Nigeria: How Buhari's Slow Decision Process May Upset Economy

President Muhammadu Buhari's slow decision-making process could once again impede his second term in office and endanger the economy.

One week after signing the N8.92 trillion 2019 budget and five days after the new administration was inaugurated, Buhari's "body language," according to a source close to the presidency, seems out of tune with the urgent need to set up a cabinet, reset the ailing economy and properly deploy the budget's borrowed funds.

"Baba's way is taking things gradually. But I don't think it would take long like before. There is a need to prove a point this time around, coupled with the criticisms against him and the condition of the economy. For now, it's not clear whether he will speak on it this week," the source said.

What has thrown into sharp relief the slowness of Buhari is that South Africa's president, Cyril Ramaphosa, named his cabinet 96 hours after he was sworn in, becoming also the third president on the continent to have a gender-balanced cabinet, after Rwanda and Ethiopia.

Affirming the connection between cabinet inauguration and the financial market, the South African rand reacted positively, appreciating by 0.5 per cent.In 2015, investors and financial market players, both foreign and domestic, waited six months before Buhari picked his cabinet. The development signalled a lack of direction and fuelled speculations. It also led to uncertainty, near-inactivity, cautious investments and huge withdrawal of investments, besides institutional sanctions.

According to the chief executive officer of Cowry Asset Management Limited, Johnson Chukwu, "It was more of a dark moment, as there was no fiscal policy direction to boost activities. The development caused investment reversals, while potential inflows were kept on the sidelines against perceived uncertainties. The hiatus, in an already high-speed growing economy, was a key reason behind the high-level economic headwinds that culminated in recession. We cannot afford it this time."

Currently, the economy is hostage to external shocks, even as the latest report on Gross Domestic Product (GDP) shows a reverse from major gains in the fourth quarter (Q4) of 2018. It went down from 2.39 per cent to 2.01 per cent in the first quarter (Q1) of 2019, representing a decline by 0.38 per cent.

But a financial analyst, Egie Akpata, was skeptical on what the president's package could unfold. He told The Guardian that the economy might not witness any great change, as Buhari might return many of his "underperforming" ministers. He nevertheless expressed hope that the 2015 delay would not repeat itself, even as he called for urgent attention to bring the economy out of its "bad shape."

FXTM research analyst, Lukman Otunuga, noted that the key question on the minds of many investors is what his re-election means for the economy in 2019 and beyond, with emphasis on shifting the economy from reliance on oil, rather than mere proclamations.

"The market is still afraid his victory suggests continuity of policies. On the other hand, it offers the government an opportunity to build on what has already been achieved over the last four years. If infrastructural developments are worked upon and there is real diversification, especially in agriculture, coupled with strategies to mitigate external risks, Nigeria could still surprise the world this year," Otunuga said.

On his part, economist, Bismarck Rewane, said: "We need investments to move on. Of course, there are signs. But what we need more, now, not the signs, but tangibles. In the near term, everything will continue this way, unless something different happens."

Financial analyst, Ayodele Akinwunmi, said the president has learned from the past. He was therefore optimistic that he would constitute his cabinet on time with a team to drive his economic growth agenda.He warned: "Any delay like what we had in 2015 may put the economy on reverse gear from its current momentum. I am sure the president will not like such. I believe Nigeria will have a cabinet before the end of June. Expectations for the second term are high and there is a lot of work to be done."

Also, economist, Dr. Olalekan Obademi, said he would not expect the president to repeat the late appointment of cabinet ministers. According to him, "The effect is that the uncertainty could lead to capital flight and create other distortions in the economy."

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