Will Buhari's reform agenda for Nigeria be derailed by political inaction?
President Muhammadu Buhari beat Goodluck Jonathan in the March election, which was Nigeria’s first-ever peaceful political transition. That said, far from reaping the benefits of the “dividends of democracy”, the long delay in appointing the new cabinet led the country to a political stalemate and, consequently, to much-needed economic reforms being postponed.
The main impact of the political standstill after the successful election in March was the lack of initiative amid a tough economic and political environment. Oil prices remained low, thereby hampering government revenues and causing a severe shortage of hard currency. Meanwhile, Boko Haram militants’ activity continued destabilizing the northeast of the country.
While losing precious time, the new government was unable not only to unveil the much-needed economic and political reforms as President Muhammadu Buhari had promised, but it was also unable to present the budget for next year nor push forward urgent infrastructure programs. Moreover, in this context, regular government activity was halted.
The main priorities for the new cabinet, once approved by the Senate, will be tackling a dire economic situation and struggling against the Boko Haram insurgency in the northeast. Buhari will have to strengthen cooperation with regional counterparts to effectively counter the menace of Boko Haram, as in recent months the group has spread its activity beyond Nigeria’s borders. Greater support from the United States is also crucial to improve the training and equipment for the Nigerian Armed Forces.
In the economic arena, Buhari has a tough road ahead. Oil prices are expected to remain low for the foreseeable future, therefore dashing hopes of a prompt and strong improvement of the economy. Against this backdrop, Buhari has to present a credible budget for next year—which could include a gradual removal of subsidies—plus a clear roadmap of future economic reforms, particularly Buhari’s long awaited overhaul of the oil industry. Increasing the government’s transparency and successfully cracking down on endemic corruption should also be among the first steps of the new cabinet. Finally, the new government should assess whether the current exchange rate is appropriate given the negative spillovers that maintaining the naira at present levels has on the economy—mainly the restriction of U.S. dollars.
While it is fair to acknowledge that Nigeria’s dim economic situation mostly reflects the sharp fall in commodity prices, it is also true that the delay in appointing the new cabinet resulted in political inaction and made the possibility of unfolding measures to better face the challenging economic environment vanish. The Senate has now finished screening candidates for cabinet positions and the new government should be appointed in the coming days. Buhari still has time to demonstrate to the world and, more importantly, to his own people, that Nigeria’s democracy is slowly consolidating. However, further delays in economic and political reforms could disillusion the millions that had trusted him to change the country.
Author: Ricard Torné, Head of Economic Research
Date: November 3, 2015
TagsEuropean Union Brexit Euro Area Latin America Euro Area NAFTA Turkey precious metals Nordic Economies Spain Mexico Panelists Precious Metals Commodities OPEC Greece Argentina Inflation oil prices Consensus Forecast Brazil Forex Italy Sub-Saharan Africa Industrial Metals Commodities Housing Market Fed Eastern Europe Portugal India Energy Commodities Major Economies China Canada Base Metals Commodities Venezuela Germany Investment France Russia Tunisia Australia Japan Exchange Rate United Kingdom Vietnam Economic Growth (GDP) IMF Unemployment rate Banking Sector G7 Commodities Infographic Latin America UK Company News Trade NAFTA Iran Agricultural Commodities Gold Emerging Markets Africa Asia USA Ukraine Colombia South Africa MENA Oil
1 hour ago
2 hours ago
3 hours ago
4 hours ago
5 hours ago
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- The World's Top 10 Largest Economies
- Is Spain doing enough to address its high youth unemployment rate?
- Has Latin America gone far enough in reducing barriers to international trade?
- Commodities Outlook: Oil, Natural Gas, Coal, Lead & Tin
- 21 experts tell us what the future looks like for cryptocurrencies and blockchain
- Turkish lira plummets to all-time low on Erdogan’s monetary feud and tense U.S.-Turkey relations
- Copper: The first metal mastered by man
- The Mercosur-EU Free Trade Agreement: Obstacles & Opportunities
- Nigerian Economy Still Treading Water Thanks to Oil Sector
- Elections in Chile: What the results could mean for the economy
- QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate
- Holland’s fragile one-seat majority government targets economic growth at the expense of fiscal sustainability
- South Africa: Economy at a tipping point?
- Latin American Commodities: What’s behind the increase in demand and prices?
- Is the UK really "shackled to a corpse"?
- Spain-Catalonia: 7 economic experts weigh in on how the situation will affect the outlook
- How well is Spain's labor market doing since the crisis?
- Which countries will have the highest and lowest inflation in 2017?
- How vulnerable is Latin America to economic crises today?
- Iron ore facts and common questions answered
- The bulging economic costs of obesity
- How much investment is needed to salvage Latin America’s crumbling infrastructure?
- A Look at the Potential Impact of Brexit on the Dutch Economy
- Emerging Markets Are Kicking Into Higher Gear In 2017
- Why is foreign direct investment in Latin America falling again?
- Are Central Banks Nationalising the Economy?
- Bounty or burden? The impact of refugees on European economies is far from clear
- What’s the future of U.S.-Latin America trade relations?
- Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
- Are uranium prices making a comeback?
- Taxing the Economy: Achieving a Delicate Balance
- How will emerging market economies perform in 2017?
- How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
- Chilean Economy in Focus: Interview with Senior Economist of the Chamber of Commerce of Santiago
- CEOs Rank Top Economies for Growth Opportunities
- The Mobile Ecosystem & Latin America's Economy
- Prospects and Challenges for the Global Economy: Interview with Tim Cooper from BMI Research
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 19 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- Gold: The Most Precious of Metals (Part 3)
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- 2017 & 2018 Economic Outlook for the Top Oil Producing Countries
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- 4 Key European Elections That Will Impact the Economy in 2017
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- Russian economy update in wake of OPEC deal announcement
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- Sub-Saharan Africa's 2016 & 2017 growth rates
- China: Recent postive economic data may be papering over the cracks
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit