BREAKING NEWS, Oil & Gas
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Fransisco Ferreira, chief economist for Africa, World Bank Group, is asking General Muhammadu Buhari to probe the Nigerian National Petroleum Corporation so as to set records straight
| By Anayo Ezugwu | Apr. 27, 2015 @ 01:00 GMT |
TWO months after the PricewaterhouseCoopers, PwC, cleared the Nigerian National Petroleum Corporation, NNPC, of any missing funds, the World Bank Group has urged Muhammadu Buhari, President-elect, to probe the corporation over allegations of missing funds. Speaking in a video conference from Washington to journalists from across Africa on the occasion of the launch of Africa’s Pulse, a bi-annual World Bank Group analysis of the issues shaping Africa’s economic prospects, Francisco Ferreira, World Bank chief economist for Africa, urged the elected government to look at what happened in NNPC in the past.
He said such move would have consequences for the future and such consequences would help institutions become stronger, while the culture of impunity is eliminated, allowing for more resources to be committed to the betterment of the poor. He said ridding the NNPC of alleged corruption would be a major achievement for the incoming government. Ferreira noted that tackling past corruption won’t be a distraction for the incoming regime.
“I think it’s very well spent time because institutions are built in part on norms and one norm that needs to be changed is the norm of impunity. I am from Brazil myself so I am also used to a country where people could be corrupt and escape justice. And that just teach the people to keep doing it. I think the current emphasis of the elected government to look at what happened in the past hopefully would have consequences for the future. And those consequence for the future is that institutions would be stronger, hands would be cleaner and people have to sense that if they steal billions of dollars from NNPC: people have alleged in the past that there be been major corruption scandals there-if that stops, then that could have very high returns in terms of the money staying around and being spent on education, health, roads and power and electricity that the poor people in Nigeria and across the country need. I think actually that it is good investment to promote cleanliness in politics and in the management of public resources,” he said.
The World Bank chief economist also praised what he termed as political maturity in Africa when President Goodluck Jonathan conceded defeat in the recent presidential elections and urged other African leaders to emulate him. He said if rules about elections are established and followed, fears of foreign investors exiting markets would be minimised.
“We’ve all recently seen a great example of political maturity in Africa from the handling of election results in Nigeria where President Jonathan was very quick to concede after an election that was judged mostly free with irregularities in some places but this was a substantial progress over previous elections and transition of power from an elected government to another elected government from a different party which is the norm everywhere, the norm in democracies and Nigeria can do it and hopefully other countries can do it too if we make sure that becomes the norm everywhere. There’s no reason why foreign investors should be nervous about elections; we don’t see a declining foreign investment in the United States and in the UK when they have elections because we know all the people play by the rules. So long as rulers play by the rules, and the elections are fair-and they concede elections when they lose them, elections are good things and should actually promote investment.”
On the possibility of countries raising taxes amid the dwindling revenue from oil, he noted that though governments have to provide basic services, such taxation needed to be progressive as well as beneficial to the poor.
“In fact, there’s probably room for African governments to tax a little bit more. But the important thing is who they are taxing and who they are providing the services for. What we want is progressive taxation, where the tax incidence falls mostly on the rich. And as we all know, Africa has many rich people who can pay taxes. So if the taxes fall on the right people and if they are used not for corruption to provide good public services like the much needed infrastructure and education and health spending, then it helps to diversify the pool of resources which governments use and that’s no bad thing. In fact to a number of countries, I advise them that they probably should diversify not only their economies but also sources of their fiscal revenues. The key thing as I say is to ensure that the people are not paying the bulk of those taxes but in fact receiving the bulk of the benefits of those spending.”
Meanwhile, Ferreira said Nigeria was more likely to recover from the current fiscal crisis occasioned by the falling price of oil ahead of oil dependent countries like Angola because of its more diversified economy. It also said the current drop in oil prices was unlikely to alter Nigeria’s current economic dominance in the continent in terms of Gross Domestic Product, GDP.
A South African journalist had asked anxiously whether her country would take advantage of the current fiscal challenge in Nigeria to regain its position as the continent’s largest economy and that goes to show the rivalry between the two African economic power houses. Nevertheless, the newly released Africa’s Pulse projected that Sub-Saharan Africa’s growth would slow in 2015 to 4.0 percent from 4.5 percent in 2014. It noted that the 2015 forecast was below the 4.4 percent average annual growth rate of the past two decades and well short of Africa’s peak growth rates of 6.4 percent in 2002-08.
Excluding South Africa, the average growth for the rest of sub-Saharan Africa is forecast to be around 4.7 percent. “As previously forecast, external tailwinds have turned to headwinds for Africa’s development. It is in these challenging times that the region can and must show that it has come of age, and can sustain economic and social progress on its own strength. For starters, recent gains for the poorest Africans must be protected in those countries where fiscal and exchange rate adjustments are needed,” Ferreira said.
Makhtar Diop, World Bank Vice President for Africa, said despite strong headwinds and new challenges, sub-Saharan Africa is still experiencing growth and with challenges come opportunities. He said the end of the commodity super-cycle has provided a window of opportunity to push ahead with the next wave of structural reforms and make Africa’s growth more effective at reducing poverty.
He noted that fiscal policy stance in the region was expected to remain tight throughout 2015 in most net oil-exporting countries across the region, as countries take measures to rein in spending in light of anticipated lower revenues. “While capital expenditures are expected to bear the brunt of expenditure measures, recurrent expenditures, including fuel subsidies, will also be reduced. Despite these adjustments, fiscal deficits are likely to remain high. Fiscal deficits are also expected to remain elevated in net oil-importing countries.”
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