As Nige­ria’s re­ces­sion takes hold, Buhari’s shine wanes

Kuwait Times - - BUSINESS -

It’s not Nige­rian Pres­i­dent Muham­madu Buhari’s fault that Nige­ria’s econ­omy is in­ex­tri­ca­bly tied to the global price of oil, now half of its 2014 peak of over $100 per bar­rel.

But the pres­i­dent’s re­sponse to the eco­nomic cri­sis has a grow­ing num­ber of peo­ple con­cerned that he doesn’t have what it takes to res­cue Nige­ria from re­ces­sion. Warn­ing signs ap­peared early. Buhari took six months af­ter be­ing elected to name a fi­nance min­is­ter, then vowed not to “kill the naira” by de­valu­ing it, against ex­pert ad­vice and with ne­far­i­ous con­se­quences.

His seem­ingly lack­adaisi­cal at­ti­tude to the crash­ing econ­omy spooked in­vestors who wor­ried that he was ig­nor­ing the cri­sis. Now crit­ics are com­ing from all sides. In Oc­to­ber, Buhari’s wife Aisha told the BBC that she may not back him in the next elec­tion, sug­gest­ing that his govern­ment had been hi­jacked and he had lost con­trol.

Buhari’s re­sponse, that his wife “be­longs to my kitchen”, made Nige­ri­ans cringe. But what he said next was, po­lit­i­cally, more re­veal­ing. “It is not easy to sat­isfy the whole Nige­rian op­po­si­tion par­ties to par­tic­i­pate in the govern­ment,” Buhari said.

He can say that again. Over the past month, the pres­i­dent has re­peat­edly been stonewalled by law­mak­ers who want the ex­ec­u­tive to be more trans­par­ent about his eco­nomic poli­cies and plans.

Early this month, Nige­ria’s Se­nate re­jected Buhari’s at­tempt to take on al­most $30 bil­lion in ex­ter­nal bor­row­ing to fund his record bud­get “due to lack of doc­u­ments” sup­port­ing his re­quest. The Se­nate also “ex­pressed sur­prise” at the Nige­rian Law Re­form Com­mis­sion, who said it was con­sid­er­ing jail­ing or fin­ing peo­ple for hold­ing dol­lars in an un­con­ven­tional strat­egy de­signed to ad­dress a for­eign cur­rency short­age in the coun­try. “The mea­sure is dis­rup­tive and coun­ter­pro­duc­tive, threat­en­ing to un­der­mine many of the re­form ef­forts... in­tended to boost in­vestor con­fi­dence,” the Se­nate said in a press state­ment Mon­day.

‘Pol­icy paral­y­sis’

“The pres­i­dent is hav­ing dif­fi­culty mak­ing any kind of leg­isla­tive head­way,” John Ash­bourne, econ­o­mist at Cap­i­tal Eco­nom­ics, told AFP. “It adds to the sense that there’s pol­icy paral­y­sis and when the econ­omy is fac­ing a dif­fi­cult time we need some ac­tion. We can’t get that if Buhari isn’t able to ne­go­ti­ate.”

Nige­ria’s econ­omy con­tracted in the third quar­ter by 2.2 per­cent, with rebels in the oil-pro­duc­ing south­ern swamp­lands con­tin­u­ing to at­tack pipe­lines and busi­nesses strug­gling to ac­cess for­eign ex­change. “I think the re­ces­sion is re­ally start­ing to hurt,” Razia Khan, Africa econ­o­mist at Stan­dard Char­tered Bank, said. “With the cur­rent short­age of for­eign ex­change clearly hav­ing a detri­men­tal ef­fect on growth, there is lit­tle ev­i­dence of any mean­ing­ful pol­icy ini­tia­tive that might be able to re­solve this,” Khan said.

“There is a con­cern that there isn’t enough mo­men­tum, not enough is be­ing done.” Ide­ally, Buhari’s ex­pan­sion­ary bud­get would have boosted growth. But the fis­cal stim­u­lus isn’t ma­te­ri­al­iz­ing. In Oc­to­ber, the bud­get min­istry said it was fac­ing unan­tic­i­pated rev­enue short­falls and that it had spent only a lit­tle more than half of what was al­lo­cated for 2016. Rev­enue short­falls will per­sist as long as mil­i­tants con­tinue sab­o­tag­ing the oil and gas in­fra­struc­ture. To­day Nige­ria’s oil pro­duc­tion is 1.6 mil­lion bar­rels per day, down 22 per­cent from the same pe­riod in 2015, with no signs the sab­o­tage will stop.

‘Mil­i­tary ruler’

Talks with the mil­i­tants in the south have been un­suc­cess­ful so far. “Pres­i­dent Buhari and his govern­ment have so far failed to hold con­struc­tive talks with mil­i­tants,” Rhi­doy Rashid, oil an­a­lyst at En­ergy As­pects, said in a re­cent note. “The Nige­rian mil­i­tary has also con­tin­ued its op­er­a­tions in the Delta, in­flam­ing ten­sions while fail­ing to dis­rupt the mil­i­tants.”

In­vestors are rat­tled and want to see a more con­crete plan from Buhari’s govern­ment, said Manji Cheto, risk an­a­lyst at Te­neo In­tel­li­gence. “I be­lieve he con­tin­ues to act as if he’s a mil­i­tary ruler, there is a per­cep­tion that has un­der­mined the abil­ity of pol­icy mak­ers within his govern­ment to take de­ci­sions,” Cheto said. “I gen­uinely think that he’s pretty much run out of his good­will.” Some polls are al­ready re­flect­ing that sen­ti­ment. Last year around this time, Buhari en­joyed an 80 per­cent ap­proval rat­ing, re­ported anal­y­sis firm BMI Re­search. Com­pare that to this Septem­ber, when his ap­proval rat­ing hit just 41 per­cent, with vot­ers bear­ing the brunt of 18 per­cent in­fla­tion, slow busi­ness and sput­ter­ing elec­tric­ity, the re­sult of lower oil and gas out­put. —AFP

AD­DIS ABABA: This file photo taken on Jan­uary 29, 2016 shows Nige­rian Pres­i­dent Muham­madu Buhari at­tend­ing the African Union (AU) Peace and Se­cu­rity Coun­cil in Ad­dis Ababa. It’s not Nige­rian Pres­i­dent Muham­madu Buhari’s fault that Nige­ria’s econ­omy is in­ex­tri­ca­bly tied to the global price of oil, now half of its 2014 peak of over $100 per bar­rel. — AFP

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