She stunned the world of politics when she resigned last week from President Olusegun Obasanjo’s administration. Analysts in London and Paris, who spoke to BusinessDay expressed "serious difficulties" in coming to terms with any reasons why Okonjo-Iweala, the woman they chose to call "the face of reform and transparency" in the government, was allowed to leave office.

Those who spoke to BusinessDay, including Razia Khan, the Regional Head of Economics, Africa, at Standard Chartered Bank in London, Gregory Kronsten, a financial and Emerging Markets analyst at Germany’s Commerzbank London office, Victor Lopes, a senior economist and Africa analyst at Paris-based Societe Generale, and Antony Goldman, Director, Africa, London-based Clearwater Research Services. They all agreed that there were serious concerns in the international financial community over the fate of the economic reform agenda of the government going forward to the 2007 elections.

Kronsten, who also deals in Nigeria debt instruments at Commerzbank, said the resignation was evidence of tension in the government ahead of the 2007 presidential elections.

"The resignation from the government of Okonjo-Iweala is an unfortunate reminder of the tensions ahead of the presidential elections in 2007", he said in a statement he specifically directed to the international financial market in London yesterday.

He sees the resignation of the former finance minister ahead of a contested election as sending a poor market signal, describing it as "the loss of a technocrat with a name for transparency".

Kronsten thinks there are now questions to be asked about the reform momentum of the government, noting that as finance minister, Okonjo-Iweala was the best-known member of the reform team, who played a major role in its successes.

He said: "As a finance minister from 2003 until June (when she moved to the foreign ministry) she was the best-known member of the reform team, and had a major role in its successes (the introduction of the oil windfall account, banking sector consolidation and landmark debt relief/buyback deal with the Paris Club).

"The changes brought a debut sovereign rating of BB-. She may return to whence she came (World Bank) but the loss of a technocrat with a name for transparency ahead of a contested election sends a poor market signal," said Kronsten.

Razia Khan, of Standard Chartered, shares the view that the market will react with a measure of uncertainty in the near term.

She, however, said a lot would depend on whether the Fiscal Responsibility Act, championed by the former finance minister got passed into law.

Khan said: "There will be concern whether or not the economic reform will die with the exit of Okonjo-Iweala. If this were to happen, then the market’s conclusion will be that the reshuffle that took place earlier in June did not make sense. There will certainly be caution internationally to see what will happen next".

However, with her departure from government, Khan says the market will clearly view this as negative, adding that she has played a key role in economic reform of the government. "It will be looked at as the most well-known face internationally has left the government. So, yes, it will be seen as negative."

Khan has good news for Nigeria as far as the international money market is concerned, though she says it won’t be negative for Nigeria, noting that this is because of all the indices going for Nigeria at the moment, including oil prices, which remain strong.

"Besides, macro-economic indices are still favourable. Earnings are still good for Nigeria", she said.

Antony Goldman, of Clearwater Research, says that on a positive note, Nigeria’s credit rating will not necessarily be affected by the resignation.

According to him, "credit ratings are driven more by performance and numbers than by personality," although he admits that under the former finance minister, the country enjoyed a lot of goodwill from the international finance community.

However, Goldman said because of the fact that Okonjo-Iweala was the face of reform in Nigeria to the international community, many people outside, will need a lot of persuading from the government that Nigeria is better off without her.

He said: "I think a lot of people outside, by which I mean private banks, international financial institutions and organisations, western financial institutions, who, while dealing with Nigeria, saw her as the face of reform in Nigeria, will need some persuading that Nigeria is better off without her in government."

But more worrying for Goldman, who said the general feeling in the market is that there was serious misgiving in the way the former finance minister was treated, is the shaking of market confidence following her removal as head of the economic team.

Specifically, he said market analysts questioned the wisdom in announcing Okonjo-Iweala’s removal as head of the economic team, while she was away in London negotiating with key finance people over Nigeria’s debt.

"If there was something wrong with her being the head of the economic team, the government should have been bold enough to say so. To remove her without offering some explanation was to send a negative signal to the market," he said.

But Goldman explained that what had happened in the past two months shows that Obasanjo was still very much "the boss" even going into an election year, especially with the knowledge the he won’t be returning for a third term.

He said the questions that Okonjo-Iweala’s departure raised included what happened to the reform process? "Are they really going to move the process forward? Question will also be asked about control of administration and spending in government."

"The pressure is now domestic. The government will need to show that it won’t be business as usual with the departure of Oknojo-Iweala. There will be keen interest to see what happens to tender arrangements and what happens with the award of contracts and dealings at the NNPC," Goldman said.

For Victor Lopes, a senior economist and Africa analyst at Societe Generale in Paris, there is some difficulty in understanding the reason for her resignation.

But he said that ahead of next year’s election, this could be a sign of danger for the reform agenda.

"The outlook is heavily constrained by the next elections. The major concern right now is who is going to be the next President of Nigeria.

Will the transition be smooth? However, the key point to make here is that this resignation of the former finance minister, who played a key role in getting Nigeria out of the Paris Club of debtor nations, is not a good sign for the reformist agenda," Lopes said.


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