Will Buhari's reform agenda for Nigeria be derailed by political inaction?
President Muhammadu Buhari beat Goodluck Jonathan in the March election, which was Nigeria’s first-ever peaceful political transition. That said, far from reaping the benefits of the “dividends of democracy”, the long delay in appointing the new cabinet led the country to a political stalemate and, consequently, to much-needed economic reforms being postponed.
The main impact of the political standstill after the successful election in March was the lack of initiative amid a tough economic and political environment. Oil prices remained low, thereby hampering government revenues and causing a severe shortage of hard currency. Meanwhile, Boko Haram militants’ activity continued destabilizing the northeast of the country.
While losing precious time, the new government was unable not only to unveil the much-needed economic and political reforms as President Muhammadu Buhari had promised, but it was also unable to present the budget for next year nor push forward urgent infrastructure programs. Moreover, in this context, regular government activity was halted.
The main priorities for the new cabinet, once approved by the Senate, will be tackling a dire economic situation and struggling against the Boko Haram insurgency in the northeast. Buhari will have to strengthen cooperation with regional counterparts to effectively counter the menace of Boko Haram, as in recent months the group has spread its activity beyond Nigeria’s borders. Greater support from the United States is also crucial to improve the training and equipment for the Nigerian Armed Forces.
In the economic arena, Buhari has a tough road ahead. Oil prices are expected to remain low for the foreseeable future, therefore dashing hopes of a prompt and strong improvement of the economy. Against this backdrop, Buhari has to present a credible budget for next year—which could include a gradual removal of subsidies—plus a clear roadmap of future economic reforms, particularly Buhari’s long awaited overhaul of the oil industry. Increasing the government’s transparency and successfully cracking down on endemic corruption should also be among the first steps of the new cabinet. Finally, the new government should assess whether the current exchange rate is appropriate given the negative spillovers that maintaining the naira at present levels has on the economy—mainly the restriction of U.S. dollars.
While it is fair to acknowledge that Nigeria’s dim economic situation mostly reflects the sharp fall in commodity prices, it is also true that the delay in appointing the new cabinet resulted in political inaction and made the possibility of unfolding measures to better face the challenging economic environment vanish. The Senate has now finished screening candidates for cabinet positions and the new government should be appointed in the coming days. Buhari still has time to demonstrate to the world and, more importantly, to his own people, that Nigeria’s democracy is slowly consolidating. However, further delays in economic and political reforms could disillusion the millions that had trusted him to change the country.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of Met the why particular S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. Met the why particular S.L.U. takes no responsibility for the contents of third party internet websites.
Author: Ricard Torné, Lead Economist
Date: November 3, 2015
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