By Raj Bharat in Abuja
Nigeria’s economy has continued to show healthy growth despite lingering political uncertainties
There can be few sharper distinctions than those between the political intrigues of Nigeria’s capital Abuja and the upbeat deals and money-making in Lagos, its commercial centre.
Government officials, off the record, acknowledge the disconnect between the business scene and the political environment that has characterized the government of Umaru Musa Yar’Adua, elected president in April 2007. They say he has been careful to consolidate his authority – but is now in a position to inject new momentum into policy-making and public administration.
Only in February did Yar’Adua overcome a legal challenge to his election, when members of the Presidential Election Tribunal unanimously agreed to throw out petitions from the two main losing candidates, Muhammadu Buhari and Atiku Abubakar. The tribunal dismissed their case, despite widespread reports from local and international observers of irregularities and fraud.
Buhari and Atiku are appealing to the Supreme Court. They maintain the election tribunal erred in law and avoided ruling on substantive issues; they complain of inducements to secure the verdict and argue the higher court will offer a fairer platform. Yar’Adua aides – and, privately, some Buhari and Atiku supporters – say the matter is effectively settled.
According to one senior official in government: “Whatever you might think of all the elections we had in 2007 – for state governors and a national assembly as well as for the presidency – a competent court has shredded their case. As an issue we need to look at our politics, but as a government we now need to move on.”
Signs that the government is moving on emerged at the March convention of the ruling People’s Democratic Party (PDP). After low-key but effective lobbying, Yar’Adua out-manœuvred rival factions to secure key party jobs, including chairman and national secretary, for his own supporters.
Officials say he is preparing a government reshuffle to shape an administration more in his own image. In an interview after last May’s inauguration, Yar’Adua acknowledged that Nigeria’s political system obliged him to work – at least initially – with people not always of his own choosing: “It’s not like the US for instance, where... virtually you move into government with half or more of the campaign team immediately,” he said.
The international community watched the 2007 process with some anxiety. Only South Africa moved quickly to congratulate Yar’Adua, who before his victory had travelled rarely, and never to the US. But with unfolding violence and election-related tensions in Kenya and Zimbabwe, many diplomats have welcomed the relative calm that has been associated with the transfer of power in Nigeria.
The business community may have less reason for optimism.
Reasons to be anxious
In April, Nigeria cancelled a $31 million steel contract and a 10-year iron ore mining concession to India’s Global Infrastructure Holdings Ltd (GIHL), accusing the firm of asset-stripping, corruption and other improprieties. In March, the House of Representatives probed spending of up to $16 billion in the power sector and uncovered a host of irregularities. Local newspapers alleged that one Japanese firm alone had failed to execute contracts worth $400 million.
Government sources say damning evidence has also been gathered for public investigations by the national assembly into the recovery of assets of money stolen by the Abacha military regime (1993-98).
There are also plans for an inquiry into management of the oil and gas sectors since the end of military rule in 1999. According to a senior official, “the dossier has already been prepared – it makes what was stolen in the power sector look like children’s pocket money.”
Seasoned observers say the common thread linking such probes is a determination to humiliate and disgrace Yar’Adua’s predecessor, Olusegun Obasanjo, who was president from 1999 to 2007. Obasanjo held the oil portfolio for much of his tenure and also took personal charge of power sector reforms.
Relations between supporters of Yar’Adua and Obasanjo are notoriously poor. Obasanjo is said to feel betrayed after helping to secure the presidency for Yar’Adua. Obasanjo’s aides describe the current campaign as a vendetta that masks continuing corruption in the executive and among favoured ministers, governors and others.
According to a former minister: “It is no good blaming everything on what happened before. All ex-presidents are unpopular, but this is cheap politics. Nothing is actually happening in government now. Even the budget has not been agreed, six months after it was presented to the national assembly.”
Yar’Adua’s aides counter that Obasanjo never intended Yar’Adua to take over and has tried to undermine his administration. They say that what Obasanjo preached to a receptive international community – and more sceptical Nigerian public – about political and economic reform should be exposed as hypocrisy.
They dismiss claims of lethargy and inertia in government, pointing to improvements in security in the Niger Delta and an easing in communal tensions in other flashpoints.
On the policy side they say months of detailed committee work has gone into the preparation of programmes for reform in oil and gas, energy, law and order and elections. “It is not fair to say we are doing nothing; but we are taking time to create structures that will work,” a Yar’Adua aide tells Emerging Markets.
Reasons to be cheerful
While the politicians have been battling in Abuja and state capitals, the economy has continued to post strong growth. Nigeria has continued to produce its Opec (Organization of the Petroleum Exporting Countries) quota, despite production difficulties resulting from communal unrest, poor maintenance, underfunding and labour issues.
This, combined with growth in non-oil sectors, is expected to contribute to a rise in real GDP of nearly three percentage points in 2008 to 9%. High oil and gas prices are meanwhile expected to increase nominal GDP – by 19% to N24,893 billion ($212 billion) – and boost the country’s international currency reserves 40% to $73.2 billion.
Yar’Adua’s platform is cautiously embraced by international financial institutions and capital markets, which in 2007 heavily backed a series of bond issues by private Nigerian banks. In Article IV negotiations completed this February, the IMF said Nigeria should accelerate the momentum of public-sector reforms and improve its regulatory framework.
However, the financial sector was among the biggest fans of the structural reforms completed during the Obasanjo era that are now the subject of scrutiny. Personally and institutionally, evidence of what happened then could at the least prove an embarrassment.Yar’Adua appears anxious to strengthen relations with the private sector, to which he is looking to create new financing structures for oil and gas and other infrastructure projects. The huge sums of public money allocated by former administrations to such sectors have promoted only modest real investment, and instead fuelled corruption on an industrial scale.
Government officials believe that by bringing in money from Nigeria’s bigger private banks, several of which claim paid-up capital in excess of a billion dollars, a transformed financial system is likely to encourage improved transparency and levels of implementation.
For its part the private sector is listening – and hoping to steer clear of Nigeria’s still choppy political waters.