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Buhari's challenge: translating popular rhetoric to actual policy

Buhari's challenge: translating popular rhetoric to actual policy

"While it is not uncommon for opposition governments to campaign on issues such as corruption and security, which allow for powerful and persuasive rhetoric, Buhari’s history as a fighter of corruption and his military experience have led many to believe that he will genuinely try to tackle these issues."

In late March and early April 2015 Nigeria went to the polls in one of the closest-run elections in Nigeria’s democratic history. These presidential elections saw the ruling People’s Democratic Party (PDP), led by President Goodluck Jonathan, face the All Progressives Congress (APC), led by former military general and one-time military ruler of Nigeria, Muhammadu Buhari.

In the lead up to the elections, which were postponed from 14 February to 28 March, many feared that they would be marred by violence and corruption. The Economist, along with most other commentators, was forecasting that a win for President Jonathan would see violence break out in the opposition-supporting north, while a win for Muhammadu Buhari would see violence break out in the mostly PDP-supporting Niger Delta region.

In addition to these fears of violence, there was also concern that the elections might not go ahead at all. The declared reason for the delay was to give the Nigerian government time to tackle the terrorist group Boko Haram, which had invaded large areas of the northeast of Nigeria making voting there impossible. However, many were of the view that the elections had been pushed back to allow more time for the PDP to buy support, while putting the APC into financial difficulty.

Despite these forecasts, the 2015 elections went ahead, with the presidential and legislative elections taking place on 28 March and the gubernatorial elections on 11 April. While there was some violence as people went to the polls, with Boko Haram killing 41 people in the north and two car bombs exploding in the southeast of Nigeria, the levels of violence were low compared to the 2011 elections, which saw over 800 people killed after Goodluck Jonathan was elected president.

Indeed, these elections, which saw Muhammadu Buhari elected president and the APC gain considerable ground in the gubernatorial elections, have been heralded as the fairest and most peaceful elections that Nigeria has seen to date. The decision by President Jonathan to concede defeat has been widely praised and has further drawn a line under Buhari’s election victory.

As concerns over potential instability in the aftermath of the elections have dissipated, the focus has turned to what a Buhari-led government (which was inaugurated on 29 May) will mean for Nigeria. When looking at Buhari’s promises from the campaign trail, four core goals are evident; these are improving the security environment, tackling corruption, strengthening the economy and creating more jobs through economic diversification.

Improving  security

The insurgency by Boko Haram in the north-east has killed an estimated 10,000 people in the past three years alone. While this is clearly a humanitarian crisis, the ratings agency Moody’s recently commented that the insurgency is also affecting Nigeria’s economy by putting a strain on the country’s sovereign debt rating and ‘weighing on investor demand for Nigerian assets’.

President Jonathan faced intense criticism for his perceived lacklustre response to the rise of Boko Haram. He failed to comment on the abduction of the Chibok girls in April 2014 until two weeks after the event, giving the impression that the government of Nigeria was not taking the kidnapping seriously.

The failure to deal effectively with Boko Haram has been partly blamed on his failure to properly equip the Nigerian army. This has not been a problem of resources. Revenue devoted to the military forces increased significantly under the previous government. According to New African Magazine, government funding of the army increased more than five-fold from NGN 264 billion ($1.3 billion) in 2010 to NGN 1.55 trillion ($7.5 billion) in 2013. Despite this significant increase in funding, soldiers have complained of a lack of equipment and many have questioned where the money for the army has gone, with widespread allegations of corruption in the upper echelons of the military forces.

In light of the above, Buhari is faced with a significant threat from Boko Haram and a dissatisfied and, in some instances, mutinous army. While a recent alliance between Nigeria, Niger, Chad and Cameroon has been partly successful – pushing Boko Haram out of areas in the northeast that it was occupying – the situation in the north is still perilous. Risk Advisory’s Africa-focused political risk analysts believe that Boko Haram’s withdrawal from occupied territory could simply signal a return to the guerrilla tactics they previously used.

Throughout his campaigning, Buhari promised to ‘bring to an end the menace of Boko Haram terror that is plaguing the society’. That Buhari was previously a general in the army has led many to suggest that he will be more effective at fighting Boko Haram than President Jonathan, who had no military experience. Buhari has also played up to this image, promising that he will ‘lead from the front’, which has proved to be popular rhetoric. However, to achieve this aim, Buhari will need to significantly strengthen the Nigerian army, as well as improve army morale.

In contrast with the previous government, Buhari has already commented on the importance of greater international cooperation in tackling Boko Haram. In a piece written for The New York Times, he said he would ‘welcome the resumption of a military training agreement with the United States’, which was suspended by President Jonathan’s administration in December 2014. Buhari has also highlighted the importance of working closely with neighbouring Chad, Niger and Cameroon when tackling Boko Haram, and met with the Chadian president on 12 May. After this meeting, both leaders announced that there would be a comprehensive review of the security situation once Buhari takes power on 29 May to help in planning joint military action against Boko Haram.

Buhari also stated in his article for The New York Times that, to effectively tackle Boko Haram, the government must deploy more troops to the north of Nigeria. He underlined this intention to do so during his inauguration speech, when he announced that he plans to move the Nigerian military’s command centre from Abuja to the strategically important northeastern city of Maiduguri. Many of these troops will come from central and southern Nigeria, where they have previously been used to quell dissent among local communities. There has been some concern that removing troops from the southeast, particularly the Niger Delta, may be dangerous as groups like the Movement for the Emancipation of the Niger Delta (MEND) may resume hostilities. However, the relationship between Buhari’s new government and MEND at present appears to be stable. MEND came out in support of Buhari in January this year and publicly congratulated him on his election victory in early April.

Tackling corruption

Corruption has long been one of the biggest barriers to companies wishing to operate legitimately in Nigeria. It is also, perhaps, the most important issue facing Buhari as it compounds the many other challenges his government faces, such as the worsening security situation and the struggle to create jobs in a country where basic infrastructure and power are seriously lacking.

Many see the crippling levels of corruption in Nigeria as a legacy of President Jonathan’s administration, and while it is false to say that there was no corruption before President Jonathan came to power, it is certainly perceived to have increased under him. Indeed, there have been a number of recent high-profile corruption scandals in Nigeria that have attracted a considerable amount of international media attention, such as the $20 billion worth of oil revenue that was alleged to have gone missing from the federal account between 2012 and 2013.

In stark contrast, many in Nigeria remember Buhari’s brief rule between 1983 and 1985 as a time when, as noted by Al Jazeera, ‘hundreds of corrupt politicians, businessmen and officials were convicted of and jailed for graft’. Throughout his campaign Buhari has drawn on his image as an anti-corruption campaigner, commenting at a rally in the northern state of Adamawa ‘what we save from the fight against corruption and leakages, we will invest heavily in education, infrastructure, equipment, and teachers’.

The corruption scandals under President Jonathan have flourished, to some extent, due to the complete lack of transparency around government revenue and expenditure. This lack of transparency is, at least in part, the result of opaque book-keeping and the failure of the government to properly audit its institutions. For example, until the oil revenue scandal, the Nigerian National Petroleum Corporation (NNPC) had never been properly audited.

Buhari has expressed his intention to move towards a more transparent system, where government revenue and spending is regularly reviewed. He has promised to ‘plug the holes in NNPC accounting’ and ensure that ‘there will no longer be two sets of books, one for public consumption and another for insiders who profit from this slick fraud’. In addition to this, Buhari has stated that revenue producing entities, such as the NNPC and Customs and Excise, will be regularly audited and have their revenues publicly disclosed.

On the subject of government salaries, Buhari has said that he will stop the practice of ‘self-drafted salaries’ and ensure that the pay packages of all government officials will be decided by the Revenue and Mobilisation and Fiscal Allocation Commission (RMFAC), a statutory body created to determine the salaries and allowance of all political appointees. When it comes to prosecuting those who have done wrong, Buhari has stated that his government will enhance the Economic and Financial Crimes Commission’s (EFCC) powers to investigate and prosecute independently.

Despite the strong rhetoric, concerns persist around Buhari’s commitment to tackling corruption among the political and business elite. In March 2015 Buhari released a statement saying that he would offer a pardon for those accused of taking part in corrupt activities between 1999 and his inauguration on 29 May. He then stated that anyone involved in corruption from that date would be severely dealt with. Critics have claimed that this shows Buhari giving way to corrupt elements within his own party, who are concerned that, once Buhari is in power, he may pursue them for past corruption.

Economic recovery

With the recent fall in world oil prices, a sharp depreciation of Nigeria’s currency, the naira, and rising fiscal and trade deficits, Buhari faces considerable challenges in stabilising the Nigerian economy. While numerous factors have contributed to Nigeria’s current economic situation – not least the months of uncertainty around the elections – the country is heavily reliant on revenue from oil exports. According to Citi’s Africa economist Nigeria’s exports are due to fall to $55.3 billion in 2015, down by $27.5 billion from 2014.

As such, Buhari is faced with falling revenues and a depleted treasury. Many commentators, including the head of economic research at the pan-African banking conglomerate Ecobank, are saying that to speed up economic recovery Buhari will need to consolidate government expenditure and diversify the sources of government revenue.

Comments made by Buhari’s advisors suggest that he is already looking at ways to consolidate government spending by merging certain ministries and government departments. He is also apparently planning to improve tax collection and prosecute those companies and individuals committing tax evasion, in order to increase government revenue.

Another cost-cutting measure that Buhari could implement would be to dispense with the hefty subsidies that the government continues to pay for the import of refined petroleum products. These subsidies constitute a significant percentage of government expenditure and are widely regarded as fuelling corruption. This would be particularly timely given that the Nigerian industrialist, Aliko Dangote, is in the process of building the continent’s largest refinery in Nigeria, which could potentially save the country $24 billion a year by halving fuel imports. However, an attempt by Ngozi Okonjo-Iweala, the technocratic finance minister in the Jonathan government, to remove these subsidies in 2012 led to widespread protests. The government subsequently reversed its decision. Possibly mindful of the lack of popular support for removing fuel subsidies, no such policy has been promoted by Buhari.

Diversifying the economy and creating jobs

As part of its strategy to reduce its reliance on oil exports the Nigerian government has been seek to diversify its economy away from this sector in recent years. There have been some recent success stories, particularly in the agriculture sector. This has become particularly apparent since 2013, when Nigeria rebased its GDP, resulting in an 89 percent increase in the estimated size of the economy. This made Nigeria the largest economy in sub-Saharan Africa. After rebasing GDP, agriculture, trade and services are now considered the main drivers of GDP growth, despite not contributing significantly to export earnings.

Despite Nigeria now being the largest economy in sub-Saharan Africa, many Nigerian are still struggling with extreme poverty and unemployment, which is exacerbated by a lack of access to basic infrastructure and amenities. This is partly because the benefits of economic growth have not trickled down through Nigerian society, particularly to those living in rural communities. The figures for GDP are also only representative of the formal sector and make no allowance for Nigeria’s large informal sector, in which many of Nigeria’s poorest operate.

In light of the high levels of poverty in Nigeria and the growing rate of unemployment, which increased from 5.8 percent in 2008 to around 28 percent in 2014, Buhari has, unsurprisingly, made diversifying the Nigerian economy and creating more jobs a key focus of his political campaign.

One option would be to develop Nigeria’s manufacturing sector, which has previously been plagued by high operating costs – often the result of poor power supply and corruption – and poor quality goods. The labour-intensive nature of the sector could make this an attractive proposition for the Buhari government as it has strong job creation potential. Moreover, in recent years we have seen a marked increase in Nigeria’s manufacturing capacity. For example, in 2013 Nigeria’s manufacturing sector grew by 22 percent and comprised one third of Nigeria’s total economic growth, putting it ahead of the telecommunications and oil and gas sectors.

This growth has largely been driven by food, cement and textile manufacturing. For example, cement manufacturing, which at present comprises only 1 percent of GDP, grew by 39 percent in 2013. This is consistent with Nigeria’s fast-growing construction and real estate sectors. It is also consistent with Nigeria’s growing population, particularly the more upwardly mobile population in the southwest where the demand on food producers and breweries is growing. The development of the manufacturing sector has been spearheaded by Aliko Dangote, a Nigerian entrepreneur. In the last decade, Dangote has focused his business on flour, cement and sugar manufacturing and is now the richest man in sub-Saharan Africa.

However, the development of the manufacturing industry, and many other sectors, is being hampered by the country’s unreliable power supply. In the World Bank’s 2014 Ease of Doing Business report Nigeria had dropped 10 places compared to 2013, partly due to the unreliable supply of power. While President Jonathan’s government took the first steps towards improving the power supply, by privatising the old state-owned power generation and distribution companies, these private companies are now complaining that they are hampered by the lack of a reliable gas supply.

The APC has promised to triple Nigeria’s 4,000 megawatt generation within four years of taking office, an extremely ambitious aim. If the incoming government is to achieve this goal, it will need to ensure a reliable gas supply to the power companies, perhaps by attracting investors into the gas industry through clearer regulations on gas tariffs. Africa Confidential has also forecast that the APC is likely to privatise the Transmission Company of Nigeria, which remains in government hands, as many of the problems within the energy sector are caused by poorly maintained transmission infrastructure. Indeed, The Economist estimates that weak power infrastructure has held back economic growth by as much as 3 percent each year.

Conclusions

The initial promises and proposed policies coming from Buhari and his advisors are certainly positive, as was Buhari’s inauguration address. However, until the new government begins the task of running the country, it is difficult to speculate on whether the promises will translate into government policy.

While it is not uncommon for opposition governments to campaign on issues such as corruption and security, which allow for powerful and persuasive rhetoric, Buhari’s history as a fighter of corruption and his military experience have led many to believe that he will genuinely try to tackle these issues.

In the coming months, as Buhari’s government settles in and begins to elucidate specific policies, it will become clearer how the APC plans to effect change. One clear positive is that the incoming APC will have over half the seats in the legislature, giving it considerable power to effect change, and cement Buhari’s initial aims in government policy and new legislation.

Image:PA

Published: 1st June 2015
Categories: Company News