Nigerian President Umaru Yar’Adua’s strengthening grip on power is still unlikely to mean a revival of economic reforms that have stagnated since he took office 16 months ago.
Yar’Adua, known by his critics as ”Baba Go-Slow,” has imposed a major shake-up in Africa’s most populous nation in recent weeks — replacing military chiefs, restructuring key ministries and preparing for a possible cabinet reshuffle.
The sweeping changes come amid growing frustration, from both Nigerians and foreign investors, over chronic power problems, poor infrastructure, and persistent violence in the oil-producing Niger Delta.
”Yar’Adua is known as a do-nothing man. I don’t think these changes will achieve anything,” said Bismarck Rewane, chief executive of Financial Derivatives, a Lagos-based consultancy.
There is also evidence of foreign investors re-thinking their positions in Nigeria alongside worries over other emerging markets. The stock exchange index has tumbled nearly a third since March.
Yar’Adua took office in May 2007 promising among other things to bring stability to the oil-rich delta and develop a reliable power sector, both considered key to the Opec member’s economic growth and industrialisation.
But most of Nigeria’s 140-million people continue to experience weeks without mains electricity and a fifth of oil production remains shut due to violence in the Niger Delta.
Health worries
The 57-year-old leader, whose health treatment abroad has prompted speculation that he will be unable to complete his four-year term, looks to be consolidating his power and breaking free from the influence of predecessor Olusegun Obasanjo.
But analysts said his shake-up offered no concrete solutions to Nigeria’s problems, only new faces and more bureaucracy.
”The honeymoon of the current administration is over. We now need to see visible evidence that the reform process is starting to move ahead of pace,” said Matthew Pearson, head of equities research Africa for Renaissance Capital.
Concerns have also arisen over the seriousness of Yar’Adua’s pledged fight against corruption after the sacking and demotion of the top police officer who had led it and had won respect at home and abroad.
Foreign investors flocked to the world’s eighth largest oil exporter, drawn by annual economic growth of between 5% and 10% over the past five years according to the International Monetary Fund, high oil prices and a competitive banking sector.
Foreign direct investment soared to over $5-billion in 2007 from barely a fifth of that in 2000, according to World Bank data. Nigeria has been central to frontier investors seeking to profit from Africa’s fastest growth in decades.
But although the naira currency has held stable, the index of the $85-billion stock exchange, which grew by 75% last year to become one of the world’s top-performing frontier markets, has fallen by 26% since early March.
Falling world oil prices are unlikely to have any budget impact since at around $100 a barrel they are still above the government’s $59 forecast, but they do indicate less of a potential upside than might have been the case with oil at $140.
Delta troubles
The ongoing troubles in the Niger Delta have also held back oil production. Nigeria was briefly surpassed by Angola as the continent’s biggest oil producer earlier this year.
”In the last six months, there has been growing caution in foreign investment. The Niger Delta is still the greatest threat to wider stability,” said Rolake Akinola, senior West Africa analyst with independent risk consultancy Control Risks.
Yar’Adua on Wednesday announced a new ministry to address instability in the delta, but militants dismissed it as no more likely to succeed than numerous past efforts.
Militants, who say they are fighting for development and a greater share of oil profits, launched a campaign of violence against the energy sector in early 2006.
Analysts said the new ministry’s success would largely depend on who Yar’Adua appoints to lead its operations.
”The key in Nigeria is individuals as much as institutions. You can have a good structure, but without the right people it isn’t going anywhere,” said Antony Goldman, an analyst at London-based risk consultancy PM consulting.
A peace summit promised by Yar’Adua was shelved in July after the mediator chosen to organise the event resigned amid controversy over his past political positions. – Reuters