Nigeria’s Tinubu picks his cabinet

President Bola Tinubu nominated 28 cabinet ministers today (27 Jul). He will have to put forward more* if he is to meet the constitutional requirement regarding representativeness. There is another bar to pass though. A complete and credible economic plan is urgently required to keep Tinubu’s big bang reforms on track and mitigate costs to the investment climate.

For now, the lineup that the president has proposed for the task is dominated by career politicians more so than technocrats. And yet, addressing Nigeria’s mammoth opportunities and challenges will require more than is drawn from the typical politician’s toolkit. As such, the outlook improves to the extent that nominees with technical expertise are assigned key portfolios and allowed room to steer policymaking.

Significance – Power and Motion

Nigeria’s constitution requires the president to nominate at least one minister from each of the country’s 36 states. The president’s allies from each state usually try to propose a nominee, but subsequent infighting delays the process and most slots are eventually used to reward politicians.

Now, power has swung back to the south after eight years of northern rule. Accordingly, we expect President Tinubu to allot key portfolios to his home state Lagos and other southern states. The de-facto cabinet chief will be Tinubu’s chief of staff Femi Gbajabiamila, who was appointed to this role last month after four years as speaker of the House of Representatives.

Olawale Edun will likely get the finance portfolio and take office under challenging macroeconomic circumstances. GDP growth slowed to 2.31% in Q1 this year from 3.52% in the previous quarter. The naira has depreciated at the official rate by more than 70% since the central bank began lifting restrictions in mid-June. Meanwhile, fuel prices have more than tripled since Tinubu announced the end of subsidies at the end of May. These recent changes have had a dramatic impact on daily life.

We note that the fiscal and monetary reforms are taking place with continued uncertainty despite the imminent cabinet formation. The government is still deliberating on how to respond to the economic fallout. Typical policies like fertiliser distribution have been proposed to curb food inflation, but it remains unclear how the government intends to sustain the reforms while mitigating costs to the broader economy. Last week, Tinubu walked back a plan to pay around USD10 monthly to low earners after popular pushback. The central bank remains under interim management while the secret police continues to detain its suspended governor Godwin Emefiele (background here).

Outlook – Personnel is policy

We maintain that the next steps in the reform process should be to appoint a new central bank chief and outline a credible plan to turn round the economy. These steps will be complicated by the present scenario where key policies have preceded cabinet nominations. Policymaking is already progressing through informal channels.

In important instances, Tinubu has been inclined to seek solutions to current economic problems from political actors such as state governors – and even a former rebel leader, Asari Dokubo. This can temper the quality of decisions and consequently the economic outlook. On the other hand, the forecast improves if additional cabinet members with technical knowledge are nominated and if those with the relevant expertise are allowed space to drive policymaking.

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*Amended (27 Jul) to reflect language in the constitution: (a) to name ministers by 29 Jul and (b) to name ministers from each of the 36 ministers. An argument could be made that the first requirement has now been fulfilled and the second can follow at a later, unspecified date.

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