Labaran Maku, Nigeria’s Information Minister, writes a rejoinder to a keynote delivered by Oby Ezekwesili at the 42nd convocation of the University of Nigeria, Nsukka and published on PREMIUM TIMES.

The recent statements by Mrs. Obiageli Ezekwesili at UNN’s convocation ceremony on January 24, 2013, betray a surprisingly limited understanding of government finances. These statements are even more curious in light of the fact that she has held senior positions in government, and more recently, a position as a Vice President of the World Bank. However, rather than speculate about her motives, we would focus on the facts.

The statement by the former World Bank Vice President that the governments of Presidents Musa Yar’adua and Goodluck Jonathan have squandered $67 billion in reserves (including$45 billion in external reserves and $22 billion in the Excess Crude Account) left by the Obasanjo Administration at the end of May 2007 is factually incorrect. At the end of May 2007, Nigeria’s gross reserves stood at $43.13 billion – comprising the CBN’s external reserves of $31.5 billion, $9.43 billion in the Excess Crude Account, and $2.18 billion in the FederalGovernment’s savings. These figures can be independently verified from the CBN’s records.

The figure of $67 billion alleged in her statement is therefore clearly fictitious.

However, since President Obasanjo left office, the reserves have experienced fluctuations, rising from $43.13 billion in May 2007, peaking at $62 billion in September 2008 during the Yar’adua/Jonathan Administration when oil prices peaked at $147 per barrel, and falling subsequently to a low of $31.7 in September 2011. This fall in reserves was a result of the vicissitudes of the global financial crisis which caused CBN interventions in the currency market to defend the value of the naira.

The Excess Crude savings, a component of the reserves, was also used to stimulate the economy at the height of the global financial crisis to the tune of about $1 billion (or 0.5 percent of our 2009 GDP). As a result, Nigeria is one the few countries in the world that did not seek assistance from international financial institutions. It should be noted that the fiscal stimulus used to shore up the economy during that period was shared by all 3-tiers of government, including commitments of about $5.5 billion made under the Obasanjo Administration for power projects.

On the use of reserves, it is fallacious to say that the nation’s external reserves were dipped into or misapplied by the Federal Government. It is important to note that the Federal Government cannot dip its hands into external reserves. Like in other countries, the management of external reserves is one of the statutory mandates of the Central Bank of Nigeria (CBN). Section 2 sub-section (c) of the CBN Act (2007) states that the Bank shall “maintain external reserves to safeguard the international value of the legal tender currency” – in other words, to defend the value of the Naira. No President since the democratic dispensation has contravened this Act.

Other uses of the reserves are to settle both public and private sector foreign currency obligations of Nigeria, including the importation of goods such as equipment for power sector. Whenever a ministry or agency of government needs to incur approved expenditure in foreign currency (e.g. payment of goods and services, settlement of external debt, etc) it must provide the naira equivalent to the CBN before the Bank sells the required foreign currency. As a former World Bank Vice-President for Africa, surely, Mrs. Ezekwesili must have known this.

We also found Mrs. Ezekwesili’s interrogation ofthe educational system somewhat disingenuous and borderline hypocritical. During her tenure as Minister of Education between 2006 and 2007, she collected a total sum of N352.3 billion from direct budgetary releases. In addition, she received about N65.8 billion under the Universal Basic Education Commission (UBEC) Fund, and over N40 billion from the Education Trust Fund (ETF) during her time as Minister of Education. In view of these humongous allocations, a few legitimate questions arise. What did she do with all these allocations? What impact did it have on the education sector? One wonders if our educational system would have been better today if these allocations were properly applied.

No one disputes that Nigeria still faces challenges, most of which were built up over a long time. But we need to acknowledge the significant achievements of this administration in the aftermath of difficult but necessary macroeconomic and structural reforms being implemented in the country.

This administration has restored macroeconomic stability against the backdrop of global economic uncertainty, slow growth in the United States and high unemployment and unsustainable debt in Europe. In the first 3 quarters of 2012, Nigeria’s economy grew by about 6.4 percent and is set to continue at a similar pace in 2013 according to independent forecasts.

We have reduced our fiscal deficit to only 2.17 percent of GDP in the 2013 budget, while rebalancing our spending in favour of capital expenditure. These achievements have already received strong endorsement from international ratings agencies. At a time when many advanced and emerging markets are being downgraded, Fitch and S&P have upgraded our sovereign credit ratings. The inclusion of Nigeria’s sovereign bonds in the emerging market bond indices of JP Morgan and Barclays also testifies to the growing confidence of the international investment community in our economy.

We have also focused our attention on removing the bureaucratic and structural bottlenecks in the economy to enable the private sector create more jobs for our youths. In the power sector, most Nigerians will attest to improvements in power supply even as the 10 new power plants being built by this Administration are yet to fully come on stream.

There have also been improvements in rail services; for example, the Lagos—Kano rail line is now fully operational and serving
Nigerians for the first time in over 20 years.

There have been significant improvements in road development; aviation – in particular refurbished terminals; and agriculture, where new jobs are being created every day. Serious work is ongoing to improve our ports and lower the cost of doing business and the cost of consumption in Nigeria.

The government has further launched a number of initiatives targeted at creating jobs for our youth, including support for entrepreneurship through the YouWin Programme; work for the unskilled through the Community Services programme of the Subsidy Reinvestment and Empowerment Programme; and support for unemployed graduates through the Graduate Internship Programme.

This administration is squarely focused on promoting a stable, non-inflationary, and inclusive economic environment for Nigeria to ensure that Nigerians can live better and more fulfilled lives.

Labaran Maku is Nigeria’s Information Minister.


http://premiumtimesng.com/opinion/117413-ezekwesili-got-it-wrong-by-labaran-maku.html?wpmp_tp=1

Continuous manipulation of the truth.

Sharrrrrrrrrraaaaaaap! I never thought I would ever have to say shaaarrrrrraaaaapppp publicly! Ta! You knew she misappropriated funds as a Minister and you didn't call her out then till she criticized the government....once again, shaaaaarrrrrrrrrrraaaaaaappp! Politrickticians!

Ezekwesili as a former top public official should've known all these before running her mouth like a drunk fish.

Enoquin:
Sharrrrrrrrrraaaaaaap! I never thought I would ever have to say shaaarrrrrraaaaapppp publicly! Ta! You knew she misappropriated funds as a Minister and you didn't call her out then till she criticized the government....once again, shaaaaarrrrrrrrrrraaaaaaappp! Politrickticians!

Ma'am, Nigeria politics is about 'He who lives in glasshouse shouldn't throw stones...

Labaran Maku has thrown down the gauntlet of implied misapplication of Funds against Mrs Oby Ezekwesili. Let her reply the Minister cos She started the Tirade

J12: Ezekwesili as a former top public official should've known all these before running her mouth like a drunk fish.

I know of a fact that the excess crude account was $22bn as at the time Obasanjo left office and external reserves was $43bn or there about with the projection that year end, Nigeria's external reserves will reach the $50bn milestone.

On Education, I can recall during Obasanjo's second tenure, several universities saw a facelift in their infrastructure and the 'red bricks' university were beginning to attract attention overseas. All that appears to have melted like the snow. As for Universal Basic Education, we know that that fund was the conduit for theft by most governors, for example, it is on record tht states like Edo, Delta, took billions of Federal government counterpart funding, never made a single contribution as required by the UBE ACT and at the same time, there was no evidence whatsoever of what the governors used the money for. Again, Muku's rejoinder is one joke too many. UBE funds are for states and the FG cannot dip her hands into that fund.

I think it is obvious to any sane Nigerian that the rejoinder by MAKU further cements the truth exposed by the ex-minister.

Maxymilliano:

Ma'am, Nigeria politics is about 'He who lives in glasshouse shouldn't throw stones...

Perhaps, the glass needs to be shattered...and then let the flying shards hurt whoever gets in the middle...

Omo_Tier1:
I know of a fact that the excess crude account was $22bn as at the time Obasanjo left office and external reserves was $43bn or there about with the projection that year end, Nigeria's external reserves will reach the $50bn milestone.

On Education, I can recall during Obasanjo's second tenure, several universities saw a facelift in their infrastructure and the 'red bricks' university were beginning to attract attention overseas. All that appears to have melted like the snow. As for Universal Basic Education, we know that that fund was the conduit for theft by most governors, for example, it is on record tht states like Edo, Delta, took billions of Federal government counterpart funding, never made a single contribution as required by the UBE ACT and at the same time, there was no evidence whatsoever of what the governors used the money for. Again, Muku's rejoinder is one joke too many. UBE funds are for states and the FG cannot dip her hands into that fund.

I think it is obvious to any sane Nigerian that the rejoinder by MAKU further cements the truth exposed by the ex-minister.

You obviously dont know what you are saying; and it shows cos just like everyone else who believe that 'Yar'adua and GEJ squandered $67billion' (whatever that means), you didnt say anything concerning that claim ie attempting to explain that that is even possible. Any sane Nigerian would know whose account is closest to the truth.

@emboldened, I can ASSERT that the ETF fund (now TETFund- ie only meant for tetiary instittions now) is far more effective for tertiary education than when OBJ was there. Stop spewing nonsense in public plz.

The nly point I disagree with Maku on for now, is the below-the-belt jibe at Ezekwesili on allege corruption as Education minister. That was frivolous and childish in my view; but on the Foreign Account itself, Maku makes far more sense

On the use of reserves, it is fallacious to say that the nation’s external reserves were dipped into or misapplied by the Federal Government. It is important to note that the Federal Government cannot dip its hands into external reserves. Like in other countries, the management of external reserves is one of the statutory mandates of the Central Bank of Nigeria (CBN). Section 2 sub-section (c) of the CBN Act (2007) states that the Bank shall “maintain external reserves to safeguard the international value of the legal tender currency” – in other words, to defend the value of the Naira. No President since the democratic dispensation has contravened this Act.

Maku is a daft man that just talks anyhow. If he does not understand the link between reserves, fiscal policy and monetary policy the best he could have done is to keep quiet and not spew what he knows not about. The government does not have to "dip its hands into reserves" before the reserves go down.

As government spending increases on consumption, the real exchange rate moves to a less competitive position and you either support the Naira with the reserves, raise interest rates or devalue the Naira.

What the CBN did at the time was to support the Naira for long with the reserves as government budget deficit grew. Again at that time there was a bail out of banks and raising interest rates was not an option. Devaluation was not also an option as it would have led to rising prices and further pressure on the reserves.

It is a technical issue and one will expect Maku to get a proper education or better still stick to drinking his 'fura de nunu' and not open his mouth on what he has no knowledge of how it works.

ballabriggs:

Maku is a daft man that just talks anyhow. If he does not understand the link between reserves, fiscal policy and monetary policy the best he could have done is to keep quiet and not spew what he knows not about. The government does not have to "dip its hands into reserves" before the reserves go down.

As government spending increases on consumption, the real exchange rate moves to a less competitive position and you either support the Naira with the reserves, raise interest rates or devalue the Naira.

What the CBN did at the time was to support the Naira for long with the reserves as government budget deficit grew. Again at that time there was a bail out of banks and raising interest rates was not an option. Devaluation was not also an option as it would have led to rising prices and further pressure on the reserves.

It is a technical issue and one will expect Maku to get a proper education or better still stick to drinking his 'fura de nunu' and not open his mouth on what he has no knowledge of how it works.

Read d full piece again and you wud realise that you and Maku were saying essentiali same thing. You were largely right here- which is very surprising ; D

taharqa: Read d full piece again and you wud realise that you and Maku were saying essentiali same thing. You were largely right here- which is very surprising ; D

Mr man I am not saying the same thing with your dull oga, Maku. I am talking from a monetary and fiscal policy perspective and its impact on reserves. It is more technical than Maku's brain can handle and so please don't bring me to the same level of the dunce called Maku.

taharqa: Read d full piece again and you wud realise that you and Maku were saying essentiali same thing. You were largely right here- which is very surprising ; D

I am less concerned on how the monies was judiciously spent or squandered since the government lacks probity and can hardly be brought to account, but its demeaning for a depraved and irresponsible fellow like Maku to Besmirch the reputation of Oby, an accomplished economist as having "limited understanding of government finances."

Its appalling that anytime one comes out to question this government on issues of accountability, they resort to smearing such a person. If Oby was found wanting during her time as the minister for education, why not prosecute her if truly the government is serious on tackling graft instead of this silly accusations of not knowing how she spent the funds released to her.

She has now challenged the FG to a public debate, its now left for government to respond to her challenge if truly the government is truthful!

Other uses of the reserves are to settle both public and private sector foreign currency obligations of Nigeria, including the importation of goods such as equipment for power sector. Whenever a ministry or agency of government needs to incur approved expenditure in foreign currency (e.g. payment of goods and services, settlement of external debt, etc) it must provide the naira equivalent to the CBN before the Bank sells the required foreign currency. As a former World Bank Vice-President for Africa, surely, Mrs. Ezekwesili must have known this.

Look at Maku's defence, is this a joke or what?

Bolekaja analysis for a macroeconomic issue.

Mrs. Ezekwesili, the World Bank VP questioned how the FG spent the $65billion savings Obasanjo administration left behind...In response, The Minister of Information made a sweeping statement that the savings wasn't $65billion...he went further to say that Mrs. Ezekwesili must account for the N458billion that was budgeted to her during her tenure as the Minister of Education between 2005-06...hmm...Is that how a government Minister should address an allegation so weighty as this?

I have come to a conclusion that this GOVERNMENT IS GONE PAST REDEMPTION so going to Redemption Camp was waste of time