This is a joint post with Kaci Farrell.
During a House Financial Services subcommittee hearing on the global financial crisis and Nigeria’s financial reforms, CGD vice president for programs and senior fellow Todd Moss said Nigeria’s economic and political stability are inextricably linked to each other and to U.S. national interests. He urged members to support the African Development Bank and the World Bank and proposed a new idea: Nigeria should consider using oil revenues to finance cash transfers to citizens in the Niger Delta.
Moss talks with Chairman Gregory Meeks (D-NY)
The hearing was primarily an opportunity for Chairman Gregory Meeks (D-NY) and Ranking Member Gary Miller (R-CA) to welcome two special guests: Lamido Sanusi, Governor of the Central Bank of Nigeria and Arunma Oteh, Director General of the Nigerian Securities and Exchange Commission. It’s extremely rare for members of foreign governments to testify before the U.S. Congress, but Meeks met Sanusi during a congressional delegation to Nigeria earlier this year and persuaded him to come. Both Meeks and Miller praised Nigeria’s efforts to modernize the country’s banking and financial system in the aftermath of the economic crisis.
Moss also highlighted the links between Nigeria’s economic and political stability and U.S. national interests:
The United States needs a strong, capable, and stable Nigeria… Fixing the financial sector is a prerequisite if the country is going to modernize, become middle-income, and join the international community as a responsible and dependable partner.
But given the Subcommittee on International Monetary Policy and Trade’s jurisdiction over the multilateral development institutions, Moss urged members to support—and adequately fund—the African Development Bank and the World Bank, which have been instrumental in helping the rest of Africa cope with the crisis:
The multilaterals are critical to the recovery of the global economy, and worthy of robust U.S. support. I would urge Congress to look favorably upon the soft loan window replenishments and general capital increases for the African Development Bank and the World Bank in particular. These are investments that leverage U.S. contributions, build global markets, and expand the circle of prosperity.
Moss also pitched a new idea. Nigeria, he said, should consider providing payments in cash from oil revenue to citizens in the Niger Delta. This would adapt a model used in Alaska since the 1980s whereby the state pays dividends from oil earnings directly to residents as a way to check the power and wasteful spending of government. Moss explained that new technologies, like iris scanning and mobile banking, make these transfers easier than ever. Cash transfers are now being used in Mexico, Brazil, South Africa, Bolivia and Mongolia. Next up: Nigeria?