World Bank Won’t Force Nigeria on Fresh Loan- Onno Ruhl, Country Director

The new Country Director of the World Bank in Nigeria, Onno Ruhl is very passionate about positive results on the ground than any rhetoric’s on projects. An Economist from the Netherlands, he started his career by teaching economics in his country, long time ago. He later worked for the Netherlands Ministry of Foreign Affairs for 17 years and took his service to the Hague in the Multilateral Development Department before moving to Washington at the Netherlands Embassy. He moved from the Netherlands Government to the World Bank. Where he worked in the former Soviet Union for a number of years then got involved in the disengagement after the war in the Balkans. He had worked in a successive number of countries: Croatia, Kosovo, Bosnia and Albania. In 1999 he was in the Africa Department where he developed a work in Private Sector Development Infrastructure, Financing and Trade Finance in the East and Southern Africa. In 2001 he became the Country Manager of the Bank in the Democratic Republic of Congo for four years during the peaceful process and transition. He later returned to Washington as Manager Results and Learning in the African Region until last March 2008 when he was posted to Nigeria as Country Director. In this Exclusive Interview with Editorial Team of the Economic Confidential, he talks about various issues including Nigeria’s foreign reserve, some projects in Nigeria, the principle of Public Private Partnership (PPP) amongst others.
 
QUE: you have been in Nigeria for a period of 6 months, how you will describe your experience so far.
ANS: Nigeria is a very famous country because it is very large and important country. Like every visitor, I had some impressions about Nigeria because I had been here during the 5th Anniversary of the Africa Development bank at Abuja in the early 90’s. All I remember was that I saw 2 big hotels, a ring road and the Savannah. My experience took me through from Abuja to Lagos by road. My second coming left me amazed at how it has changed within such a short period and how dynamic it is in total contrast to impressions many outsiders have about Nigeria. Most people think the country is all about oil. I see Nigeria as a big and very vibrant country. My background is in the private sector development and you can just smell that the people have a business sense and take initiatives and try to build businesses which are quite impressive. It is also clear that the people complain a lot in Nigeria about the resources that is not being adequately tapped and utilized which is understandable. Still, the rate of progress in recent times is extremely impressive. There are some things here in the banking sector, telecommunications sector, the entertainment sector even in the agricultural sector that are quite modern in Nigeria. Just 10 years ago the present development was unimaginable. Look at the ATM machines, who could have thought that would be possible a few years ago. The world cannot overlook how revolutionized Nigeria has become. In comparison to the rest of Africa, Nigeria has much more potential for even more growth, that’s my strong impression. Not just because of the resources that is under the ground but in terms of its people. In terms of the fact that every one is waiting for business opportunities which is a tremendous strength. Also for the fact that Nigeria is a very serious market that you must build something solid to achieve result. When I look at some of the telecom companies that are inspiring and have the resources to build their own fibre lines across oceans. very few other African countries can be as ambitious and daring as that.
 
QUE: What has been your major goals and mission in Nigeria
ANS: The World Bank’s major goals are to support Nigeria’s development process particularly with emphasis on poverty alleviation. The way I will like to articulate that in my responsibility as a County Director is to say that we can only do that affectively by supporting the government’s programmes which is in articulating the 7 Point Agenda driven by Vision 2020. It is important to do that in a way that is understood and based on the experience of the realities on the ground. What are some of the realities on ground? The key reality is that Nigeria has a lot of money. Thanks to the fact that it has oil. Thanks to good macroeconomic policies that has been followed for a significant period now. So there is reserve. There’s Excess Crude Account which ensures the money is stable. So in terms of absolute demands, the money is however too small to achieve all development objectives, the Millennium Development Goals (MDG); it is too small to ensure that every Nigerian that is poor is lifted out of poverty. There is no enough money in Nigeria for that. So the big challenge is given the fact that there’s still a lot of money but the task is enormous which makes it imperative to work together on development programmes and approaches that allow the money that Nigeria has to be used efficiently and effectively as possible in order to achieve government’s objectives. So that when we talk about what the World Bank can do to help farmers become more productive, what we do are things like FADAMA project and building on that to become more commercial. If we work on electricity, not just in our financing, lying of transmission lines and transformers but also to look at what are the key constraints of the sector and find solutions to them. The World Bank wants to be a partner that provides advice to Nigeria in terms of how money can be judiciously spent. These are the goals and missions of the World Bank as an institution. In terms of my own objectives, I’ve been to so many African countries that I’ve lost count but Nigeria is a great country where one can learn a lesson on its diversity and cultures. It is a nice place to be, really.
 
QUE: Nigeria have enormous resources like you mentioned in the Excess Crude Account and Foreign Reserves, suffice it to say that Nigeria does not need foreign loans. What can you say on this?
ANS: The World Bank is not only in the business of money lending but also as economic advisers with vast local and international experiences on how nations can manage their wealth for sustainable economic development. The Nigerian budget is by and large more than the World Bank can ever bring to Nigeria. We can do a programme in Nigeria for a year for about 1 billion dollars, that’s a significant amount of money but it is quite small compared to the government’s budget. First of all there are a couple of issues. One issue is that any money that Nigeria takes from  outside, it has to be very aware that it shouldn’t recreate the debt crisis that it previously had. If Nigeria is to achieve its Millennium Development Goals, then it needs all the monies it can get. Because Nigeria is a very large country for example, there are over 7 million girls that don’t go to school. There is need for all resources to be channeled into different goals as long as Nigeria doesn’t create debt problem, it can borrow money from financial institutions. The main thing is translating the money into real result. The World Bank funds are on extremely concessional terms with ten years grace period. The first 10 years you don’t pay anything. The administrative charge is 0.75 percent and the repayment period after 10 years is for another 30 years. If you take that money and just put it in US Treasury Bonds it would be making a lot of money so it would be a good deal. But my conscious would not allow that because it would not impact on the community. We are however more concern in helping Nigeria to develop programmes and approaches that make the government to spend its money effectively. Let the money translate into services of development like decent levels of clinics available to all Nigerians and those clinics have medication and when pregnant women go there they don’t have to die for lack of care. Because they get the kind of care they need. If you put good water sources in the village, a lot of girl-children would be free to go to school because they don’t have to fetch water all day long. If you invest wisely in electricity sector, more businesses will come back to life. Likewise investment in road should not be limited to construction but maintenance too for safer transportation. That’s what I mean by spending money judiciously and effectively.”
 
QUE: How far have you gone in your programmes on poverty alleviation? What are the mechanisms put in place to check and track the impact of such programmes?
ANS: In order to achieve results our approach is usually holistic. Implementation, monitoring and evaluation for instance the FADAMA project 1 was a little bit difficult. FADAMA 2 became more successful so it became kind of popular with T.V programmes. Then at some point we did an Impact Evaluation. The objective of FADAMA is to increase the income of the farmers by 20% that would constitute success. An Impact Evaluation is actually done by the International Food Policy And Research Institute at the request of the government because they wanted to know if the result were actually a success. Guess what, the average beneficiaries of the FADAMA projects actually increase their income by 60%. That’s really poverty reduction if you increase somebody’s income by 60%. What we have learnt in the FADAMA project has made it imperative to use the Impact Evaluation on our other projects, so that there’s no room for tales of what was achieved or not.
 
QUE: Very soon new members would be approved for the Commission on Private Public Partnership in Nigeria. What areas can the World Bank be of assistance, especially as regards energy and transportation?
ANS: The power sector in Nigeria is a sad story, because Nigeria has all the fuel in the world to power that sector. There are many reasons behind that. First of all, let’s take an example from cell phones in Nigeria. Why are they such a success story? Because if you purchase a scratch card, you know the units of service you are paying for. Nobody can take that away from you because you know how much it costs. The telecommunication companies are providing efficient service, because it’s being paid for. What you spend on your cell phone is actually much more than you could have paid for electricity which you would spend happily because it is something you need. That is where the change in the power sector ought to start. In any country where people pay less for power than it costs to generate, there would be problems. The question is where the money for maintenance is going to come from? The government is taking a very good decision to set a price for power for the benefit of the people and for them to appreciate it. Even though it has to be gradual, the oil companies have some roles to play. They are in business to make profits. But you cannot expect the companies to provide the goods if you don’t make it economical for them to supply it. If you get a good price for gas and for electricity, all the rest would actually fall in place. In Russia, a country that has some interesting similarities with Nigeria: a large country and also a big time oil producer. It solved the same problem sometimes ago. On transportation, it’s a very different story. Nigeria’s most traveled road is the Lagos to Ibadan route. The road is not so bad. There’s a lot of traffic and needs a lot of maintenance. I think Nigeria still faces the situation where the private sector can partner with the government to address the problem. If that synergy is achieved then the transportation aspect can be sorted out soon.
 
QUE: can you give us a specific update of your project in Nigeria on the following; MSME and LEEM
ANS: well, The Micro, Small and Medium Enterprise (MSME) Project in Nigeria aims to increase the performance and employment levels of MSMEs in selected non-oil industry sub-sectors. To achieve this, the project in Nigeria develops and strengthens the capacity of local intermediaries to deliver financial and non-financial services to MSMEs. It reduces selected investment climate barriers that constrain MSME performance and increases private investments in MSMEs, and intermediaries. The MSME project has helped. The CBN set up a very credible framework for microfinance. I met recently with the mission that is working with the CBN to discuss on the project and whether it has given us the result we want. A lot of positive developments are going on in the microfinance sector. Some of which are state Institutions, some are banks and a number of new banks are also coming on board in that regard. Some of the established banks like UBA and other big banks in the country are in it. The result seems to be quite good but there are a couple of issues. For instance the government likes to give a geographical spread in coverage which is very understandable in a country such as Nigeria. An objective that we are in support of, at least to give every part of the country a sense of belonging.
 
What can you say on the overall poverty picture?
Recently there was a press conference in Washington. A question was asked on which countries in Africa are likely to reach the poverty MDG: which means cutting poverty between 2000 and 2015. Nigeria was not mentioned by the gentleman who represented the World Bank Vice President. I did not understand why Nigeria was not mentioned. I think they probably know we have some issues in Nigeria with the poverty data. We are making a lot of progress with the statistics which make the data reliable. There maybe some data constraints if you look at 15 years period but we make the best of what we have by what has happened to poverty in Nigeria currently. When I talk about growth and poverty, I’m talking about non oil growth. Oil growth does not directly affect poverty level. Actually non-oil growth has positive and clear impact on the economy. It was 9.7 percent last year and 9.2 the year before. It is indeed a very high growth rate. It’s based on our best calculations; we think that if Nigeria can achieve 10 to 11 percent growth on non oil between now and 2015, it will be a great success in poverty reduction. If only it can move from 9.7% to 11% non oil growth and sustain it for 5 to 7 years and beyond that, the story would be a success. Nigeria’s story has been that of a rich country with poor people. Nigeria has all it takes to turn that around.

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