Opinion: 5 Things Buhari Must Do to Save Nigeria - by Matthew Page

 

 

Buhari’s reform agenda probably faces its greatest threat from corrupt, old-school politicians within his own All Progressives Congress (APC) party.  Buhari should neutralize some of the APC’s shadiest figures, who could emerge as “veto players,” as described in Carl LeVan’s recent book.

 

Examples of these kleptocrats are not hard to find.  The U.S. Department of Justice has accused one sitting APC governor of helping former dictator Sani Abacha steal at least $458 million from state coffers.  Likewise, both APC candidates in the upcoming Kogi and Bayelsa State governorship elections have been indicted by Nigeria’s anti-corruption agency.

  

Admittedly, housecleaning carries political risks for Buhari. After all, his victorious electoral coalition included powerful defectors from former president Goodluck Jonathan’s People’s Democratic Party (PDP).  If he unduly antagonizes these establishment figures, they could derail his party’s newfound dominance by joining their former comrades in the opposition PDP.

 

Buhari has an opportunity to realize immediate savings by eliminating or merging some of Nigeria’s more than 500 federal parastatals and boards. Parastatals are government-operated companies or commercial agencies.  Pundits allege that past presidents used parastatal appointments to cultivate national political allies and provincial cronies.  These institutions, which range from the lucrative to the modest to the moribund, have long been a cornerstone of corruption in Nigeria — a complicated topic expertly explained by Daniel Jordan Smith.

 

Buhari may also want to disband some nice-to-have but non-essential parastatals in light of competing priorities and current fiscal constraints.  Does Nigeria need to spend more than $4 million annually on a Center for Space Transport and Propulsion? Is there an effort underway to rescue the supposedly stranded Nigerian astronaut featured in this legendary scam letter?

 

Buhari’s apparent determination to revive two “white elephant” economic sectors — domestic oil refineries and steel mills — worry industry experts.  Nigeria is replete with these kinds of investment projects where state-owned enterprises are funded for long periods even if they incur huge losses.  For decades, Nigerian leaders have thrown good money after bad at these projects because, as Robinson and Torvik argue, white elephant projects yield short-term political gains.

 

Buhari, like any of the rest of us, could stumble into a sunk cost dilemma where his efforts to maximize future returns of Nigeria’s white elephants only increase their cumulative losses. Instead, he should address the graft, inconsistent policies and opaque privatization deals that experts say turned these industries into white elephants in the first place.

As Buhari tries to put Nigeria’s public finances back in order, the balance sheets of the country’s 36 states are sinking deeper into the red.  In a decentralized federal system like Nigeria’s, state budgets typically affect the lives of ordinary citizens more than federal spending does. Since taking office, Buhari has already bailed out 27 cash-strapped states to the tune of $2.1 billion.  States’ borrowing trends are risky and need to be addressed, according to a recent report by the African Development Bank.

 

All but a few states generate minimal revenue outside of their monthly allocation of Nigeria’s anemic oil income.  While Nigeria’s national debt is still relatively low by global standards, fiscal federalism means that if states default on their debts, the federal government foots the bill.  Buhari’s reasons for watching state borrowing should also be personal: One of the stated reasons for the 1983 military coup that first brought him to power was runaway borrowing by state governors.

Nigeria will need to feel the “Buhari effect” (the sense, evident in a recent New York Times article, that there is a new sheriff in town) long after the president’s tenure is over.  The best way for him to protect his legacy is to partner with the National Assembly to enact legislation enshrining key reforms.  With few other politicians like him on the horizon, Buhari should put his legacy in writing.

 

A good place to start would be an act prohibiting the use of “security votes.” Both a definitive article by Uche et al. and a 2007 Human Rights Watch report illustrate how these secretive budgetary line items are used by officials at all levels of government as slush funds. Even Nigeria’s leading anti-corruption agency had a $1,000,000 security vote included in its 2014 budget. Buhari has his work cut out for him.