Finance minister Kemi Adeosun with Nigerian President Muhammadu Buhari. Photographer: AFP/Getty Images
By Paul Wallace and Chris Kay
Kemi Adeosun spent most of the past four years clamping down on corruption and turning around the finances of Ogun, a Nigerian state of five million people.
Now she is tasked with doing the same for a country of more than 170 million people as well as reviving an economy experiencing the slowest growth since 1999.
The London-born 48-year-old dual U.K.-Nigerian citizen, who speaks in an English accent and moved to Lagos about 12 years ago, was a surprise choice when President Muhammadu Buhari picked her as finance minister last month. Adeosun is aiming to use the same tactics as she did in Ogun by tackling graft-ridden state-owned agencies and ensuring that they pay their dues to the government.
“No one’s subjected them to any oversight,” she said by phone from Abuja, the capital, on Wednesday. “We looked at one agency the other day that commissioned a school, when they had no business doing that. Because there’s no control over what they do, they always look for things to spend money on. I’m coming after them.”
The mother of three will have a battle on her hands in a country that ranked 136 out of 175 nations in Transparency International’s 2014 Corruption Perceptions Index. She also takes over a Treasury that the president has said is “virtually empty.”
Africa’s largest economy and oil producer is struggling to cope with crude prices that have fallen almost 70 percent since their peak in June last year to below $40 a barrel. The commodity accounts for two-thirds of government revenue and almost all exports, weighing on growth, which is set to ease to 3.2 percent this year, according to a Bloomberg survey of economists.
Nigeria, which holds gas reserves of more than 180 trillion cubic feet, plans to give low-tax incentives for investments to help boost gas revenue as crude prices decline.
Adeosun has been there before. Those who know her, point to her success as an investment banker and finance chief of southwestern Ogun as signposts to the future.
The University of London graduate has been credited with improving the region’s accounts after taking the job in 2011, increasing state revenues from 750 million naira ($3.8 million) a month to as high as 6 billion naira. This was done by forcing state agencies to use fewer banks accounts to improve monitoring, auditing them to determine actual running costs, switching to electronic payments rather than cash and eliminating salaries from the payroll for people no longer working for the state, she said.
Ogun “was financially vandalized” before Adeosun took over, said Bismarck Rewane, who heads Lagos-based consultancy Financial Derivatives Co. and has known Adeosun for over a decade. “When she got that job, I expressed my sympathies for her. She went in there, cleaned it up, restored their credit rating and left them cash-flow positive.”
Adeosun is little known compared to her predecessor, Ngozi Okonjo-Iweala, a former World Bank executive who negotiated a write-off of Nigeria’s debt in the mid-2000s. After leaving London, where she worked as a senior manager at PricewaterhouseCoopers LLP, Adeosun joined Chapel Hill Denham Group, a Lagos-based investment bank, where she became a managing director.
Adeosun will need political support as she focuses on increasing revenue to tame a widening budget deficit while cutting expenditure of everything from travel to entertainment.
Her measures come as Buhari prepares to announce record spending to lawmakers on Dec. 22 to boost the economy. The 2016 budget is set to increase about 25 percent from this year to 6 trillion naira, resulting in a more than doubling of the fiscal shortfall to 2.2 percent of gross domestic product.
That may be funded in part by raising international debt for the first time since 2013, Adeosun said. Yields on Nigeria’s $500 million of securities due in July 2023 have risen almost 300 basis points since the beginning of May to 8.54 percent by 1:07 p.m. in London on Friday.
“We need to stimulate the economy because we cannot afford this downturn to be excessively prolonged,” she said. “The budget will show a fairly aggressive cut in overheads. We’re taking them down.”
Almost 85 percent of Nigeria’s budget this year has been taken up by recurrent expenditure, such as government salaries, rather than infrastructure. Adeosun wants to cut that to 70 percent in 2016.
The last administration “failed” to boost capital expenditure, said Bolaji Balogun, chief executive officer of Chapel Hill and Adeosun’s former boss. “It will be Kemi’s big focus,” he said in an interview in Lagos. Adeosun “clearly knows how to get things done.”
Questions linger over whether she will challenge Buhari’s policies on the economy and the local currency. Backed by the president, the central bank has implemented foreign-exchange restrictions since March to prop up the naira. Investors have blamed the policies for exacerbating Nigeria’s economic slump by deterring foreign investment and preventing businesses from buying essential imports.
“She certainly has her own opinions about things,” said Seyi Owodunni, who worked with Adeosun on initial public offerings and is the Lagos-based managing director of buyout firm Emerging Capital Partners LLC. “But will she toss the cart over if she can’t win her position? No.”