Nigeria, Africa’s largest economy and the world’s most populous black nation, went to the polls to choose new political leaders at the national and sub-national level in April 2015. There were speculations and educated prophecies that violence and carnage would follow the deeply polarizing elections, which supposedly pitched the ‘Northern Muslim ethnic majority’ against the minority oil producing states of the ‘South-South’. A pact within the ruling People’s Democratic Party (PDP) to rotate the presidential seat among candidates from the Northern states and the Southern states, had been broken when then Vice-President Goodluck Jonathan, the loser of the 2015 polls, ran for office in 2011, following the sudden demise of the substantive president of Northern extraction, President Umaru Yar Adua.
Some prominent politicians from the North, miffed by that development, darkly warned that the nation ‘would be made ungovernable’ for President Jonathan. The Boko Haram phenomenon was apparently exacerbated by those sentiments. The South-South region was the proverbial goose that laid the ‘golden egg’ of crude oil that formed the bulk of the nation’s prosperity. Exclusion from equitable access to national political and economic power and participation in political, economic and social benefits spawned the militancy and a brief insurgency in the Niger Delta. The election of President Jonathan was widely seen as a means of appeasing the sense of injustice and violence. Whilst the South-South wanted a second term for its son, the Northern majority groups were anxious for a return to power, in spite of having ruled for more than forty years of the nation’s existence.
Run up to the 2015 Elections
The ruling PDP had been in power since the re-introduction of civilian rule in 1999. The opposition parties were small, many and weak. However, less than a year to the 2015 elections, the major opposition parties managed to cobble together a grand alliance named ‘All Progressive Alliance’ (APC). It remained united through the difficult journey of nominating a presidential candidate from among the various factions of the party, and chose a highly resonating theme of ‘change’ and ‘anti corruption’ as the major planks of their election campaign. President Jonathan went into the elections embattled. The strictures were about a track record of disastrous management of the Boko Haram crisis, failure to deal with reported cases of corruption among members of his cabinet, and perceived political and economic marginalization of the South-West region, among others.
President Buhari was voted into power by a cross-section of Nigerian’s who were appalled by the poor record of anti-corruption and governance. These included ordinary citizens in the Northern parts of the country, who saw General Buhari as an austere but incorrupt leader, (in spite of the fact that the incumbent governors in many of the States in the region were from the PDP), and a simple majority of the South West region electorate (which had voted into power in 2011 a key faction of the opposition party). The outcome of the election was historic in Nigeria and Africa, as the common pattern was that ruling parties were seldom ever ‘voted out of power’. Swift concession of victory to the winner by President Jonathan was sagacious and an epochal manifestation of Nigeria’s acculturation of the finer aspects of democracy and political culture. The elections, therefore, were widely adjudged to be free and fair, and the electorate demonstrated political sophistication and passion for participative democracy.
The handover process
Unfortunately, the transition was bedeviled by partisan politics and the new administration complained of being given unhelpful and thin ‘handing over’ notes or situation reports only four days to its inauguration. After his swearing-in on May 29, 2015, President Buhari decided to spend some more time to obtain more detailed knowledge of the ‘situation report’ and to fine tune a programme of action for his tenure. He unapologetically refused to appoint a cabinet for four months, in spite of vociferous complaints that economic direction was unclear, executive administration and the national economy was slowing down due to the absence of a cabinet. He preferred, he said, to be slow and methodical as there was a need for reorganization and whittling down of the size of administrative structures as a cost-cutting measure. He pruned down the number of ministries from thirty to twenty-five, named his cabinet on October 1, 2015, and swore them into office on 11th November, 2015.
Essentially, the cabinet is comprised mainly of professionals with experience of politics, administration and public service, as well as technocrats. This is exemplified by the appointment of five former state governors; Messrs Amaechi, Fashola, Fayemi, Onu and Ngige, generally acclaimed to have been effective and of high integrity. They also visibly worked hard to get Buhari elected. There are a number of former ministers (called commissioners) of state governments, such as Mrs. Kemi Adeosun (who had previously worked in the private sector with PWC), Mr. Uguru and Mrs. Abba. Some former political associates of the President, albeit with distinguished pedigrees, political or professional and administrative experience, were also appointed. These included Messrs Ogbeh, Shittu, Shehuri, Adamu Adamu, Suleiman Adamu and Malami. Also appointed were technocrats, such as Messrs Enelemah, Kachikwu and Ohanire (Buharis campaign coordinator in Edo State), respected academics and former university administrators, Professor’s Adewole, Daramola and Onwuka. Accomplished professionals like Messrs Udoma and Ocholi (both Senior Advocates of Nigeria), seasoned international civil servants and technocrats (Mr. Onyeama; Mrs. Ahmed), and former top military officers (Generals Dambazau and Dan-Ali), also made the list. Finally, political gladiators with respectable professional, administrative and other background, such as Messrs Lai Mohammed, Lokopbiri, Dalong, Bello and Bawa were also appointed.
Overall, the cabinet largely comprises of well-educated and travelled persons (in several cases with master’s and doctorate degrees), experienced professionals, administrators and successful politicians. In other words, mostly individuals with a track record of accomplishments and strong character. This is neither a cabinet of figure-heads and paper tigers or nod to clientelism. It is a strong cabinet, which potentially should be able to initiate the required change and astutely manage the politics of a complex and diverse society like Nigeria. It is generally agreed that appropriate postings to and allocation of ministries were made. Many of the ministers have their roots in the private sector and should be empathetic to the concept of private sector-led economy approaches. There is consensus that Buhari’s cabinet has quality. This largely corresponds with the initial considerations revealed by President Buhari before the appointment of ministers, when he said the following (Isiaka Wakili & Nuruddeen M. Abdallah, Daily Trust Newspapers, April 14, 2015):
‘I want them to be completely detached people who are patriotic Nigerians, and who are knowledgeable and experienced. If we get majority of politicians involved, it will lead to a lot of row and we may end up with inconclusive recommendations, which will not be very helpful in our condition.’
Although the constitution requires the cabinet to comprise a minister from each of the thirty-six states and the federal capital territory, the South East Region of the Igbo ethnic stock, which almost entirely voted against Buhari, complained of being marginalized in the number of overall political appointees and of being given insignificant ministerial slots. Matters are not helped by the fact that media reports at the dawn of the new administration quoted Buhari as saying that he could not be expected not to favour those sections that voted for him in terms of political appointment and patronage. Ironically, the leaders of the Ijaw Youth Congress, the ethnic group of former President Jonathan, were reported to have commented that the cabinet was fair in terms of geo-political balance. On the other hand, complaints that appointing only six women amounted to under-representation appear to be fully justified.
The political and economic direction
The Vice-President, Professor Yemi Osinbajo, at an inception programme and policy retreat for the newly appointed ministers before they were sworn in, gave a hint of the economic strategy of the Buhari administration. He said (Olalekan Adetayo, Punch Newspapers, November 6, 2015) that government would seek to boost the economy by ‘embarking on massive infrastructure building/renewal programme; social spending/social protection; improved consumer spending; job creation, and expansionist fiscal/monetary policies.’ He projected that the 2016 budget would be in the range of N7 – 8 trillion, virtually doubling the average size of the budget during the past eight years. Capital expenditure was in the order of 30% compared to an average of about 10 – 15% in recent times.
Government admits that it is ‘exploring’ the option of borrowing $3.5 – 4 billion from the World Bank, the African Development Bank and other international sources. World Bank loans would be subject to the endorsement of the International Monetary Fund (IMF), which could be expected to require commitment to a credible economic reform programme. The IMF Managing Director, Mrs. Lagarde, visited Nigeria in January 2016 and advised that oil subsidies be eliminated and the VAT rate increased. Government says that it would rather enlarge the VAT tax base, but began a ‘price modulation’ of petrol prices that appears to be a politic way of easing off subsidies. The Chairman of the Federal Inland Revenue Board has announced that the service would collect an unprecedented N4.6 trillion in tax revenue in 2016. Obviously, the administration has accepted the counsel of leading Nigerian economists that it would be okay to borrow externally, especially in order to fix and build up decrepit infrastructure. Emphasis would also be placed on taxation initiatives and the elimination of wasteful spending and graft to improve the revenue profile of the federal government. The current aversion of President Buhari to the devaluation of the Naira currency rate, may be expected to give way to reality and the ‘conditionality’ of external borrowing.
Security concerns are primary in the wake of the Boko Haram crisis. No wonder the Ministries of Defense and Interior were allocated to retired Generals Dan-Ali and Dambazzau, respectively. Government communicated a commitment to quell the crisis in the shortest time possible by appointing respected professional soldiers and credible military Chiefs of the armed forces, motivating the men and securing military pacts with Nigeria’s immediate neighbours and assistance and support by the international community.
Mr. Enelemah, a notable figure in international finance and foreign investment, a former Goldman Sachs banker and consummate professional, was charged with the task of driving up industrial development, trade and investment. Nigeria has been a leading destination of FDI in Africa in the past decade and the government is obviously keen to facilitate industrialization, expand trade and encourage greater investment inflows to boost national development. Nigeria is the largest economy in Africa, with a population of one hundred and seventy million and investment friendly laws, albeit a challenging business environment for the novice, but with very good returns on investment. It remains a leading and logical destination for investment in Africa.
Mr. Udoma and Mrs. Adeosun, ministers for Budget/National Planning and Finance respectively, are respectable professionals, experienced in the ways of the commercial and financial sector. However, the separation of the budget department from the finance portfolio is novel, and the appointment of a commercial lawyer and industry player with regulatory experience as National Planning and Budget minister is somewhat unusual. With no clear arrowhead for coordinating fiscal policy and the economy as yet, there are likely to be a few stumbles along the way.
The unusual allocation of the triple portfolio’s of power, roads, and housing to Mr. Fashola, the former governor of Lagos State, widely acclaimed as the best performing governor in the 2007 – 2015 class of governors, demonstrates the importance and priority accorded to those matters and the expectation of performance placed on him by the President. A stock of functional infrastructure is important for improving economic growth and development, as well as attracting investment, and it is clear that government is earnest about orchestrating a turn-around.
Another subject that is expected to receive marked attention is that of job creation meant to boost the economy and to quell the looming danger that youth employment poses to national political stability and security. The APC manifesto promises to create about one million jobs annually, implement a conditional cash transfer scheme of N5000 to poor parents and a meal a day to pupils in public schools but that looks increasingly utopian now.
The stalled reform of the oil and gas sector, meant to improve efficiencies, governance, fiscal terms and local content, will also be pursued by a veteran of the oil and gas industry, the junior minister, Dr. Kachikwu; who is directly under the supervision of the President, as the substantive Petroleum Resources Minister. However, government is determined to restructure the economy and diversify revenue sources away from crude oil receipts. The Solid Minerals ministry, under the cerebral, technocrat and former State Governor, Dr. Fayemi, is therefore being re-positioned as a major revenue earner. Nigeria is blessed with many minerals, which have been neglected because of crude oil, and hold tremendous opportunities for discerning investors.
Agriculture, with political veteran and farmer Mr. Audu Ogbeh, is a major plank of the administration’s structural reform, food security and employment strategy, as well as the largest component of national GDP. It is worth stating that the ministry was adjudged one of the best performing under President Jonathan, as it was led by Dr. Akinwumi Adesina (currently the President of the African Development Bank (ADB)), a technocrat and star performer in that cabinet. Hopefully Mr. Ogbeh will not relent in pursuing the market led approach, technological and other scientific and process innovations that distinguished the ministry in the former dispensation and will encourage more private and foreign investment in agriculture. The Olam Group, a Singaporean led firm, is active in the agri-business sector, and has demonstrated by its success the transformation of the Nigerian agriculture value-chain and the immense, untapped investment opportunities available.
What next on economic reform?
The Jonathan administration apparently became too distracted or mired in politics to decisively and coherently prosecute well acclaimed economic reforms initiated by the Obasanjo Government in 2003, which the Yar Adua Government promised to continue, but largely reversed and stymied. Jonathan could not progress on the reform of the oil and gas sector and on the removal of petroleum subsidies in the aftermath of widespread protests shortly after taking office in 2011. Vested interests and the legislature ensured that the consideration of the relevant bill was left too late until the dissolution of the 7th parliament in April 2015 was imminent. The power sector reform was subjected to delays and politics and has run into financing difficulties. Fiscal consolidation and structural reforms were subordinated to the lure of winning a second term. Privatization, market reforms, anti-corruption and governance reform, as well as public sector reforms, were virtually abandoned or slow walked.
It was expected that President Buhari would immediately settle down to pursue these reforms, widely regarded as imperative to improve competitiveness and to drive development. However, the administration has so far not made a commitment to wholesale pursuit of the agenda and methodology of the reforms. For example, it chose to adopt administrative and capital control measures to tackle currency exchange rate pressure. There is not yet a consensus among pundits and economic experts that a convincing plan to deal with revenue erosion arising from the oil price slump has been finalized. Earlier announced policy and measures meant to increase government revenue, increasingly look in need of fine tuning as oil and commodity prices continue to nose dive. Coherent and sophisticated communication on economic policy is a work-in-progress, apparently because of the failure to expressly name a select team or ‘Kitchen cabinet’ on the economy, or because the various ministers are yet to bond and form an effective team.
President Buhari admitted that governance standards and culture, as well as the economy, were in a more terrible state than he and his party assumed before taking office. Given the ‘sabotage’ in the takeover process mentioned earlier, it was unrealistic for the Buhari administration to ‘hit the ground running’. However, it is moot whether an earlier naming of a cabinet and getting the team to fashion economic and governance strategy, would have been more effective and time saving. What is clear is that an outstanding cabinet has been appointed and that the iteration of policies and strategy will inevitably take place given the pedigree, experience and strength of character of most members of the team. It is reasonable to expect that the cabinet will very soon fashion a coordinated strategy, policies and synergy that will focus on the challenges of structural reform, diversification of the economy and revenue sources, and the more integrated and long-term task of increasing national competitiveness and sustainable development. The moral tone of the administration, its anti-corruption campaign, ethical leadership, good governance and institution building stance, appears unimpeachable so far. With the composition of the cabinet and strong leadership of a President who is innately frugal, honest and empowers his team, the necessary institutions for efficient markets, good corporate and regulatory governance, and efficient legal and judicial system are assured.
The political calculations
In selecting his ministers, President Buhari had to ensure that the various parties that coalesced to form the APC were appropriately represented in his cabinet. Necessarily, there had to be some weighting of the relative strengths of those parties in the number and prestige of the portfolios assigned. It is fair to assume that prior agreement on such matters must have been fundamental to the formation of APC. President Buhari informed the nation, before picking his cabinet, that he had a free hand to determine who the ministers he would work with would be, apparently from nominations received by various blocs and interest groups, but that he would have to agree the list with his party executives before announcing the team. Granted that an incumbent president eclipses other power brokers in the party, it is a fair surmise that those power brokers had to accommodate the president rather than the other way round.
It was being speculated in the press that President Buhari had selected persons who would migrate their loyalty to him over time. In that way, it might appear to be that his own wing of the party, the Congress for Progressive Change (CPC), would increase in influence over the next three years or so. There is evidence that a particular wing of the party that broke away from the ruling PDP, felt cheated by the initial allocation of national positions after the elections. Consequently, it apparently engaged in maneuvers with the PDP to have its own candidates, rather than the candidates of APC, elected as Heads of the upper and lower houses of Parliament. Nevertheless, there are a number of ministers in the cabinet who were former members of the PDP and may be expected to transfer their loyalty to the President.
At the level of the cabinet, most of the ministers are independent minded, have track records of integrity and are ambitious to demonstrate credentials as results-oriented, in order to aid their future political or professional careers. One expects them to demonstrate overriding allegiance to the constitution and the people of Nigeria rather than to the President as an individual or to their factional leaders and ethnic groups of origin. There is a gargantuan challenge of development and institution building that the nation is facing and the APC has demonstrated some resilience in managing its internal differences by a good degree of adherence to party democracy and ethical leadership. The cabinet should, therefore, have the opportunity to avoid distraction and to concentrate on the task of administration and nation building until election politics surface in earnest by mid-2018.
Nigerians demonstrated political sagacity and voted for purposive, ethical leadership when they elected the government of President Buhari and the APC in May 2015. However, they made it clear that governments and parties would no longer be tolerated if they failed to perform or deliver the dividends of democracy. They demonstrated a total aversion to corruption and impunity in governance by voting for the plank of change and anti-corruption, and for Buhari, who they believe to be honest and probably too rigid in his convictions. They chose to be governed by a strong leader, a former military Head of State, but reformed democrat. They expect him to quickly pick up the subtlety and political skills required to manage a diverse nation in a multi-party democracy. His selection of a team to assist him is widely adjudged to have been excellent.
No doubt there is some incoherence around economic strategy currently, as the President and his inner cabinet negotiates the learning curve. It is clear that they will have no choice but to pursue, at least, the main outlines of reform that Nigeria has not managed to consistently pursue since 2003. The pedigree and composition of the team of ministers leads one to surmise that many of them subscribe to the economic vision and philosophy underlying the reform imperatives, having participated in the previous governments or in the private sector and other institutions in the last thirteen years.
Astute businesses and investors will not relent in taking position and betting on Nigeria, as its antecedents suggest that it will continue to make progress as a respectable democracy and economic power-house of sub-Saharan Africa. The prediction of chaos and demise of Nigeria around the 2015 elections that some touted as a disincentive to investment, was shown to be a fundamental misreading of this vibrant, complex but opportunity laden African jewel of investment and economic opportunities.
This article was written specially for the NTU-SBF Centre for African Studies.
By Olawale Ajai,
Professor of Legal, Social and Political Environment of Business,
Lagos Business School, Pan Atlantic University,