Okonjo-Iweala quits World Bank to be Finance Minister

World Bank managing director Ngozi Okonjo-Iweala resigned her post on Friday in order to become Nigeria’s new finance minister, spurring hopes of reform in sub-Saharan Africa’s second biggest economy.

Okonjo-Iweala will take up an expanded position as Coordinating Minister for the Economy and Minister of Finance in Nigerian President Goodluck Jonathan’s new cabinet, World Bank President Robert Zoellick said in a statement.

“Her desire to serve her country is truly a big loss for the World Bank but a major gain for Nigeria as it works to craft its economic way forward,” he said.

Government sources told Reuters two weeks ago that Jonathan had asked Okonjo-Iweala, a respected former finance minister who helped negotiate debt rescheduling in 2005, to return to her old position with broad powers over economic management.

Jonathan was sworn in for his first full term on May 29 following general elections and his ministerial choices are being closely watched by Nigerians and foreign investors keen for a team capable of driving badly needed reforms.

“We think President Goodluck Jonathan’s selection of the World Bank MD will result in a vote of confidence for his administration, and suggests he is serious about initiating fiscal reforms,” Renaissance Capital said in a research note.

Okonjo-Iweala laid out her vision for the Nigerian economy during her screening by the Senate on Wednesday, pledging she would create jobs and ensure the country “lives within its means” if approved as a cabinet minister.

The high cost of government has been a major concern for economists and investors. Recurrent expenditure accounts for well over half of spending despite poor public services.

Ministers sworn in

Jonathan swore in 17 other ministers on Friday including outgoing finance minister Olusegun Aganga, who is expected to be put in charge of a newly-expanded commerce and investment portfolio, presidency sources said.

Their roles will formally be announced next week.

Aganga, a former Goldman Sachs executive, is expected to oversee the sovereign wealth fund created under his administration as part of his new post, the sources said.

Okonjo-Iweala would also have been sworn in on Friday but returned to the United States in order to resign and would be confirmed once back in Nigeria, the presidency sources said.

Jonathan reappointed 12 outgoing ministers to their old jobs a week ago, including oil minister Deziani Alison-Madueke, a move his critics saw as an uninspiring start.

The inclusion of Okonjo-Iweala in the cabinet could lend more weight to his reform ambitions, although sceptics question whether she will have the full political backing she needs.

“As a reformist, her reputation speaks for itself,” said Razia Khan, head of Africa research at Standard Chartered.

“Whether Ms. Okonjo-Iweala is given the necessary political backing to enact key reforms … will also be closely watched.”