Nigeria’s Coordinating Minister for the Economy/Minister Finance, Dr. Ngozi Okonjo-Iweala, has aligned herself with forecasts of sustained economic growth for Nigeria and some other West African countries this year.

In a Welcome Address she delivered yesterday at the 31^st Meeting of the Convergence Council of Ministers and Governors of Central Banks of the West African Monetary Zone (WAMZ) held at Abuja, the Nigerian capital, Okonjo-Iweala noted that despite global economic turbulence, “the economies of the WAMZ exhibited robust growth, with GDP growing by 6 to 9 percent in countries like Nigeria, Ghana, Cote d’Ivoire, and Liberia in 2012, and even double-digit growth in Sierra Leone and Niger.” She said that “based on projections, these countries are expected to maintain this pace of growth in 2013.”

The former World Bank Managing Director then took time to outline measures being taken by Nigeria to grow her economy and insulate it against future shocks. She also raised hopes about the emergence of a common currency for West Africa despite the challenges being experienced in this regard. Below is an excerpt of her speech:

The global economic environment has remained volatile and uncertain since the financial crisis of 2008/09. This has been exacerbated by the ongoing Euro Zone sovereign debt crisis. This convergence meeting, therefore, provides us a platform to collectively address those issues which work against growth and development within our zone and to work out sustainable solutions, especially with the envisaged launch of a single currency barely twenty four months from now.

It is encouraging to note that in spite of the global economic slowdown, the economies of the WAMZ exhibited robust growth, with GDP growing by 6 to 9 percent in countries like Nigeria, Ghana, Cote d’Ivoire, and Liberia in 2012, and even double-digit growth in Sierra Leone and Niger. Based on projections, these countries are expected to maintain this pace of growth in 2013. It is also important to acknowledge the progress that has been made over recent years regarding the quantitative and qualitative convergence. However, effective management of public finances remains a challenge as most member countries exceeded the benchmark with respect to their fiscal deficit/GDP ratio.

Macroeconomic stability in a monetary union cannot be guaranteed without sound fiscal policies, as the recent experience of the Euro Zone shows. The Convergence Criteria aims to ensure prudent fiscal policy and sustainability of public finances. If we look at the cyclical-adjusted fiscal balance over time, we will see that it has improved remarkably within the last five years. We have by no means accomplished our goals, but we have made appreciable progress.

On its part, Nigeria has intensified efforts to reduce its fiscal deficit in compliance with the fiscal responsibility act. The path of fiscal consolidation, upon which we have embarked, is expected to bring our fiscal deficit down to 2.17 percent this year, from 2.96 percent in 2011. We are reducing the flow of domestic borrowing from N1.36 trillion in 2010 to N727 billion this year, while also setting aside a sinking fund to reduce our total debt stock.

We are also building buffers against economic shocks. On the back of greater efficiency in the management of our resources, our foreign reserves soared from US$32.6 billion at the end of 2011 to about US$44.6 billion now. The Excess Crude Account (ECA) balance has also improved from $4.57 billion in August 2011 to about $9 billion now. Our Sovereign Wealth Fund is up and running and will oversee the $1 billion set aside by the government. But more important, President Goodluck Jonathan’s administration is embarking on a strong programme of economic diversification – which is the only real buffer for our economy. We are investing in Agriculture, Housing, Solid Minerals, the Creative industry, and other sectors, in an effort to limit our dependency on oil revenue, and create jobs. It is a fact, that our present growth rate is being sustained by the activities of the non-oil sector.

It is noteworthy to mention that since its establishment in 2001, the West African Monetary Institute (WAMI) has made significant progress towards the realisation of a monetary union and a single currency (eco) under the Bamako Accord. However, I wish to state that a single currency cannot be introduced only by means of an act of law. It requires action by the monetary authorities and by market participants in order to make it viable and sustainable. The work conducted by the WAMI over the past decade has reflected this dual approach and I would like to commend the Institute for its doggedness and optimism towards the realization of the single currency project.

Let me state clearly that we should not be under any illusion of how difficult it is to establish a credible, viable and sustainable West African Monetary Union. The journey will not always be smooth; there will be periods when our collective will to actualise the project would be severely tested. But let me assure you that, political will, which is critical to the success of the monetary union, is guaranteed as authorities of the WAMZ are resolute on this common project. So we need to persevere and remain focused as well as learn from the lessons of the ongoing European Monetary Union crisis.

Can crisis be prevented? Probably not, since they are a structural part of the dynamic global economic system. But crisis can at least be mitigated. If the turbulence in the Euro Zone has taught us any lessons, it is that sustained convergence is the rock on which monetary union is built; tough fiscal rules are necessary to lay the ground for a relatively homogenous fiscal zone; a permanent funding mechanism contributed to by all members is needed to help countries access finance if they cannot source it from the market; and the limits of central banks must be understood and accepted.

It cannot be over emphasised that we have invested so much money and time into the WAMZ project. A lot has been achieved but a lot more remains to be done. If there is a message that should emerge from this august meeting, it should be that, we have an abiding faith in the WAMZ project. As we endeavour to put the project on a firmer footing, we should look at the future not with trepidation but optimism, we should resolve to turn the challenges into opportunities, work harder and adhere to the precepts of sound economic management. Together we can establish an enduring monetary union.

From our performance, we are well on our way to meeting the convergence criteria although we still have some way to go.

•Photo: Okonjo-Iweala.