12 months in: Nigeria’s chaotic year of change

A year after his stunning election victory, Muhammadu Buhari is struggling amid an oil shock and unconventional policy choices.


Decked in multicoloured T-shirts and marching through downtown Abuja, trade unionists defy a strike ban to deliver a blunt message to the Nigerian government. Energetically waving signs and delivering trenchant speeches, representatives from the powerful Nigeria Labour Congress urge workers to down tools unless the government restores a controversial multi-billion dollar annual fuel subsidy.

One placard-waving protester sums up the insurgent mood with a mischievous swipe at the initials of the ruling All Progressives Congress: “APC – All Promises Cancelled.” For many Nigerians who voted President Muhammadu Buhari into power a year ago on a wave of sky-high optimism, that message has a particularly bitter resonance.

The removal of subsidies has become a lightning rod for public anger at an underperforming government. For defenders of the administration, the recent decision to increase petrol prices at the pump by two-thirds, amid an acute fuel shortage in the country, is a simple acknowledgement of economic reality. For critics, the APC’s about-turn after years of opposition represents just another of Buhari’s failed promises.

The ultimate trigger for the removal of subsidies is wearily familiar to all but the youngest Nigerians. With the return of low oil prices, Nigeria is once again paying the price for an economy geared too heavily towards the wells and rigs of the southeastern Delta region, home to its vast oil and gas reserves. While generations of policymakers have preached the gospel of economic diversification, progress has been piecemeal, with crude still accounting for well over half of export earnings. With resurgent militant activity in the Delta sending production to its lowest level in 20 years, the engine of the economy is under unprecedented strain.

The dramatic decline of the industry has provided the bleak mood music to Buhari’s first year in charge, shattering budgetary assumptions, decimating social spending and damaging investor confidence. With capital inflows declining 74% year-on-year in the first quarter, according to Capital Economics, the president’s honeymoon is well and truly over. Yet while critics acknowledge Buhari’s misfortune in governing during a time of economic crisis, few are prepared to absolve the president of blame.


From Buhari’s handling of the economy to the snail-paced appointment of cabinet members (it took six months to select them) and concerns around his leadership style, complaints are being aired with worrying regularity. For many analysts, hopes that Buhari could replace predecessor Goodluck Jonathan’s ineffective administration with a lean operation dedicated to economic stability are fading. Instead, critics ask whether the government is allowing unrealistic expectations to spiral out of control.

“Citizens have a tendency to wait and defer their timelines when there is an honest conversation on the substance of the work that is necessary,” says Obiageli Ezekwesili, an ex-minister of education for Nigeria and former vice-president of the World Bank’s Africa division. “That conversation frankly did not happen, so between government and citizens there was never really a convergence of priorities, timelines, and indicators of performance.”

Most commentators have focused on the negatives. But others suggest Buhari’s slow, deliberate style contains the seeds of a long-term plan for Nigeria’s revival. From gradual change in the military and judiciary, to a restructuring of the Nigerian National Petroleum Corporation (NNPC), some see the stirrings of a Nigerian renaissance.

“The president still enjoys a lot of goodwill from the population and I think for good reason,” says Temi Popoola, chief executive of investment bank Renaissance Capital Nigeria. “He came in at a time of aggressively declining crude oil prices and the massive risk-off trade we are seeing globally, neither of which are his fault. Today, the right questions are being asked by the Nigerian leaders and the populace at large; one only hopes the right solutions will be proffered.”

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After repeated delays, months of inter-ministerial wrangling and the personal scrutiny of the president himself, Nigeria’s 2016 budget finally arrived at the presidential villa in early May. The painstakingly crafted document, signed by the leader in the presence of his most trusted lieutenants, would normally be eagerly dissected by analysts and investors. This year, however, Nigeria’s loyal band of creditors have struggled to get excited.

Instead, all eyes remain firmly fixed on the quixotic policy choices of the Central Bank. In defiance of economic orthodoxy, and under severe pressure from the government, governor Godwin Emefiele has pursued a highly controversial strategy of propping up the naira in the face of the oil shock. The decision to peg the currency at around N200 to the dollar has left investors bamboozled and threatens to draw a cloud over all other areas of economic policymaking.

“The biggest elephant in the room is the exchange rate policy. The current government policy is not sustainable. It can only work if oil prices recover. That’s turning the Nigerian economy into a giant hedge fund betting on the oil price,” says Ayo Salami, chief investment officer of Africa funds at Duet Asset Management.

With the official exchange rate deviating wildly from the parallel market, dollar reserves – crucial for purchasing imports – have quickly dried up. It’s a strategy that has left businesses struggling and investors deeply uneasy.

“You’re not going to get investors feeling comfortable owning the currency when the exchange rate should be much weaker,” says Kevin Daly, portfolio manager at Aberdeen Asset Management.

“If you can get your dollars out today you’re fortunate, because it feels like something’s got to give.”

There are signs that the political unity behind the contentious strategy is finally unwinding. On May 18, vice-president Yemi Osinbajo suggested that the central bank ought to alter its policies in a bid to woo back foreign investment. Yet without the direct approval of President Buhari, that crucial policy change is likely to remain elusive.

“The exchange system is creating a new avenue for those seeking economic rent. On an annual basis $6bn of cash going to central government is going to be privatised … those numbers are too staggering to believe that Buhari understands it or thinks he can stop money getting lost,” argues Salami.

It is not the first time that Buhari’s economic credibility has been questioned. From the earliest days of his administration, the president has drawn uneasy glances for his stewardship of the economy. Despite being elected in May 2015, it was not until November that the president appointed Kemi Adeosun, until then a little known former investment banker, as his finance minister. The protracted wrangling over the budget has further strengthened a reputation for indecisiveness and policy drift.


Yet Buhari has appeared consistently unruffled by outside voices, choosing to do things his own way in the face of intense internal and external criticism. There are no signs yet that he is prepared to weaken his grasp over key macroeconomic and fiscal policies, whatever his critics may think.

“I think the president is the driver of economic policy,” says Ezekwesili. “The way that the government is looking at its role vis-à-vis the private sector is being shaped by Buhari’s own ideology.”

For Ezekwesili, that ideology is mistrustful of private enterprise, prone to excessive government interference and a serious danger to Nigeria’s hard-won macroeconomic reputation.

“There has not been any aspect of economic policy direction that has been handled with the level of competence and clarity that an economy with the largest GDP on the continent deserves,” she says.

Vested interests

Playing host to a high profile anti-corruption conference in May, British Prime Minister David Cameron hoped to gain plaudits for highlighting global transparency in the wake of the damaging Panama Papers scandal. A diplomatic faux pas in which he labelled guests Nigeria and Afghanistan “fantastically corrupt” in front of the Queen was not supposed to be on the agenda.

Buhari, who deftly sidestepped the slight, would be forgiven for allowing himself a wry smile. Even the president’s critics acknowledge that he has tried to tackle the vested interests and rent-seeking that have long defined participation in Nigerian public life and which reached an apotheosis under the Jonathan administration.

“On the anti-corruption side this government has a lot it can present as evidence of change,” says Ezekwesili, who also co-founded Transparency International.

“We have seen a resurgence of the Economic and Financial Crimes Commission (EFCC) to investigate and embark on prosecutions. Even though we haven’t yet seen convictions, I am encouraged by the fact that these matters are receiving attention.”

In 2015, Nigeria ranked 136 out of 168 on Transparency International’s anti-corruption index. The think-tank Global Financial Integrity estimated that $157bn left Nigeria illicitly in the decade to 2015. If the Buhari government is able to make a dent in those staggering figures, the economy will see the benefit.

As a result, the drift that has characterised Buhari’s economic policies has been largely absent from his anti-corruption efforts. In September 2015, the government implemented the Treasury Single Account, an attempt to consolidate all of the country’s inflows into a traceable account at the Central Bank of Nigeria.

Just as significantly, the government has embarked on a wholesale overhaul of the Nigerian National Petroleum Corporation. Long considered a hotbed of theft and a black hole for government funds, the organisation was found to be illegally exporting 445,000 barrels of oil per day, with billion of dollars in proceeds dumped in shadowy accounts. Buhari moved swiftly to replace the leadership, appointing oil industry veteran Emmanuel Ibe Kachikwu as general managing director and approving a purge of discredited officials. The organisation has been forced to open its books to scrutiny.

It is a new way of doing business that Buhari would clearly like to see extended beyond the oil industry. The emboldening of the previously neutered EFCC has allowed the anti-corruption body to pursue a raft of cases against former officials.

“It’s too early to argue there’s been a cultural change, but it’s beginning to be recognised that if you commit corruption and its found, there will be consequences. Changes like that make a difference,” says Salami.

Yet the all-consuming battle against Nigeria’s deep state of corrupt vested interests may have unpleasant side effects. With so many senior officials potentially implicated in wrongdoing, Buhari is once again falling back on his own counsel or relying on a small coterie of close advisors.

“The sheer scale of historic corruption, in our view, is enough to make him question everyone’s intent, leading him to micromanage and get involved with too much at the same time,” says Renaissance Capital’s Temi Popoola.


A persistent criticism of the president, and one which may come to define his administration, is this tendency towards micromanagement. For many, the seeds of Buhari’s leadership style lie in his long career in the upper echelons of the military.

“He spent years in the army, a regimented, rank-driven system where he says ‘I want it done’ and it gets done. In a democratic setting, your order becomes a request, which becomes a suggestion … [as a result] he is now too involved in the minutiae,” says Salami.

While that may leave the country well equipped in the long, hard fight against corruption, it leaves Nigeria looking remarkably flat-footed in its attempts to deal with pressing economic issues.

And while the consensus is that Buhari has appointed a competent team, observers believe that as regards the economy it is time for the president to take a step back and listen.

It is a lesson that could apply to many African countries whose economies have long been held back by stubborn leadership and overly centralised policy-making. And it is a lesson that Buhari will have to learn if the widespread optimism of his election is to return.

“I hope with time that he might learn his cabinet can be trusted, and he can listen credibly and wholeheartedly to their advice,” says one Nigerian banker. “He can learn with time that the ideas and policies are probably not the best way to go. And the macro-condition might just improve in our favour.”

David Thomas

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