Nigeria 'to reduce oil reliance'

Nigeria's finance minister says infrastructure is the real challenge

Nigeria is to use an $18bn debt write-off to reduce its dependence on oil, according to its finance minister.

The country has long relied on oil revenues, a situation which has contributed to endemic corruption.

But economic and anticorruption reforms mean the Paris Club of creditor states has written off 60% of the debt, said Finance Minister Ngozi Okonjo-Iweala.

The money saved, she said, would help the country build infrastructure to help it diversify its economy.

"We are trying to develop a non-oil economy to take the focus away from oil," London's Observer newspaper reported her as saying, allowing a more stable path to economic growth than one dependent on fluctuating oil prices.

"The private sector says the biggest obstacle to investment is no longer briery and corruption, but infrastructure."

Nigeria has long argued that the debts run up during the decades of dictatorship should not now bedevil its seven-year-old democracy.

Payoff

However, it is the soaring price of oil which means that Nigeria is now in a position to cut its deal with the Paris Club.

WHAT NIGERIA OWES UK - $7bn France - $5.6bn Germany - $4.6bn Japan - $4.2bn Others - $11.7bn Total debt - $32.9bn Source: Nigerian Debt Management Office, 2003

It is using its oil revenues to pay $12bn over the next six months to buy back a chunk of its estimated $30bn debt to Paris Club members.

In return for that and other debt arrear repayments, the Club will write off the rest of the country's borrowings.

And corruption remains a serious problem, international observers say.

Anti-graft watchdog Transparency International rated Nigeria equal 152nd out of 159 countries in its 2005 Corruption Perceptions Index, which uses surveys of businesspeople, politicians and academics to class how deep-rooted graft is in a country.