As we approach the end of Nigerian President Buhari's first year in office, sworn in before celebratory crowds looking for change (May 29, 2015), the country will be waiting to hear his list of accomplishments. There seems to be two schools of thought on what type of report card his administration should have. Yes, there are critics who primarily complain about changes taking place way to slowly, but there are those that still believe the government is trying to do the right thing and want to give it time to get there. If you are wondering where I fall, well, I fall into the latter category -- very much supporting giving the government the time it needs to make the transformative changes that Nigeria needs and Nigerians want.
Certainly, with any new government, there are fits and starts, and the Buhari Administration has had its own over the last 12 months, coupled with critical economic difficulties making it hard for the President to fulfill his campaign promises. There have been 2 steps forward and one back on things like confusion over the budget submission; the long wait for ministerial appointments; and, on the economic side, challenges in protecting its currency (the naira) from devaluation. The President strongly believes that devaluation will hurt the poor and help the privileged. Drop in global oil prices have hit the country's reserves hard over the last year, along with its ability to pay its bills, or move forward on social sector improvements, particularly health, education, and job creation. As of May 24, 2016, oil prices were at $USD48 barrels per day, still $10 off the country's 2016 benchmark; luckily the new budget's benchmark has oil at $38 per barrel.
That being said here is the good news:
The list below list is not meant to be exhaustive but highlights some of the changes:
The Buhari Government has: -- Committed to strong anti-corruption efforts; asked foreign governments, including the U.S., to help return $150 billion in stolen state wealth in foreign countries.
-- Moved to "zero-basing," of the budget, linking needs and costs, with a focus on infrastructure development, social needs, manufacturing, and job creation; publicized his personal wealth (good first tone-setting step); and paid civil servants some of their unpaid wages;
-- Appointed new leadership to the problematic National Petroleum Company (NNPC); and,
-- Worked to carefully vet senior appointments (we will have to see how they all actually do).
Looking at some of these key steps, what do they mean for Nigeria's bigger picture?
Analysis: Steps on Corruption & the Economy:
President Buhari is unshakeable on his quest to end corruption and his national and international reputation on this issue is virtually unmatched. His recent comment "what I am demanding is the return of assets" checkmated British Prime Minister David Cameron, at his own London anti- corruption conference, following his remarks that "Nigeria and Afghanistan are the most 'fantastically' corrupt countries in the world," especially in light of his father being named in the Panama papers . Buhari, not being deterred over the calls for an apology, kept his eye on ball, which is his steadfastness to get state assets back.
At home, the Buhari Administration has had to institute some difficult economic policies to protect the naira such as tightening foreign exchange. Some of these steps are linked to his anti-corruption efforts to block ways money has been stolen over the years; cash money was one of the biggest ways by which former government officials and others removed funds over decades, or through inflated government contracts.
Business & Investments Feeling the Pinch
I know many businesses are feeling the pinch, but presumably these restrictions are short term for a few more months as the government fine tunes its checks and balances. As an example, in September of last year, the Buhari Government required all ministries to use their Central Bank of Nigeria (CBN) accounts, called Treasury Single Account for all government monies. Meaning, ministries cannot deposit government funds into commercial banks -- a past practice where it is believed substantial state wealth disappeared.
Further on the economy is the oil subsidy. Efforts to remove it in 2012 caused strikes which left the country paralyzed for more than a week (I was in Nigeria during this period), and strikes are underway as the Administration tries this again. Depending on what happens between now and President Buhari's May 29, 2016 anniversary speech, it will be important for him to convince the public to get on board. They are not onboard now, particularly since in his campaign he promised not to; the subsidy is, however, financially unsustainable.
Nigeria has Africa's largest population (estimated at 178 million) and economy (Nigeria rebased in 2014),. However, these are tough times as it struggles to get its financial footing back, and keep investors engaged. We will look to Buhari's anniversary speech on the way forward on corruption issues, the economy, federal salaries, and jobs.