again appointed minister of agriculture. I did it for one year we had disagreements with General Abacha and I decided to resign , so we started agitation against the military regime. We wanted to tackle corrupt system and at long last Abacha went and Abdulsalam came and we agreed to return the country to civilian rule and we started forming political parties again and again our party won and I was appointed finance minister again.
Forbes: As the new minister of finance, what would be your last word to the 4.5 million Forbes readers?
Mallam Ciroma: I want to assure them that as far as I see, I believe democracy has come to stay in this country. Democracy in the system, Americans and other countries know but I know it will take time to get every institution working properly but things will be done in the open and with transparency. This county is big, populous and it will increasingly offer attraction for large investments in large areas of human endeavor. It offers opportunities, people should deliberately look at so that they can take advantage, and I believe that they will find nigerians as being affable, welcoming and cooperative not every nigerian is welcoming. And sometimes you meet some who are sully, people who are not friendly, but most of the time they are friendly. The outside world will find it mutually beneficial to come. |
© World INvestment NEws, 1999.
This is the electronic edition of the special country report on nigeria published in FORBES Magazine,
October 18 th issue.
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nigeria
