Nigeria, IMF and COVID-19

This blog is part of our series, Tracking the Trillions, which takes a closer look at how the International Monetary Fund (IMF) can tackle corruption, while promoting transparency and accountability.

Amidst a catastrophic collapse of oil prices and a health care system unable to cope with the COVID-19 pandemic, Nigeria recently requested US$3.4 billion in emergency assistance from the International Monetary Fund (IMF). This massive loan, which was approved in April, adds to billions of dollars in emergency assistance and should avert catastrophe for Africa’s largest economy and population of over 200 million.

The coronavirus or COVID-19 pandemic highlights Nigeria’s economic imbalances and collapse of public services, which many Nigerians would argue had already failed long ago.

Budgetary appropriations for health have not improved much since 2016. At that time, health was only 0.5 per cent of Nigeria’s gross domestic budget or 5 per cent of the national budget.

Unfortunately, without sufficient resources, the Nigerian health care system often relies on ‘self-funding’ through petty corruption and illegal fees. Patients pay these costs of corruption.

Given these limited funds, it’s unsurprising that Africa’s three most populous nations – Nigeria, Ethiopia and Egypt – only have 1,920 intensive care beds between them for a population of more than 400 million people.

While Europeans and Americans build emergency hospitals to respond to the COVID-19 pandemic, most Nigerians do not have access to even basic health care facilities.

As COVID-19 spread, Nigerian government officials seemed unprepared to tackle existing weaknesses in the health system. For example, the Secretary to the Government of the Federation, Boss Mustapha, was surprised and claimed he was unaware of the bad state of the nation’s health sector until he became chairman of the Presidential COVID-19 task force.

Many citizens took this as another sign that Nigerian leaders are out of touch and helplessly unaware or disinterested in the collapse of public services, which often serve the poor and most vulnerable people, who cannot afford private hospitals or medical care.

In response to Nigeria’s collapsing economy and poor public services, the IMF and other international lenders and development partners offered emergency assistance during COVID-19.

However, unlike previous loans, where money was often lost to corruption, this time the response must not be business as usual for Nigerian leaders and the international community to manage this crisis.

Instead, development agencies should actively reduce corruption and work with the Nigerian government to ensure humanitarian assistance reaches those who need it most.

This moment presents an opportunity to reform a system riddled by pervasive corruption, a culture of unaccountability and obscene profiteering at the expense of hundreds of millions of Nigerians.

There are some promising signs that Nigeria could use emergency assistance from the IMF and other international donors effectively and with proper safeguards against corruption.

For example, the contract between the Nigeria Ministry of Finance and the IMF states:

"[…] the Nigerian authorities committed to undertake an independent audit of crisis-mitigation spending and related procurement processes and to publish procurement plans and notices for all emergency-response activities, including names of awarded companies and beneficial owners.”

Indeed, Nigeria’s public finances suffer from a lack of accountability. Nigerian cronies use public budgets as a quasi-legitimate tool for personal enrichment and political adventures. The Nigerian Office of the Auditor General periodically complains that public institutions and political appointees ignore the law by blatantly refusing to submit their public books for scrutiny.

This time, IMF assistance stipulates that funds must undergo periodic external audits that are open to the public. Specifically, the IMF agreement states that the Nigerian government should:

"…Publish no later than three to six months after the end of the fiscal year the report of an independent audit into the emergency response expenditures and related procurement process, which will be conducted by the Auditor General of the Federation—who will be provided the resources necessary and will consult with external/third party auditors.”

In addition, according to the loan agreement, the government will investigate suspicious expenditures and hold people responsible for suspicious transactions.

Civil society and media can also help identify and call out corruption when they see it happen.

Implicit statements and general phrases about ‘structural deficiencies’ made by the Nigerian government must no longer be accepted by the IMF or other international lenders and partners.

This language is often used in the context of widely recognized systemic corruption, which characterises Nigerian public administration.

Economic and health care programmes to fight the COVID-19 pandemic should publish a full list of financial, technical and in-kind assistance, including the source and targeted beneficiaries.

The Nigeria Ministry of Finance committed to the establishment of a database for this purpose. However, this database still does not exist, even after three months since the approval of the loan.

If the Nigerian government is incapable of developing this simple tool, civil society will be happy to step in. The Civil Society Legislative Advocacy Centre (CISLAC) and our partners such as BudgIT already work on these type of IT solutions and make them available to the public.

Special attention needs to be given to clean public procurement to ensure that millions of dollars of public contracts are not lost to corruption.

Nigerian politicians and executives often negotiate big procurement contracts, which if misused, can divert hundreds of millions of dollars from public budgets.

Given the poor reputation of government institutions in pursuing competitive and transparent contracts, civil society must step in. Contract information should be publicly available to taxpayers and civil society to monitor results.

Equally important, the government and its partners should protect whistleblowers who speak out against the misuse of emergency funds or incompetency in the government’s response to COVID-19.

Nigerian public service has a long history of secrecy and intimidation, particularly among those who try to report wrongdoing. International partners must use their diplomatic status and operational insight to ensure governments protect whistleblowers and encourage whistleblowers to report corruption and mismanagement.

International partners and government agencies should no longer turn a blind eye to corruption nor be rewarded for doing so. Civil society needs to step up its efforts to serve as watchdogs of corruption, particularly given the history of broken promises, undelivered commitments and failed projects in Nigeria.

To conclude, there are promising signs that COVID-19 emergency assistance can be an opportunity for governance reform in Nigeria and beyond.

IMF Managing Director, Kristalina Georgieva, was very explicit in her recent remarks:

In Nigeria, IMF emergency loans and other international assistance must follow this statement and promote accountability.

It will take some personal courage, a great deal of simplification of our bureaucratic rules and a true behavioral change in how we run government, but this is an opportunity we cannot afford to lose.

We must promote far-reaching governance reforms in a country synonymous for predatory public financial management for personal gains.

Nigeria is very familiar with pandemics – it has been living through a corruption pandemic for decades – and is now poised to take action, with the help of the IMF and international partners.