What fuel subsidies in Nigeria say about Ngozi Okonjo-Iweala and the enthusiasm we’re seeing

The World Bank’s vice president for Africa, Obiageli Katryn Ezekwesili, and Nigeria’s coordinating minister, Ngozi Okonjo-Iweala, had an interesting exchange on fuel oil prices in late December 2011.

Soon after, Oby’s departure from the Bank was after re-announced by Robert Zoellick, and she’s spent a lot of time in Nigeria since.  An appointee of Paul Wolfowitz, Ezekwesili leaves the Bank definitively May 1.

Normally, Bank concerns about imminent government policies don’t get such airtime, attention and reaction, on either side. Fuel is underpriced in Nigeria, with the greatest benefits flowing to business interests who smuggle it to neighboring countries, as they have for the last 30 years.  It’s clear that many in Nigeria would like Ngozi out of the finance portfolio (a second time), because she challenged the corrupt status quo, but having to deal with the Bank’s vice president for Africa who was, well, a bit hostile to how the measure was being readied for implementation, might have been a bit much for her to take.  Her resolute but rather badly defended action in January despite the public uproar and subsequent violence well may account for the adulation she receives in some Nigerian circles, and the uncritical support that amplifies in the global North among male development economists and World Bank retirees.

Ultimately, the government backed down, and restored the fuel subsidies, and now Ngozi presents herself aggressively as a candidate to come back to the World Bank.  Well-qualified on paper but more controversial among those who have worked with her, Ngozi’s wish to leave NIgeria (a second time) may also account for her increasing desperation to have the job, and her continuing vocal and exaggerated attacks on the US nominee.

It’s not just about leveling the playing field, or an overdue recognition that the United States does not have the monopoly on qualified candidates, and let’s not pretend it is.  Nor is it about “hitting the ground running”.  As an insider, it will be the same ground she left free of footprints during her time as Managing Director, when little happened on either “Voice”, her signature initiative during her previous stint as World Bank corporate secretary, or on “modernization”.

Looking at what happened with fuel in Nigeria, let’s remember that Ngozi did instigate another “big bang” as a managing director.  Over the advice of the human resources team, which she oversaw, and with no consultation with Bank managers, she announced the abolution of open-ended contracts for new hires.  Like the cutting of fuel subsidies, this caused great turmoil, and implementation was clumsy.  There were no riots, of course, or interviews with BBC World.  Few exceptions were granted, and even when Ngozi was confronted with the fact that the new norm to apply her policy was two year contracts, when “her expectation” was five years, all her ‘concern’ did not translate into either longer initial contracts, or more conversions.

Again, how are we to assess her ability to bring change to the World Bank as president, based on her record as managing director?  Is her penchant for dramatic moves, without thinking through implementation details and gathering stakeholder support, the way to bring to the World Bank the change it needs and that insiders who haven’t retired are keen to see?

32 thoughts on “What fuel subsidies in Nigeria say about Ngozi Okonjo-Iweala and the enthusiasm we’re seeing

  1. Most of your postings are getting more critical of Ngozi as you do everything to endorse Ocampo….Wish you can come out straight and endorse Ocampo or tell the world what you seem to have against Ngozi

    • Voice of Reason hasn’t “endorsed” anyone yet. Concerns about Ngozi’s management style and lack of achievements when she was a managing director of the World Bank are pretty clear, and not exclusive to Voice of Reason.

      • Innuendos like this one about management style and lack of achievements need to be substantiated, especially behind a pseudonym. Your postings are far from the “Voice of reason” but a thinly veiled and consistent screed against one of the candidates, who happens, in my view to be the better qualified of the lot. You should change your pseudonym from Voice of Reason to “Bitter about Ngozi”.

        On the oil subsidy debate, please see Paul Collier’s article in the FT on the topic. And you should explore the facts on the timing of the announcement and the consultations that preceded it, before they were abruptly ended for reasons that I do not know, when the economy minister was away.

        http://www.ft.com/intl/cms/s/0/9d57c51e-3f87-11e1-8809-00144feab49a.html#axzz1qoM1bs7T

        • NO reasonable person could disagree with the need to remove fuel subsidies. As many have said, the issue was how it was done, and how the public reaction was handled before the government put the subsidies back in place. It may be that part of the enthusiasm for her candidacy is from the interests that can’t wait until a more pliant successor is in place. Again, for reasons we do not know and can only imagine.

          On lack of achievements when Mrs Okonjo-Iweala returned to the Bank as Managing Director, published IEG reports on GAC and on the $500mn DPO to Nigeria substantiate some of what happened under Ngozi’s watch. As do the glacial progress on “modernization” which has picked up once her successor took charge, and a highly-critical report on the Bank’s matrix organization which the board has discussed and which will be published this week. The debacle over term contracts, also imposed under her leadership, is not over, as the resulting over-reliance on young consultants and retirees erodes the Bank’s long-term knowledge and credibility with its clients and other stakeholders.

          Management style is, of course, a matter of taste and first-hand experience, but many who worked with her when she was Managing Director share the concerns alluded to in these posts. In the language of Washington, “spoke anonymously for fear of retaliation/because of the sensitivity/to discuss internal matters” is well understood.

          There is no doubt that Mrs Okonjo-Iweala is qualified to be World Bank president, as are the other two nominees. As an insider, she has a history of how she managed, and whether her recent record speaks to her ability to inspire change and get it done. That history is part of what the Bank’s board must consider as they weigh her suitability.

          • It is quite wrong to have personal grudge against a particular individual, and try to express such grudge in a destructive way. Though, I am happy, with the way Dr. Ngozi Okonjo-Iweala is being criticized by you. It shows that she is infact, a formidable candidate for the position. As long as she is qualified to be the next World Bank Boss, no amount of your irrational criticism will stop her. The Fuel Subsidies you are talking about is even what helped to invigorate her as a renowned reformer. However, the world knows the truth. We all know that with Ngozi, There will be positive changes in the economic sectors of the world at large.

  2. “Male development economists and World Bank retirees” like Ngozi? Well that certainly disqualifies her.

  3. First, let us be clear that most of the world does not pay one iota in fuel subsidies, much the contrary, they tax the consumption of fuel as much as they can, in Europe the tax man receives more revenue per barrel of oil than a Nigeria giving up this nonrenewable resource for ever… so this has nothing special to do with the World Bank.

    Second, coming from a country, Venezuela, where by means of basically giving away gasoline for free, about 2 US$ cents per liter of US$ 8 cents per gallon, the government transfers value of around 10 percent of GDP from the poorest to the consumers of gasoline if Ms Okonjo-Iweala wishes to put a stop on that robbery… then she is my candidate.

    • The need for price adjustments of fuel in Nigeria is not in dispute. How it was done, in a big bang, is. Not everyone in Nigeria agreed on the rationale, which was clumsily handled, for reasons good and bad. Most everyone agreed that the implementation was badly done, and that’s why it was reversed.

    • The problem with the removal of fuel subsidies in Nigeria is that rather than attack the cause of the corruption and problems (the oil cartel in Nigeria), the government shifted the costs to the people – who by the way rely on fuel as power supply is highly erratic-. The removal of fuel subsidy was highly inhumane.
      The govt ( which NOI is a part of) know the perpetrators but refuse(d) to challenge them. Rather they continue to make Nigerians groan under insufferable pain through economic policies that are only good on paper but fail to acknowledge the Nigerian context. I expected that someone like NOI would have studied the impacts of the removal of fuel subsidy ( I have it on high authority that this was not done) or put in place alternatives ( such as a good transport system and working refineries) to cushion the effect of the removal but NO this was not done.
      I have no issues with whoever becomes WB president because whether it is NOI or not, WB is never going to drive development in Africa. What I have issues with is the premise that NOI is the best candidate because she is from a developing country or because she has done great things in her country- She has not

  4. i am a nigerian who is a living witness to the oil subsidy saga, i agree with the voice of reason that the implementation of the fuel subsidy removal was bad. But why? The reason is beyond her alone,it is a general inherited problem which she is ignorant about and the lack of sincerity by the govt which she is part of.

  5. Hello Mr Voice of reason or whatever you wanna be called. Don’t you think it is about time you found the courage to come out bold and unveil the face of bitterness behind the veil?

    Let me begin to answer some of the fallacy presented in this article.

    Do you know that Nigeria spends $350 million monthly on oil subsidy? And this subsidy doesn’t go to genuine marketers of oil. It goes to what we refer to as brief case importers. What they do is just collect money for subsidy and then bribe their way through customs and other government officials to bring in a WATER laden vessel in place of oil.
    Please bear in mind that this money is borrowed. Because presently, Nigeria runs on budget deficit. The government have to borrow to fund the budget.

    This is what Ngozi is determined to fight.

    And for your information, even before Ngozi step foot on Nigeria soil, the 36 governors of Nigeria states have been calling for removal of fuel subsidy. http://www.vanguardngr.com/2012/01/why-govs-called-for-fuel-subsidy-removal-uduaghan/

    On your claim that ngozi is desperate: it might interest you to know that President Goodluck Jonathan came under intense pressure from Ivory Coast president and South African president for NOI to run. Check this link: http://www.vanguardngr.com/2012/03/wbank-presidency-zuma-ouattara-others-pressure-jonathan-to-release-okonjo-iweala/

    Mr. Voice of Reason, need I say more?

    • You are correct, Ade, that Nigeria’s fuel subsidies are a waste and a source of corruption. NO reasonable person could disagree. They were in the end not rolled back, alas, and Mrs. Okonjo-Iweala is keen to leave Nigeria to head up the World Bank, whether at the acclaim of other African heads of state or not. Whether her management style and achievements at the World Bank were the same, or better than, what she achieved in Nigeria with fuel subsidies is a matter of perspective. The world surely needs someone effective at doing the needful.

      • You keep making it sound like the subsidies were removed, then reinstated. The subsidies were halved.

        The furore over this subsidy issue is due to issues not within her control – Other ministries and highly placed government individuals.

        She did the right thing, and it is my belief that the subsidies will be fully removed by 1Q 2013 at the latest.

        Bankole.

  6. Quality of execution that is, the capacity to turn principles into hard facts by inspiring allies and blocking enemies, is what differentiates successful policy makers from advisors, analysts, consultants and the like who only propound ideas without direct accountability for results.

    The policy reversal on the Nigerian fuel subsidy can be the “mother” of any test of Ngozi’s policy-making capabilities. if she couldn’t succeed in a core economic policy issue, that she picked in her country during her first 100 days in office, it is easy to conclude that her graduation from policy analyst (as she was for over two decades at the World Bank) to policy-maker was fairly lucklustre. Similarly, by the way, to her track record as manager in the World Bank, according to many posts.

    What still needs to be dissected, in terms of understanding her operating principles and capabilities, is the “policy flop” of the unprecedented $500 million credit to Nigeria that was negotiated and disbursed under her authority as World Bank Managing Director, as several bloggers have pointed out.

    How is it possible that she (and her fellow Nigerian VP for Africa) allowed the poor application for policy impact of this huge “gift” from the IDA donor community in her own country where she had insider knowledge from her years serving as Ministry of Finance? Her “development experience as a WB insider”, combined with her sense of professional self-respect, should have enabled her to steer this massive amount of money to “best practice use” for her own Nigerian people. The fact that this initiative failed miserably, as documented by the World Bank’s Independent Evaluation Group, is profoundly troubling — and must be addressed if this campaign wishes to lift itself from PR and spin.

    If anything, one ahould remember that without considerations of professional merit, the world will continue to become less governable by the day.

  7. I think you are crossing over from reporting facts and doing reasonable analysis into the territory of waging a smear campaign behind the cover of anonymity. it would far better to support one of the candidates than attack those you dont like with no hard evidence because you have a personal issue with. That kind of negative, unsubstantiated, “commentary” needs to be left for the replies and comments sections , not the main posts on this blog.

    • Jim Kim has long been the most innovative candidate, with a track record of evidence-based work, in a field, medicine, that demands accountability. His interviews on US television have been reasoned, self-deprecating, and fluent. He and Paul Farmer brought very different skills to a grassroots advocacy organization. He wrote about the negative impact of the Washington Consensus while Ngozi Okonjo-Iweala was imposing it on her clients, albeit more successfully than in other parts of the world, but with the human impact that Kim decries in his writings. He has remained above the fray in an increasingly poisonous public campaign both Okonko-Iweala and Ocampo have let themselves be drawn into, and, unlike them, he has not seen the need to slam or denigrate the other contenders. Kim would bring a new set of standards to the World Bank, and as a real outsider to its inbred culture, he could leverage the forces for change. His time at Dartmouth has been limited, but alumni seem to love him and despite the serious problems with fratboys behaving badly, his video shows a rapport with young people.

      • Jim Kim would have been a brilliant candidate for W.H.O. You cannot put a square peg in a round hole. That is a fact everyone sees and acknowledges except Voice of Reason and all those he’ll bent on ramming his candidacy through. It is time for the US and the World Bank to practice what it preaches. Choose a candidate based on qualifications and accomplishments rather than sentiments. NOI didn’t force herself into any media campaign, the minute she was nominated by several Presidents, several Media outlets picked it up and gave their opinions.

  8. Voice of Reason. What troubles me is when I see people who are closet racists masquerading as champions of what is good and right. Are you that desperate that you would dig up any rubbish you can find on the Internet about Ngozi Okonjo-Iweala in order to justify your support for the American nominee? You publish articles which you cull from the Internet without understanding the sub context of what actually transpired. Go to Nigeria today and flip through the Newspapers and you will understand how much NOI is admired and supported. No matter the garbage you publish, she will still stand out. I suppose you are more intelligent than the Washington Post, Financial Times, New York Times, Economist, Several Papers around the world, notable people including Graca Machel (Mandela’s wife), etc. The fact that you claimed she didn’t handle the subsidy issue well shows how completely ignorant you are. First off, the subsidy debate in Nigeria preceded NOI. As the 36 Governors said, they are the ones that made the President remove the subsidy. It was already on the agenda. Nigeria operates a Federal system. The date of the removal was the President’s prerogative,

  9. Recall you published articles from Nigerian tabloids that everyone in Nigeria knows as garbage and which everyone in Nigeria knows to be sponsored by the most corrupt and despicable people yet you cited those articles in your previous essay. That showed how ignorant you are. There is no where in the world you would find a reformer were you wouldn’t find critics. Mention any successful reformer including Former President Lula of Brazil and you would find vested interests who complained bitterly about him. The fact that you would cite those people shows you are desperate to tarnish her. What do you have against Africa? Why do you hide behind a pseudonym to publish your garbage?

    • Mr. Williams,

      This blog does not use garbage from discredited sources. Amongst others, the World Bank site has this information that relates to NOI’s policy analysis and execution skills in the context of her then World Bank job and Nigeria.

      http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/07/09/000333037_20090709234935/Rendered/PDF/491620PGD0P117101Official0Use0Only1.pdf.

      Can you tell us what made Nigeria deserve to receive this $500 milliom quasi-gift from the international donor community? Do you think the Nigerian people benefied from it? If, as concluded by the World Bank’s Independent Evaluation Group, this loan was not justified, in whose interest was it done and what was the calculus behind? Don’t you think that the international community could have expected a better result about the use of their money in Nigeria under NOI’s stewardship? What makes you believe, and with you the other NOI supporters, that her use of the considerable powers as World Bank Group President will not lead to similar poor results in the future — but at even larger scale?

    • If anyone is still in doubt about who ‘Voice of Reason’ works for, run through the thread below:

      Voice of Reason
      on April 6, 2012 at 19:51 said:
      Voice of Reason hasn’t “endorsed” anyone yet. Concerns about Ngozi’s management style and lack of achievements when she was a managing director of the World Bank are pretty clear, and not exclusive to Voice of Reason.

      Voice of Reason
      on April 7, 2012 at 03:01 said:
      Jim Kim has long been the most innovative candidate, with a track record of evidence-based work, in a field, medicine, that demands accountability. His interviews on US television have been reasoned, self-deprecating, and fluent. He and Paul Farmer brought very different skills to a grassroots advocacy organization…

  10. Okay, I should also add that while being MD of the Bank, Ngozi committed an American lobby driven agenda to change the Bank’s employment policy. Suddenly, despite wide spread protest and concerns, she decided to abolish open ended employment and institute a fixed term based appointment only. Although, open ended contracts are also subject to termination with a notice, it didn’t have the constant insecurity of losing jobs like term appointment does. Term appointment is simply a management tool to keep staff silent.

    By following corporate American model (why Bank has to follow American way?), the new policy basically eradicated options for development practitioners from developing countries joining the Bank to have meaningful ‘voice’ as now by design they are coerced to collaborate with management to keep their contracts renewed. Not to mention, for mid career professionals, Bank’s job is almost a professional suicide, if they leave their country for the lure of a Bank job, which may end as term appointment expires.

    We hope that the Bank’s new management will look into this with lessons learned from this ill conceived policy and reinstitute previous police in line with other UN and development agencies.

  11. In Nigeria people comment on issues based on sentiment, rather than on verifiable substance and obvious evidence or objectivity. All that Nigerians are saying is, “Ngozi is well qualified” to be World Bank President. Nobody has given one good reason other than that she has the paper qualification which is rare in that part of the world. Then she has worked for more than twenty years in the World Bank. There has been no citing of one developmental project she initiated and achieved in any part of Africa or other backward countries during her tenure in the Bank which stands for development, as I have heard of Ocampo’s and Kim’s. I maintain that Ngozi is the most unsuitable candidate for the top job, because she has no developmental capacity or background to make any difference. A case in point is that during her tenure as minister of finance in Nigeria, she did nothing to support development of the nation in terms of infrastructure, education, health care and other social services needed for the survival of the citizenry. If we want to talk about oil subsidy removal, that was one and the most disservice done to average Nigerians, the result of which has heightened inflation for more than 100 percent in a country where people live on average of less than $1 a day.

    • Not to support Ngozi irrationally but I think she did. you forget that she is ONLY the minister of finance. In her first term as finance minister, she negotiated the debt deal in order to free government funds for capital projects (that fell victim to the corruption in Nigeria’s government and other federal agencies)

      Also, the decision to remove fuel subsidy in order to also free funds for capital projects and national development (same as earlier: equally a victim of a corrupt system)

      About her management style at world bank, I have no idea.

      and you talk about achievements in her twenty years with the world bank. How does that work? Are there others with such, er, ‘achievements’? Kim? Ocampo?

  12. Reading through Voice of Reason’s articles and the peoples responses, i have come to conclusion that truth is bitter. Let us not be sentimental. Voice of Reason should come up with constructive criticisms on the other two candidates just like he did in the case of NOI. All you have done was to state the weaknesses of NOI. What about her achievements – Debt cancellation and others? NOI is a candidate to reckon with but let her work on her weaknesses. It is true, your action today will speak volume for you tommorrow.

    • NOI’s achievements in Nigeria are not necessarily part of her portfolio of achievements that are relevant to being World Bank president. If anything, they would argue for her staying in Nigeria to complete the job others say is far from finished.

  13. I am not in to play the game of “for or Against’, Ngo, as she is fondly addressed by admirers has been one of the key architect of the new Nigeria, even though the foundation is still shaky and the road is not yet clear we Nigerians are not oblivious of her immense contribution and for crying out loud, We nearly made her president.

    I for one has watched this women from the death of late Yara’dua {the ex president} to the swearing in of Jonathan, if there is one visionary I could speak boldly about in the seat of power it is Ngozi.

    She may not be perfect but she has contributed as she of course deemed fit

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