IMF’s Lagarde to Nigeria’s Buhari: Country needs to strike balance, yet ensure long-term anticorruption measures
By Michael James Currie.
The managing director of the International Monetary Fund, Christine Lagarde, welcomed Nigeria’s anti-corruption campaign which has been significantly pushed by President Buhari who was elected in May 2015.
The Buhari administration is moving towards developing a strong independent central body to deal with corruption in one of Africa’s wealthiest countries. The task will not be easy as their does appear to be a degree of consensus that the Nigerian judiciary is in itself corrupt and inefficient and cannot meaningfully tackle corruption without substantial reform.
An expert on African anti-corruption measures, Andreas Stargard, with Africa advisory firm Pr1merio, notes:
“The apparent inability by the Buhari administration to make timely ministerial appointments (which were over half a year delayed) and its failure to create a dedicated anti-corruption ministry do not bode well for a solely internally-driven strategy to combat governmental misconduct. In our view, having Ms. Lagarde and her advisors (as well as privately outsourced firms) looking closely over the shoulder of the current administration would only serve to strengthen any existing anti-corruption efforts underway in Nigeria, and we’re happy to see the meeting took place as a first step in the right direction.”
A further challenge, however, in the fight against corruption is that Nigeria is on the brink of a credit crunch due to the low oil prices which brings about additional considerations that must be taken into account when developing and implementing anti-corruption policies.
One of the Buhari administration’s most dramatic moves in its fight against corruption was to issue a directive (which came into effect in September 2015) that all income generating federal institutions pay their revenues into the central bank as opposed to local banks. This would see an estimated $6.6 billion flow from local banks to the central bank.
Economists had warned that a move such as this may put pressure on the Country’s financial position in the short term given that Nigeria is facing a credit crunch and there is already minimal lending going on.
The IMF has also pointed out that Nigeria is overly reliant on oil and in order to ensure long term stability, anti-corruption measures must be coupled with a move away from relying so heavily on oil.
Nigeria’s fiscal situation must be closely monitored to evaluate the impact of Buhari’s policy changes on the economic landscape in Nigeria, however, it does appear at this stage that the anti-corruption campaign will bring about long terms benefits which outweigh short term fiscal concerns.