Opinion
Wale Edun: President Tinubu’s economic trouble shooter
BY EMEKA EJERE
The appointment of Mr. Wale Edun as Minister of Finance and Coordinating Minister of the Economy (CME) could not have come at a more challenging time.
But the successful investment banker comes across many as a round peg in a round hole in the face of the imperative of reviving an economy that has since lost growth impetus.
With 25 years of experience in merchant banking, corporate finance, Economics and international finance at national and international levels, he is deemed to be well equipped for the daunting task.
Between 2015 and 2022, the average real gross domestic product (GDP) growth rate was below 2 percent on an annualised basis. During this period, the public debt skyrocketed while government revenue shrank. Consequently, debt service cost, as a percentage of government revenue, now hovers above 75 percent.
According to data from the National Bureau of Statistics (NBS), in November 2022, Nigeria’s national poverty rate rose to 40.1 percent. Ironically, early reforms of President Bola Tinubu, who had avowed a commitment to poverty reduction, have created more poverty by weakening economic activities and causing more job losses.
The World Bank, which had consistently advocated removal of petrol subsidy and convergence of exchange rate, now warns that without an effective social protection an additional 7.1 million Nigerians would fall below the poverty line following the two policy steps.
As a response to the situation, President Tinubu announced a N500 billion palliative programme for poor and vulnerable citizens. After its withdrawal due to public criticism of the structure of the palliative fund, the administration announced a new federal programme that provided the 36 states and the Federal Capital Territory with N5 billion each for the procurement of food and fertiliser and five trucks of rice each to be distributed to the people.
But a fixation on palliatives can, at best, distract attention from the fundamental requirement of reflating economic production. For Nigerians and stakeholders in the financial space, the main task before Wale Edun, as Minister of Finance and Coordinator of the Economy, is achieving a balance between the fiscal and monetary policies to attain a stable foreign exchange market.
For them, there should be a strong coordination of monetary and fiscal policies, with both authorities recognising the importance and boundaries of their collaborative efforts. The Central Bank of Nigeria (CBN), they say, needs to focus more on its mandate of achieving price and financial stability, while direct support for industries should become a responsibility of the finance ministry, which is discharged through fiscal policy and not for specifically identified beneficiaries.
Edun is a finance expert known for his contributions to the financial sector. He held various positions in both the public and private sectors, including serving as Nigeria’s Minister of State for Finance and later as the Chairman of the Board of Trustees of the Financial Reporting Council of Nigeria. He has extensive experience in finance and has been involved in policy-making and regulatory matters in Nigeria’s financial landscape.
With a debt overhang of over N77tn, three quarters of which was incurred by aww a immediate-past Buhari administration, an unemployment rate of over 33 per cent, an inflation rate of 24.08 per cent and an unstable and weak naira, Edun has enormous tasks before him. As a coordinating minister of the economy, he is expected to ensure that policy decisions between the finance ministry and other ministries align with the economic direction.
Hide original message
Records show that Edun, while he held sway as the finance brainbox of the Tinubu administration in Lagos State from 1999 to 2007, assisted the then governor in enunciating and formulating policies and programmes for managing the public finance of Lagos, raising its revenue from paltry N600m monthly to about N35 billion.
He had also, acting in concert with the Lagos State Ministry of Economic Planning and Budget, which was created in June 1999 by Tinubu, helped to recalibrate the economy of Lagos and shored it up for maximum efficiency.
Data from BudgIT shows that Lagos recorded internally generated revenue of N14.6bn annually in 1999, when Tinubu became governor, representing an average of N1.2bn. However, a report by Premium Times said that when Tinubu left office in 2007, the figure had risen to N83.02bn, a monthly average of N6.9bn, representing a growth rate of 468.63 per cent between 1999 and 2007.
The major aim of the Tax Reform Committee headed by Taiwo Oyedele is “to transform the tax system to support sustainable development and achieve a minimum of 18 percent tax-to-GDP ratio within the next 3 years without stifling investment or economic growth.” Edun is expected to facilitate policy realignments that could make this happen. Currently, Nigeria has one of the lowest tax collection rates in the world at approximately 10.8 percent of GDP, though tax receipts did rise by 56 percent in 2022 to a record 10 trillion naira ($13bn).
Reducing Nigeria’s debt burden, fixing unemployment and boosting economic growth are some of the most urgent tasks awaiting Wale Edun, with his present portfolio.. Edun, 62, is one of Tinubu’s closest advisers and a member of his economic team that helped prepare his election manifesto.
“The new finance minister understands the need to work more like a salesperson; he badly needs private capital/remittance inflows and short-term funds to boost FX liquidity. The country can no longer depend on oil receipts amid high theft,” a senior investment banker said under anonymity.
Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the top priority of the new minister of finance should be to ensure macroeconomic stability.
“This means bringing down inflation, stabilising the exchange rate, promoting investor confidence, reducing the fiscal deficit, and ultimately reducing the burden of debt service,” Yusuf said.
Head of Research and Strategy at First Security Discount House Limited, Ayodele Akinwumi, said, “The country is facing a number of challenges, including high unemployment, a currency deficiency, and inflation. I believe that it is essential for the new minister to implement measures that will boost investment and accelerate economic growth.”
“If the economy can grow at a double-digit, this will help to reduce unemployment and generate foreign exchange reserves. This can be achieved by creating incentives for non-oil exports.”
Edun is also under severe pressure to do something about the weakening naira. The naira has fallen sharply against the dollar in the parallel market in recent days after it emerged that the CBN has less firepower to defend the currency. In its first financial accounts since 2015, the CBN data showed reserves were closer to $15 billion than the $33 billion widely publicised.
On foreign exchange policy reforms, Yusuf suggests “a foreign exchange policy reform that will unlock inflows of capital into the economy, reduce arbitrage in the forex market and improve transparency in the forex allocation; ensure a market reflective exchange rate [as far as practicable] to eliminate distortions in the forex ecosystem; ensure level playing ground in forex transactions and remove impediments to market mechanism in allocation of forex”.
A native of Ogun State, Edun holds a Bachelor’s degree in Economics from the University of London and a Master’s degree in Economics from the University of Sussex, England. He served as the Head of Treasury and Deputy Head of Corporate Finance at Chase Merchant Bank and was in charge of the bank’s Treasury and Money Market activities where he had a major responsibility for Capital Market and Financial Advisory operations on behalf of the local subsidiaries and affiliates of major multinational companies.
He is the founder of Denham Management Limited, Chairman of Livewell Initiative, a non-governmental organisation and a Trustee of Sisters Unite for Children, an NGO focused on helping children in need. He joined the World Bank/IFC in Washington DC, U.S.A, through the elite Young Professionals programme in September 1986.
At the World Bank, Edun worked on economic and financial packages for several countries in Latin America and the Caribbean, including the Dominican Republic and Trinidad as well as Indonesia and India.
Edun had been the Chairman of Chapel Hill Denham Group since March 2008, before returning to Nigeria In 1989 as Co-Founder and Executive Director of Stanbic IBTC Plc.
