02/04/15

Barring unwelcome twists in Nigeria’s volatile elite politics, Goodluck Jonathan’s peaceful departure from Aso Rock will be judged an unexpected success at the end of a largely failed presidency. The economy has grown over the past five years, but the president’s role in this was limited at best, while mismanagement of issues such as the jihadist insurgency in the north-east has added to Nigerians’ insecurity. Jonathan’s defeat means that no future president can rest comfortable in the assumption that his ultimate control of the levers of patronage will translate into electoral success; this is a major step forward for Nigeria and, arguably, the continent.

The victory of retired Major General Muhammadu Buhari will mark a change of tone in economic and security policy. The 72-year-old one-time military dictator seems genuine in his commitment to clean up business and public life, and to give the military renewed rigour, which will mean redirecting resources from Nigeria’s ever rising military budget, that have by many accounts been pocketed by corrupt officials, into confronting Boko Haram and other challenges. As is usual after Nigerian elections, less familiar business leaders may come to the fore, while empires built up on Jonathan’s watch may tremble.

Democracy as understood in western chanceries has won out, underlined by Jonathan’s graceful acceptance of defeat. Moves to build and consolidate institutions in the spirit of the last week’s events would leave a lasting legacy of an election that eventually exceeded expectations. However, the critical question for Nigeria is whether the election of an opposition president can translate into more profound change: this means engineering a genuine overhaul of governance and creating more responsive government.

Politics in Nigeria still tends towards what one seasoned observer calls ‘the transactional’, based on alliances and decisions cemented by money and deal-making. Buhari is promising reform, which some suspect could involve a degree of retribution; this could be painful for at least some magnates who benefitted from years of People’s Democratic Party (PDP) largesse. But the All Progressives’ Congress (APC) is not a revolutionary party. Its governors and other notables have years of dealing happily with PDP counterparts. Its election reflects a shift in the system, not its overthrow.

Among key issues to watch are the following:

◊ Boko Haram – Chadian President Idriss Déby Itno has been complaining that his troops have received no support from Nigerian forces as they drive Boko Haram militants out of north-eastern towns – with the Chadian offensive, supported by Cameroon and Niger, confirming an argument made previously by African Energy that Déby’s forced intervention reflected very badly on Jonathan and his generals (AE 294/24). Buhari will move to stabilise his native north; the army will have to considerably up its game and more resources will be channelled northwards.

◊ Niger Delta – Jonathan’s home areas largely voted for the PDP president, but even here his prestige was limited. This may not stop an upsurge in violence and criminality. Major oil companies continue to divest themselves of onshore and shallow water assets in this difficult territory, where former militants have indicated they may react badly to change at the top.

◊ Oil – Few tears will be shed in the industry (nor in the Organisation of the Petroleum Exporting Countries, where she is currently president) for Jonathan’s close friend, petroleum minister Diezani Alison-Madueke, whose mismanagement of the sector was a reflection of her integration into elite political-business circles, rather than her much hyped background as a former Shell executive. APC national public secretary Alhaji Lai Mohammed has said passing the long-delayed Petroleum Industry Bill (PIB) would be a priority in an APC government’s first year – and this legislation might be strengthened in line with the PIB’s earlier promise, unbundling Nigerian National Petroleum Corporation into separate commercial and regulatory bodies (AE 292/24). Prior to becoming president, Buhari was petroleum minister in the early 1980s, in the elected government of Shehu Shagari (which he subsequently overthrew). His administration will have to re-engage with Shell and other major companies, who have been calling for improved fiscal terms to reflect the oil price downturn.

◊ Economic policy – the make-up of Buhari’s government will be closely watched by business as a signal of whether reform will continue. Finance minister and co-ordinating minister for the economy Ngozi Okonjo-Iweala will be a hard act to follow, but along with her more reformist allies in government there have been signs that their influence and energy have been flagging over the latter part of Jonathan’s mandate, as they have become more isolated from decision-making, which became concentrated into fewer hands on Aso Rock. APC officials have said they will continue with the privatization of electricity and other key sectors. The APC is a coalition of parties, and includes former PDP members who have crossed over. Buhari has a pool of qualified technocrats he can call on, as well as astute politicians such as former governors Babatunde Fashola (Lagos State) and Rotimi Amaechi (Rivers State).

Buhari’s economic managers face a difficult first year, working with a FY2015 budget based on $53/bbl oil (compared to $77.5/bbl in FY2014) and a near-depleted excess crude account, in part exhausted by an effort to prop up the naira. Stopping the pillage of government accounts, if possible, would help, but it will be a struggle for an essentially coalition government whose major initial challenges will include managing popular expectations in the face of economic hardship.

Originally published for CbI's African Energy