Nigeria finally has a government after a wait of
more than five months but the new ministers
have their work cut out to reverse a damaging
slump in Africa’s leading economy.
Falling global oil prices have shrunk government
revenues and slowed growth to a near standstill,
while the naira currency is weak, inflation high
and unemployment causing widespread concern.
At the same time, the military is working to end
a bloody insurgency by the radical Islamist Boko
Haram group that has devastated the people and
economy of the remote northeast.
“Nigeria has never been this bad,” said political
commentator Olapade Agoro, who is also an
opposition politician and former presidential
candidate.
All eyes are now on new Finance Minister Kemi
Adeosun and her team to come up with policies
to tackle the rot.
But Bismarck Rewane, of the Lagos-based
consultancy Financial Derivatives, said time was
of the essence, with investors keen for clarity
about the direction the government will take.
“The thing to do is to hit the ground running
because there is no time for rhetoric,” he told
AFP.
“The economy is in dire straits. The GDP is low
at 2.4 percent, while inflation is nearing 10
percent with weak purchasing power and a
falling naira.”
Unemployment is currently at 8.2 percent, while
the oil shock has left Nigeria — Africa’s number
one crude producer — short of cash to pay for
government projects and even civil servants’
salaries.
“You’ve got to raise money to deal with fiscal
deficits,” said Rewane.
– Cash required –
Adeosun, a former investment banker, has been
credited with turning round the finances of the
cash-strapped southwestern state of Ogun, yet is
untested at national level.
Analysts suggest she will work closely with other
key ministers such as Udo Udoma, in charge of
budget and national planning, and Okechukwu
Enelamah at industry, trade and investment.
The appointment of other technocrats has also
been welcomed, in particular former ExxonMobil
executive Ibe Kachikwu as junior oil minister to
overhaul the graft-ridden sector.
Babatunde Fashola was put in charge of a
“super-ministry” for power, works and housing
after being seen to have performed well in those
areas in Lagos State, which drives Nigeria’s
economy.
Rotimi Amaechi, the former governor of oil-
producing Rivers state, was named transport
minister.
President Muhammadu Buhari flanked by Vice
President Yemi Osinbajo and the Water
Resources Minister, Engr. Suleiman Adamu (5r)
while other Members of Council watched in a
group photograph shortly after the swear-in
ceremony of the newly composed Federal
Executive Council at the Aso Chambers,
Presidential Villa, Abuja. Photo by Abayomi
Adeshida 11/11/2015
Both are seen as powerful members of the new
cabinet.
But they will need ready cash to follow through
and are under pressure to show results quickly,
with almost half of President Muhammadu
Buhari’s first year in office already over.
Sola Oni, of Lagos-based stockbrokers Sofunix
Investment and Communications, said the
government should look to the stock market for
financing.
“The federal government should for once exploit
the capital market to fund the infrastructural
deficiency which has become the bane of our
economic growth and development,” he said.
Dependency on oil, which supplies 70 percent of
government revenue, should be cut, and a
renewed emphasis put on addressing the
country’s crippling power deficit, he added.
– Drive growth –
The five-month absence of government ministers
created uncertainty among investors in what has
been a fast-growing emerging market, with nearly
7.0 percent annual average growth from 2005-13.
Attention now is on the announcement of next
year’s budget, which has to be submitted to
parliament by December.
Reports this week suggested Vice President
Yemi Osinbajo was proposing a budget of about
eight trillion naira ($40 billion, 37 billion euros)
for 2016 — double that for this year.
Muda Yusuf, director-general of the Lagos
Chamber of Commerce, said with a ministerial
team now in place, “there should be coherent,
consistent and positive signals to investors” to
drive growth.
The Central Bank of Nigeria, which filled the void
in fiscal policy in the absence of a cabinet, in
particular should review its foreign exchange
restrictions policy, he added.
Seeking to conserve dollar reserves, the bank in
June ruled that importers could no longer get
hard currency from the interbank market to
import dozens of items, from toothpicks to
private jets.
In the past year, reserves have fallen by nearly a
quarter as it tried to prevent the naira from
falling in tandem with plummeting crude prices.
The central bank has twice devalued the
currency, taking it from 155 naira to the dollar a
year ago to 199 currently.
Adeosun, viewed as a reformist, and her fellow
ministers should meet with the private sector to
plot a way forward and also address rising
national debts, he added.
“Debt service burden is becoming increasingly
unbearable, especially domestic debt,” he said.
