In recent years, Nigeria has established a clear break with its legacy of windfall spending and oil-driven boom-and-bust cycles through a new culture of relative fiscal prudence, institutional reform and reformist policymakers, led by the celebrated finance minister Ngozi Okonjo-Iweala.
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The climax of this new-found fiscal approach was the establishment of a sovereign wealth fund (SWF), which began to assume shape in the summer of 2012, backed with, an albeit modest, seed capital of $1 billion. Designed as a buffer against oil-price shocks, a savings vehicle for future generations and to catalyze long-term investment in productivity-enhancing areas, such as infrastructure, the establishment of the SWF has been a key driver in boosting sovereign’s creditworthiness in recent years.
It has also nurtured foreign-investor confidence over the growth prospects and quality of policy-making at the federal level in sub-Saharan Africa’s largest economy, though doubts remain over the extent to which discipline in fiscal spending has been institutionalized at the state level.
Kayode Ogunro was a key architect in shaping the development of the SWF, in his capacity as special adviser to the finance ministry, after being poached in 2012 from a lucrative private-sector career in private-equity.
He represents the new era of sophisticated public-financial management in Nigeria, boasting commercial nous, and agility at navigating public and private stakeholders.
“I was approached directly in the summer of 2012 by the minister of finance," says Ogunro. "I had not contemplated working in an official capacity before. I accepted the offer since it came from the right person at the right time and I relished the opportunity to work in the public service. I saw it as a once-in-a-lifetime opportunity.”
Ogunro has a mandate to invest in illiquid, hard assets with a commercial rate of return, in an economy starved of long-term private-sector financing in both local currency and dollars, and foreign-investor appetite to take on construction risk in infrastructure projects.
Nevertheless, he strikes an optimistic note, saying: “The key to success [through the establishment of the SWF and public-private partnerships in infrastructure] is that everyone’s interests are aligned. We also have the right people in place.”