Nigerian President Muhammadu Buhari’s 43 cabinet ministers all have their work cut out for them.
But it’s four of them that will attract the most scrutiny as they set about their task of resetting the struggling economy of Africa’s largest oil producer.
First on that list, and perhaps with the most daunting task of all four, is Zainab Ahmed. Ahmed retained the position of finance minister which she undertook in acting capacity for nine months, following the resignation of her predecessor, Kemi Adeosun, in September 2018.
Ahmed also gets additional responsibilities for budget and national planning. This time, however, she’s the senior minister, a role that was formerly filled by Udoma Udo Udoma.
She had served in a junior role to Udoma as the minister of state for budget and national planning in Buhari’s first term before she replaced Adeosun.
As minister of Finance as well as Budget and National Planning, Ahmed’s task is quite daunting.
Ahmed will lead in the face of weak government revenue, a ballooning public wage bill and rising public debt – the three factors threatening a fiscal crisis.
She must also deal with the constraints of boosting non-oil revenue at a time of tepid economic growth and squeezed company profits.
While the Federal Government could have afforded to paper the cracks by borrowing to fill revenue shortages four years ago, that option is almost a non-existent one today.
Not when public debt has nearly doubled in the last four years and debt to revenue ratio is already at unsustainable levels.
In 2018, the Federal Government spent 66 kobo of every naira earned to service debt. It gets even worse. In the 2019 budget, recurrent expenditure to revenue ratio of 150 percent implies that the government will spend every naira earned as well as an extra 50 kobo borrowed on only recurrent expenditure this year.
Ahmed must find a way to restore the country’s fiscal health, according to Wale Okunrinboye, head of investment research at local fund manager, Sigma Pensions.
“To perform, she will be asking the government to spit against its own shadow,” Okunrinboye said.
That’s because she has the difficult task of balancing the budget, boosting government revenue in a sustainable manner and, most importantly, tapping private capital – something the current government is not renowned for.
“The government has demonstrated a disdain for private capital and she must change that. She must have an expansive approach to privatisation and show a real desire to implement market reforms,” Okunrinboye said.
Ahmed also needs to enforce a breakaway from the government’s spending on recurrent expenditure and debt servicing by pushing for reforms that reduce the cost of governance and spur spending on infrastructure.
Another minister that will grab the spotlight is Adeniyi Adebayo, the new minister of industry, trade and investment.
Adebayo, 61, will replace Okechukwu Enelamah, the immediate past minister in the ministry.
The University of Lagos law graduate is a veteran politician. He was the first executive governor of Ekiti State and is a top chieftain at the ruling All Progressives Congress (APC).
He faces an unenviable task of building investor confidence in an economy still struggling with weak growth.
Foreign direct investments (FDI) into Africa’s biggest economy tanked after a 2014 collapse in global oil prices, coupled with an agitation in the Niger Delta region that curbed production. Investment flows have not really recovered since then, despite improvement from 2016’s record low.
Data from the National Bureau of Statistics show that investment into the country dropped 53.5 percent in 2015 to $9.8 billion from $20.7 billion in 2014.
In the thick of the recession in 2016, the figure reached its lowest level at $5.1 billion. In 2017, foreign investment picked up to $12 billion and climbed further to $17 billion in 2018, which remains some way off the $20 billion inflow of 2014.
“The new minister will have considerable work to do in ensuring there’s an enabling environment for investors,” said Ayodeji Ebo, the managing director at financial advisory firm, Afrinvest Securities.
In 2018, Nigeria came in at 146th place out of 189 countries in the World Bank’s Ease of Doing Business rankings.
The lender in the report expressed investors’ worries over several bottlenecks that have been hurting the growth of businesses in the country ranging from registration of property, enforcing contracts, access to electricity, among others.
Analysts are curious to see whether Adebayo’s legal background would play a role in ensuring the government better upholds contracts with private investors.
“If he can at least show prowess in addressing many of these bottlenecks, the country will definitely attract more investments,” Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry, said.
The third minister that will attract attention is Saleh Mamman, minister of power.
Mamman, a businessman and former Ministry of Works official, will need to tackle a poor electricity supply that holds back economic growth and the country’s industrialisation aspirations.
Nigeria’s average electricity supply of around 4,000 megawatts poorly compares to South Africa’s 40,000, despite the latter having considerably less population.
Mamman will be faced with crippling debts that have brought the power sector on its knees and held back investment.
Stakeholders in the power sector fear Mamman may take some time learning the ropes and this could slow the workings of the industry.
“We need to wait for his policy statement before we know where he is heading to,” said Ayodeji Dada, president, Association of Energy Engineers, Nigeria chapter.
The minister of state for petroleum resources, Timipre Sylva, who replaces former Exxon Mobil boss, Emmanuel Kachikwu, also has a tough task ahead.
Stakeholders say top on his priorities would be to navigate the security and community problems in the Niger Delta with the aim of allowing peaceful operation of oil companies in the area.
He will also need to move the needle on ensuring the passage of the Petroleum Industry Bill (PIB), which has been stuck with lawmakers for decades.
As the new minister of state for petroleum resources, Sylva, assumed duties with a pledge to reposition and chart a way forward for the Nigerian petroleum sector. A lot depends on keeping that pledge.
Oil accounts for about 70 percent of Nigeria’ revenue, but the Organization of Petroleum Exporting Countries (OPEC) member has been hit hard by a prolonged drop in crude prices that have caused the deepest crisis in Africa’s biggest economy for more than a decade. The new minister must shake off oil’s many troubles and attract new investments into the sector which has stalled recently.
Amid a series of changes, Buhari has himself retained responsibility for the full portfolio, despite the oil sector of the economy shrinking by -2.40 percent in Q1 2019 compared with -1.62 percent recorded in Q4 2018.
Sources familiar with the sector say they expect Sylva to bring his experience as a former assistant to a former minister of petroleum resources and a governor of Bayelsa State to bear on the industry.
Adeola Adenikinju, a gas policy analyst for the World Bank and professor of Economics at University of Ibadan, said it’s very important that the new minister of petroleum strikes a good relationship with the president and enjoys the confidence of the president in order to succeed.
“It’s one thing to have a technocrat who knows how to move the industry forward, it’s another thing to enjoy the confidence of the president,” Adenikinju said.
“He was a former governor, so he knows what it means to exercise executive authority. Rather than start from scratch, he just needs to have an assessment on what was on ground and prioritise which is important, most especially the Petroleum Industry Bill (PIB) which would have a huge impact on investments and profitability,” he told BusinessDay.
Adenikinju, who is also a member of the Monetary Policy Committee of the Central Bank of Nigeria (CBN), said the new petroleum minister needs to look at the oil and gas sector beyond just generating revenue but rather see it as value addition to other sectors of the economy.
“He needs to work with the economic team to ensure the sector is more integrated, revive the economy and contribute to the welfare of the economy including the Niger Delta where he comes,” Adenikinju said.