How Okonjo Iweala Almost Became A Magician

Okonjo Iweala is not a politician. Forget the fact she worked for two PDP governments.

Ngozi Okonjo Iweala

But in the year 2014, she attempted to do what politicians always do; become magicians. Yes, good politicians must be good magicians to hoodwink the populace into believing they actually delivered on their promises. Like a true magician, she produced a hat. And then attempted to pull out rabbits.

She failed miserably. When oil prices crashed in 2014, the rumblings felt in the economy was expected because Nigeria, whether we want to admit it or not, is basically an oil exporting economy.

That is what we do to survive. We sell oil.

Our entire economy is based entirely on how well crude oil is performing in the international market. So in a bullish crude oil market, we are always flush with cash, and when the bears are having a field day, the economy starts cracking at the seams, revealing the fault lines of a flawed economy. So in the wake of the oil market crash, the normal thing to do was to cut government spending especially the recurrent expenditure of political office holders. The numbers strongly indicated that was the sensible thing to do in the short run. It was at this point Okonjo Iweala decided not to be normal like the rest of us but instead be a magician.

Crude oil prices had fallen to below $55 per barrel from a high of over $100 in less than a year.

The 2014 budget was predicated on $75 dollars a barrel, and the expected surplus (crude was selling at over $100 per barrel) was expected to remain stashed in a flush fund known as the Excess Crude Account(ECA). The disaster starring government in the face was clear. There would be a huge shortfall in revenue. This meant money needed to be sourced elsewhere. The easiest target was the ECA. It was raided and depleted. Still more money was needed. We borrowed massively. More on that later.

Lets get back to the magic.

She ascended the stage. Hat in hand. A magic stick in the other hand. And told Nigerians the 2015 budget would not be seriously affected by falling crude prices because she had the solution to it. The budget would be predicated on $65 per barrel even though the price at the time was hovering around the $50 mark. She carefully explained to her enthralled audience how it is possible to spend more than what you earn without bankrupting yourself. Taxation was the magic. Tax luxury goods. Tax rich men buying yachts. Tax rich people buying foreign wines and spirits. Tax all those buying private jets. And remove export waivers. Do these and we would see the magical dollars rolling into our treasury.

So much money that it would cover the shortfalls in oil revenues.

In an economy where the second highest revenue earner, custom and excise duties, brings in less than 10% of revenue in boom years, it really stretched the imagination how more than 10% of total expected revenue can be generated in a depressed economy. This magic madam wanted to pull was unprecedented. Nobody has ever done it before in the world. In human history. She is a woman of no small intelligence, so if anybody can pull it off, she can. Few months into the magic, the naira collapsed like a man deprived of food and water in a concentration camp. We were informed not to be alarmed by the magician.

The economy was still very robust she claimed……

So it came to pass that no rabbits were actually pulled out of the hat. What was displayed was a huge dose of reality. At least she attempted the impossible. Maybe she had fun while doing it. Maybe some still believe there is still some magic yet to reveal itself in the dose of reality. What we all know for sure is that, at that time, the economy is in serious trouble. The government had to borrow money just to pay salaries. Capital projects were grounded to a halt.

And she finally admitted how dire the economy is before leaving the stage.

Another way of saying her magic failed. Is there a moral lesson in there for us the helpless citizens? Maybe we should never try to be magicians is the lesson. Or maybe women in fancy headgear should never be taken seriously if they make spurious promises. I don’t know. I’m sure there is a great moral lesson hidden in all these mess.