Nigeria: Three hurdles undermining substantive reforms in 2021

Nigeria begins the year seeking a path to economic recovery.

The country suffered a recession last year alongside revenue and foreign exchange shortages. Now President Muhammadu Buhari has said his government will focus on a ‘national economic diversification agenda’.

However, there are three hurdles in the way of any reforms proposed under that agenda.

1. Underweight institutions

There is a bias toward executive action over legislation even though Buhari’s All Progressives Congress has a majority in parliament. The government is inclined to act unilaterally, such that policies change arbitrarily and are applied discriminately in the absence of supporting legislation. An example is blocking all land border trade by fiat in 2019. Certain domestic firms were later exempted and the policy is now being reversed altogether.

Key positions are also presently occupied by figures who are markedly submissive compared to their predecessors. The central bank governor Godwin Emefiele has deferred to Buhari on monetary policy, while Senate President Ahmed Lawan and Speaker Femi Gbajabiamila have allowed a new, controversial programme to hire nearly one million people without parliamentary oversight.

2. Structural drift

While Buhari was mostly aloof, his former chief of staff Abba Kyari was a central force who oriented policymaking until the latter’s death in April 2020. That gap in orientation has not been filled. Kyari’s successor Ibrahim Gambari has been rumored in the local press to be too weak to function while his son performs his duties. Turf wars have erupted within the last eight months, one of them leading to the removal of Ibrahim Magu who headed the Economic and Financial Crimes Commission (EFCC) – effectively disorienting the government’s anti-corruption campaign.

3. Fiscal constraints

The government has laid out hard and soft infrastructure development programmes in its Economic Sustainability Plan. These include developing 300,000 low-cost homes every year. But tepid prices and production in the oil and gas sector inhibit these ambitions. So does unrealistic budgeting. The government has set a revenue target of NGN8 trillion in the 2021 budget, but the country has never made nearly that figure. Its revenue fell 40% below projection by mid-year in 2020. Still, the government now forecasts it will earn even more money than last year’s forecast.