Plenty of activity in the absence of ministers -Gregory Kronsten

A common criticism of the Buhari presidency from portfolio investors is that the president will not appoint the federal executive council (FEC) of ministers until next month. The argument might have some merit but should not be expanded to give the impression that there are no reasons for the delay.
We recall that after the polls in 2011, Ngozi Okonjo-Iweala did not take up her post as coordinating minister of the economy until August. The new governor of Lagos State, Akinwunmi Ambode, is in the process of nominating his commissioners for vetting by the state assembly. To cite an extreme case, Belgium recently went more than one year without a government in place. This came about because the French and Flemish-based political parties could not agree to form a governing coalition. The country did not fall apart since in Belgium, Nigeria and elsewhere civil servants run the show and not government ministers.

President Buhari and Vice President Osinbajo

Those same ministers have a purpose, of course, and in their absence a sign-off on certain policies has to be deferred. One example is a new electricity tariff, which the Nigerian Electricity Regulatory Commission chose to reduce in the election campaign. Another is tax policy. Earlier this month the then acting chairman of the Federal Inland Revenue Service (FIRS), Samuel Ogungbesan, was quoted in the local media as advocating a doubling of the VAT rate to 10 per cent. This would be a decision for the new federal finance minister.
Another consequence of the absence of ministers is the boldness of the CBN governor, Godwin Emefiele, in the vacuum that has developed. He explains exchange-rate policy, as a central bank governor should, but the CBN circular dated 23 Junewent a step further. It listed 41 items which were no longer eligible for fx from the interbank market or bureaux de change, marking out a role in trade and industrial policy.
His predecessor, Lamido Sanusi, also called for the processing of raw materials and import substitution. He liked to bemoan the import of tomato paste but he did not ban it. Along with the many differences between the governors, two common themes are worth mentioning. Both set up a number of sectoral intervention funds (to compensate for the limited risk appetite of the commercial banks) and both extended their influence because they operated in a near-void: Sanusi because he was the first eloquent reformer appointed and Emefiele because there are no ministers to set policy. (The latter may find the stage rather crowded when there are.)
Before the appointment of a new FEC, the president has been busy making changes at the top of the armed forces and public agencies including the NNPC, AMCON, the Budget Office and the FIRS. The new senior officials may find that their organisations operate on the basis of best practice. More frequently, they will reach a different conclusion. The new group managing director of the NNPC, Emmanuel Kachikwu, moved into his new office in Abuja and immediately dismissed all the group executive directors in place.
The challenge for Kachikwu and others similarly elevated is to impose institutional change without creating resentment throughout the organisation. This means a combination of internal and external senior appointments. It is far too early to judge whether the new appointments will be able to achieve that change. In the case of the NNPC, the new GMD has to reverse habits ingrained over three decades.
Other than swap the faces in the top jobs, the presidency can also effect change by sending out a strong message on, for example, governance. How else can we explain the increase of 32 per cent (from the previous month) in the distribution of June revenues in the federation account to the three tiers of government? Production and price trends in the oil industry would not support such a rise. It would appear that public agencies remitted to the account dues they had previously withheld.
The same strong message seems to have influenced the US$2.5bn growth in official reserves in July. Again, the oil price does not help. The CBN circular of 23 June offers a partial explanation. We understand that the 41 import items had comprised about 20 per cent of fx utilization. Our rough calculations indicate that this would have accounted for perhaps US$900m of the increase in July. Since all public agencies will have picked up on the “body language” emanating from the presidency, we should not be surprised by a plugging of leakages. (In August to date, reserves have been broadly stable and the CBN has increased its fx sales.)
We see therefore that the president has been very active in the three months since the handover on 29 May. He has not appointed his ministers but has wielded the axe at leading public agencies and indicated policy preferences for a number of industries such as textiles and aviation. Some of the criticism has arisen because he is not new to the presidency, knows his way around certain areas such as the oil industry and has not worked hard at public relations. Those familiar with the UK TV series Monty Python will remember the discussion as to whether a parrot was dead or sleeping. To fast-forward forty years or so, the debate currently is whether the president is inactive or active. Without being in any way partisan, the evidence of the second is compelling.

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