* Strong reformist reputation
* Political backing will be key
* Completes team of financial reformers
By Nick Tattersall and Lesley Wroughton
LAGOS/WASHINGTON, July 8 (Reuters) - Ex-World Bank managing director Ngozi Okonjo-Iweala is returning to Nigerian politics with a reputation as a fearless reformer and tough negotiator, but she faces an uphill struggle against entrenched vested interests.
Okonjo-Iweala resigned from the World Bank on Friday after being cleared by Nigeria's Senate this week to serve in President Goodluck Jonathan's new cabinet, where she will become finance minister with broad economic powers. For details, see [ID:nLDE7670NE]
Passionate about promoting Africa as an investment destination and widely-respected for her practical approach to development, Okonjo-Iweala stands out in a cabinet largely made up of familiar faces and anonymous technocrats.
She was praised the last time she served as finance minister, from 2003 to 2006, for fighting corruption, boosting transparency, and negotiating the cancellation of nearly two-thirds of Nigeria's ${esc.dollar}30 billion Paris Club debt.
At the World Bank she led efforts last year to replenish the International Development Association, its fund for the poorest countries, involving tough negotiations with donors.
At a Nigerian Senate hearing to confirm her nomination this week, Okonjo-Iweala laid out her vision for sub-Saharan Africa's second-biggest economy, pledging to tighten fiscal policy and ensure the country "lives within its means." [nLDE7650V0]
She will have to step on toes if she is to do so.
Her predecessor Olusegun Aganga and Central Bank Governor Lamido Sanusi were hauled before lawmakers last year to explain comments that parliamentary overheads were too high.
Former cabinet minister and leading opposition figure Nasir El-Rufai was briefly detained by state security last week over a newspaper column in which he criticised the cost of government.
Okonjo-Iweala has not shied away from a fight in the past.
"When I became finance minister they called me Okonjo-Wahala, or 'Trouble Woman'. It means 'I give you hell'," she told Britain's Guardian newspaper in 2005.
"But I don't care what names they call me. I'm a fighter; I'm very focused on what I'm doing, and relentless in what I want to achieve. If you get in my way, you get kicked."
CHANGE OF MINDSET
Okonjo-Iweala left Nigeria as a young adult to study economics at Harvard, before working at the World Bank for more than two decades and rising to become a vice president.
Her return to Nigeria as finance minister in 2003 cemented her international reputation.
She was one of only three women in the world to hold such a position and won a host of accolades, including being named by Forbes magazine as one of world's 100 most powerful women.
But her second stint as finance minister under President Goodluck Jonathan could throw up even greater challenges.
"At the time when the objective was restoring the creditworthiness of Nigeria and rescheduling its debt, it was pretty straightforward what needed to be done," said Bismarck Rewane, head of Lagos-based consultancy Financial Derivatives.
"But with most of the work this time around, the objective is not external but internal. The task at hand is a mental adjustment ... making her colleagues understand that we have to have a change of mindset. That is a challenge."
POLITICAL WILL
Africa's most populous nation faces a long list of economic hurdles, not least opaque government spending, rampant corruption, import dependence, and the need to tame double-digit inflation while creating jobs and building infrastructure.
Her return means she will complement an existing triumvirate of reformers including Sanusi at the central bank, Mustapha Chike-Obi, head of the AMCON state "bad bank," and SEC boss Arunma Oteh, who have turned Nigeria's financial markets inside out over the past two years. [nLDE72M0ZA]
"The prospect of a strengthened, reformist finance ministry, working hand-in-hand with a strengthened, reformist central bank, is what investors will be hoping for," said Razia Khan, head of Africa research at Standard Chartered.
"Pulling together, this co-ordination of reforms could be transformative of Nigeria's prospects. But much ultimately rests on the political will to allow this to be the case."
Sources close to the process say Okonjo-Iweala negotiated clear terms on which she would be willing to return to serve in government, including being given broad powers over economic management and freedom from political meddling.
"In her first stint she had the strong support of President Obasanjo which aided her efforts greatly," said Kayode Akindele, partner at Lagos-based advisory firm JMH-TIA Capital.
"She will need similar support from President Jonathan if she is to succeed in facing down many of those interests that have already started manoeuvring to oppose her," he said. (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ ) (Writing by Nick Tattersall; Editing by Andrew Hay)
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