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Analysis

Now Buhari’s hard work really begins

by Kingsley Chiedu Moghalu

Now Buhari’s hard work really begins

After a delay of nearly four months, Nigeria’s newly-elected President Muhammadu Buhari has started to name his ministers – beginning with himself as Minister of Petroleum Resources.

Although the pace of announcements has been slow, the news is welcome – but now the hard work really begins.

Boko Haram, though significantly weakened, has wreaked havoc in Nigeria’s northeast region, which needs to be rebuilt. Corruption is systemic. The economy, battered by external shocks from an excessive reliance on crude oil revenues, is facing sustained headwinds from low oil prices and the country’s failure to save for a rainy day while the price of Brent crude was above $100 (it was $42.23 at its lowest point so far this year on 24 August).

The country remains deeply divided along ethnic and religious fault lines. Nigeria is still in search of nationhood and its politics remains largely a contest by ethnic nationalities for winner-takes-all political power that is deployed not for a great national vision, but for sectarian patronage networks. Add the problem of deep cleavages within Buhari’s ruling party, the All Progressives Congress, and the new leader’s challenges are nearly complete.

Buhari needs to justify his slow start by ensuring that his cabinet, whenever it is compiled, performs to match the high expectations set for it. He and his team must tackle Nigeria’s problems with a sophisticated understanding of how the problems and the solutions are interlinked.

The great benefit of Buhari’s presidency has been the stirrings in the national ethos of a shift away from institutionalised corruption and a lack of consequence for nonperformance in public service to one where his leadership example has inspired many citizens to fall in line. Many of these people are doubtless playing to the gallery. The real task is to build a system and institutions that will outlast Buhari’s presidency.

Getting the balance right between a cult of personality worship and de-personalised reforms of the system will be important. But contemporary Nigerian history has demonstrated that the values and the competence of its leaders matter. Nigeria’s sustained progress requires a leadership succession that takes the country into the future on the basis of a new national ethos and genuine economic transformation. The fleeting blessings of commodity boom cycles will no longer do.

The country’s economy presents complex challenges. It seems clear that the policy direction will be towards a strong role for the state in economic policy, even while welcoming private business and investment. This is partly evident from Buhari’s reluctance so far to abolish wasteful petroleum subsidies in the belief that to do so would hurt the poor. But in reality the subsidies are not effective, and benefit the rich more than the poor.

Buhari would achieve far more by abolishing them and targeting the resulting savings at conditional cash transfers to the very poor, based on clear criteria. The Central Bank of Nigeria’s measures to manage the depletion of foreign reserves through strict controls on foreign exchange transactions, instituted in order to avoid further currency devaluations, point to rising nationalism in economic policy. As a result, the US investment bank JPMorgan has removed Nigeria from the bank’s Government Bond Index Emerging Markets. True believers in the efficient market hypothesis have expressed concern, but it is noteworthy that emerging market giants such as China and India were not listed in the index in the first place. While the recent actions and statements of the Central Bank of Nigeria have affected perceptions in financial markets about its independence, the need for central banks to work independently surely also encompasses independence from vested private sector interests including foreign portfolio investors.

The real test of strategic economic nationalism will be how long it takes Nigeria to achieve a diversified industrial economy that can support the value of its currency and reduce the structural impact of the current dependence on commodities. Nigeria’s economic potential is hobbled largely by political factors that create perverse incentives for the wrong policy approaches. Buhari must act on the need to devolve more powers, responsibility and accountability to the constituent parts of Nigeria’s dysfunctional federal structure. Excessive powers are concentrated in the federal government in Abuja, and the country’s states are little more than mendicant supplicants for oil revenues at the feet of the national government.

Constitutional amendments that create incentives for real sector economic activity in the states and regions – as opposed to the prevailing mentality of sharing’ a vanishing ‘national cake’ of oil patrimony – is the path to both true economic transformation for Africa’s bellwether country and the unity in diversity it sorely needs. Thinking through these policy dilemmas is not a job for one man. 

The buck stops with the president, but Buhari needs a strong and credible team. That’s why he needs to complete his cabinet as soon as possible.

■ Kingsley Chiedu Moghalu was deputy governor of the Central Bank of Nigeria (2009-14) and is a professor at the Fletcher School at Tufts University. He is a member of the OMFIF Advisory Board.

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