Cabinet delay and Nigerian economy

There has been considerable anxiety in the polity over the delay in the constitution of a cabinet by President Muhammadu Buhari two months after he was sworn into office. But the president has now categorically confirmed that there will be no cabinet until September. “It would neither be prudent nor serve the interests of sound government to have made these appointments immediately on my elevation to the presidency,” the president has said, adding that the appointments would be suspended until “new rules of conduct and good governance are put in place”.

Despite the president’s explanations, we feel duty-bound to point out, once again, the unintended toll this ‘delay’ is taking on the economy and the country in general.

To begin with, the initial investor confidence in Nigeria brought about by the peaceful transition is now gradually fading away and giving way to anxiety and uncertainty. The effect on the economy is visible. The stock market that initially reacted positively to the peaceful elections and rebounded by adding about N1.8 trillion at the end of March/early April has now begun a precipitate fall. Investors largely expected some key quick actions and decisions on the economy. However, with no economic decision(s) made and no indication as to those who may be appointed to manage the economy, the capital market valuation has since declined by 8 percent, losing about N823 billion by the middle of July. Also, the naira that appreciated and stabilised (from N227/$ to N203/$) has been on a freefall against the dollar.

The obvious absence of ministers and political direction for the economy also means that there is no one really reaching out to worried investors and development partners to communicate government policies and provide much-needed reassurances. It is not surprising, therefore, that many of these investors, especially foreigners, have suspended further investments until they could get a clear idea of the direction the government wishes to take and also until the rapidly declining naira finds its level or stabilises.

What is more, efficient management of the little resources available to the government in the absence of ministers and advisers on the economy is left to politicians, who, in the Nigerian context, are more interested in ‘allocation and distribution’ of resources than its efficient management.

Meanwhile, the Central Bank of Nigeria, in the absence of fiscal authorities and a comprehensive economic blueprint, has rolled out its own agenda by prohibiting access to foreign exchange for a host of items it terms ‘frivolous’ leading to speculations that the country’s foreign reserves were badly depleted, the country was finding it increasingly difficult to continue to defend a very weak naira, and that a further devaluation of the naira was imminent.

The lack of political direction has also left room for speculations such that almost everyone is betting against the naira thereby increasing the pressure on the nation’s currency.

On the security front, the delay in the change of service chiefs apparently gave a lifeline to the near-vanquished Boko Haram to renew their terrorist activities. It is a known and accepted norm that each administration appoints new service chiefs. The former chiefs had, therefore, cleared their tables and were expecting to go with the old administration. As such, they could not initiate new offensive or draw elaborate plans in the war against the insurgents. The lacuna created by the delay and the ‘go-slow’ attitude of the president allowed the terrorists to regroup and begin another deadly campaign of suicide bombings, killings, and destruction of communities. As at the last count, there have been over 800 deaths directly caused by Boko Haram since the inception of the new administration. Although the service chiefs had been replaced, it appeared it was done more to convince Washington – which the president visited last week – of the administration’s seriousness rather than the urgent need to give direction and verve to the fight against the terrorists.

As the president takes all the time in the world to put in place “new rules of conduct and good governance”, he should know the delay comes at a rather huge cost for the country, the effects of which he may take a good chunk of his tenure to reverse.