Fighting corruption improving transparency, boosting public finances
When Kemi Adeosun took over as Nigeria’s finance minister in late 2015, she faced a unique set of challenges. The country was heading into recession for the first time in 25 years, hard currency was in short supply and capital controls were deterring much-needed foreign investment. Nearly two years later, Nigeria is still struggling to adjust to a new environment of low oil prices. Nevertheless, the economy has returned to growth, public spending has been kept in check and the depletion of the country’s FX reserves is steadily being reversed.
Adeosun has played a leading role in this turnaround. Her commitment to fighting corruption and improving transparency has not only boosted the public finances — notably through the removal of nearly 60,000 “ghost workers” from the federal payroll — but also helped to restore Nigeria’s credibility among international investors.
As a result, Nigeria was able to return to the Eurobond markets in February for the first time in more than three years. Adeosun’s hands-on approach to marketing was widely cited as a key factor in persuading global fund managers to buy the $1bn 15 year note. The deal, the longest ever issued by a Sub-Saharan African sovereign, attracted nearly $8bn of demand from around the world.
External investors were particularly impressed by the finance ministry’s promise to use the proceeds of the deal — and of a $500m tap in March — to finance long-term capital projects, including transport infrastructure.
A further $300m of funding for infrastructure development was raised in June through a bond offering targeted at Nigeria’s diaspora. Meanwhile, an inaugural local-currency sovereign sukuk in September was marketed to domestic retail investors as an opportunity to finance road building in the country. The deal, which had a minimum subscription of just N10,000 ($27.9), raised N100bn.
Filling theinfrastructure gap
Both these deals not only opened up important new sources of stable funding but also demonstrated Adeosun’s commitment to innovation in financing Nigeria’s yawning infrastructure gap.
As well as attracting new funding and improving budgetary discipline, the London-born minister is also working to tackle Nigeria’s parlous record of revenue collection. She was the driving force behind the introduction in June of a tax amnesty. The deal, which will run until the end of March, offers defaulters the opportunity to avoid interest payments, penalty charges and prosecution in return for full asset declaration.
Throughout her tenure at the finance ministry, Adeosun has shown an admirable willingness to take on vested interests. She has been particularly bold in her approach to the country’s notoriously opaque regional governments and state agencies. She is fighting to improve the collection and management of data across government ministries, departments and agencies in order to improve transparency and promote accountability.