Nigeria’s new government

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Nigeria's New Government

Nigeria's New Government

PRESIDENT GOODLUCK JONATHAN recently invited a group of businessmen to a cattle ranch for a retreat to discuss how to generate faster economic growth. At one point he handed the assembled notables unmarked brown envelopes. Raised eyebrows rippled around the room. The president often castigates corruption. Yet he motioned for the tycoons to open the envelopes. Inside they found not cash but blank pieces of paper, on which he asked them each to write the names of three rent-seeking officials hurting their businesses, promising to investigate.

It is the sort of story Nigerians like to hear about their president, following his re-election in April. He spent several months in purdah, putting together a cabinet. He lured Ngozi Okonjo-Iweala, the World Bank’s managing-director, back home from Washington to act as a super-minister for finance and the economy. Olusegun Aganga, her predecessor at the ministry who was once a Goldman Sachs banker, swallowed his pride and stayed on as trade and investment minister.

The central bank’s outspoken governor, Lamido Sanussi, completes what some call a dream team, others a “scream team”. Rivalries among the triumvirate were inevitable; turf boundaries are unclear. But after three months in operation they are generating a new sense of momentum in Nigeria’s capital, Abuja. On October 18th they set up the country’s first sovereign-wealth fund, hoping to curb the perpetual plunder of oil revenues. They seem willing to pull out the stops to create jobs and raise incomes. Despite global woes, the economy keeps growing by around 7% a year. The Standard Bank predicted on October 17th that it will overtake South Africa’s by 2015 as Africa’s largest.

All the same, the high expectations that came with the president’s re-election may not be met. His signature policy, a plan to liberalise the electricity industry, has plainly fallen behind schedule. The start of privatisation has slipped from this year to next. Most Nigerians have no more than a few hours of mains supply a day—the economy’s single biggest bottleneck. Africa’s most populous nation gets as much grid power as a mid-size European city.

If power reform fails, the country’s hopes of becoming a G-20 economy in the next decade will remain fanciful, despite its vast size, plentiful resources and undoubted entrepreneurial spirit. Warning lights are flashing. The unemployment rate in the formal economy has reached a new high of 21%. Inflation has spiked. The currency, the naira, has fallen out of the exchange-rate bracket set by the central bank, which in turn has raised interest rates to a growth-slowing 12%.

A proposed phasing out of fuel subsidies is making people tense. The plan is sound in theory. The government spends billions of dollars every year on refined fuel it buys on international markets and retails for only 60 cents a litre at home. Smugglers take some of it to neighbouring countries for resale at full value. Better to spend money on roads and power stations, says the government. Yet poor Nigerians fear that corrupt officials will pocket the savings. The subsidies at least benefit us a bit, they say. Demonstrations and strikes loom.

The economy apart, the outlook is no better. Public security has sharply worsened. Boko Haram, an Islamist extremist group, was once a nuisance confined to the far north-east. It has now extended its reach across the country. In September it blew up Abuja’s main UN building, killing 23. In October it assassinated a member of parliament. On November 4th it killed more than 100 people in a series of bombings. The American government later warned of attacks against big hotels in the capital.

Boko Haram has dominated Mr Jonathan’s second term. Its attacks bear witness to growing ambition and sophistication. Foreign and Nigerian officials believe it has linked with al-Qaeda’s north-African wing. During his election campaign the president talked of improving relations between the country’s Muslim north and Christian south. Instead the gulf is deepening. A former president, Olusegun Obasanjo, a notorious back-seat driver, says he would hold direct talks with the group if he were still in charge.

The president is not sitting on his hands. Road-blocks have gone up around Abuja and some parts of the city are blocked off. But co-ordination is poor. The checkpoint at the airport’s entrance has turned into a toll-booth where women collect fees but armed guards are absent.

Ministers argue that economics is a higher priority than security. The central-bank governor says extremists mostly want economic growth and that Nigerian Islamists differ from Arab ones, though they say they want most of all to impose sharia law. “The problem will fade if we create jobs,” he says.

Alas, creating employment in the poor north is a distant prospect. Government reforms will mainly benefit pockets of development in the south, where investors want to go. There is no sign that the machinery of government will soon be able to bring improvements across the rest of country.

Still, many Nigerians remain optimistic. They are used to bad news, and there is still a bit of the good sort. Millions are being lifted out of poverty every year, though at a slower rate than in some other booming African countries. The president has also had some foreign-policy successes. Unlike his South African counterpart, he backed the winners in Côte d’Ivoire and Libya.

But Mr Jonathan still needs to switch on the lights. Apart from his dream team, he has attracted few bright new minds. And he still seems bent on repaying election favours to a rapacious old guard. He should hand out a lot more brown envelopes.

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