Cabinet Delay May Send Nigeria Back Into Recession – Experts
There are strong indications that the economy may slide back into another round of recession, given the apparent stagnation of government activities and the uncertainties surrounding its policy direction and priorities.
It could be recalled that the 2019 presidential election was held on February 23 and the incumbent, President, Muhammadu Buhari, was declared the winner within a couple of days after the election. On May 29, he was formally sworn in as President for his second four-year tenure.
However, there are apprehensions that the economy is currently at a standstill following the prolonged absence of ministers to drive government’s policies and programmes.
In 2015 when President Buhari was first elected into office, he spent six months before appointing a cabinet, a situation that was largely responsible for plunging Nigeria into a recession the following year.
Experts fear that the nation may be headed on a similar path as the President does not seem to be in a hurry to appoint ministers that would assist him in running the governance process.
The National Assembly, which was inaugurated on June 11, 2019 has been waiting for the list of ministerial nominees in the last five weeks but to no avail.
Sunday Telegraph reliably learnt that the parliamentarians are due to embark on recess this week and there are no assurances that the list of ministers would be submitted before then.
Even if the list gets to the lawmakers this week, it will be impossible for them to consider the screening and confirmation of these ministerial nominees before they commence on their recess, which usually lasts about two months. The only alternative is for them to shelve their vacation and attend to the ministerial list with utmost despatch.
Due to the absence of the ministers, the implementation of the 2019 Appropriation Act has remained in limbo, while the preparation of the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FST), which ought to be the basis of the 2020 Budget estimates, is yet to commence.
One of the experts who spoke to the Sunday Telegraph, Professor of Economics, from the University of Nigeria, Nsukka, Ichoku Owumere, warned that the economy will suffer if the ministers are not named without further delay because it implies that in some cases, contractors will not be paid while high profile decisions can hardly be taken by the Permanent Secretaries mandated by the President to supervise the ministries.
“There are decisions the civil servants lack the statutory powers to take and the presidential directive cannot alter that fact.
“The highest decision making points of ministries and departments need to be activated by the President immediately as further delay will delay implementation of capital budgets which have multiplier effect on the economy,” he said.
Speaking, Founder and the first National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said the delay is already impacting negatively on the Nigerian capital market.
“You can see that the big boost and interest the stock exchange is supposed to receive from the listing of MTN and Airtel is not yet there because investors are on ‘wait and see game”.
He said the delay is confirming the belief by foreign investors that the government would continue in the old policies that have kept the economy growing at a very slow pace.
He warned that if President Buhari does not submit the list of the Ministers to the Senate for their approval before they proceed on their annual vacation this week, it will send a very negative signal to foreign investors.
Also speaking, the Director-General, Lagos Chambers of Commerce and Industry, Muda Yusuf, said delaying the appointment of ministers would hamper the implementation of government policies.
He said the nomination of ministers should be seamless if Buhari was desirous of achieving progress in the second tenure of his administration.
Yusuf stated: “Delaying appointment of ministers has implication for the implementation of government policies because transiting from one regime to the other is like running a relay race. When you are running a relay, the faster you are able to hand over the baton, the better for the eventual outcome of the race. But if there is a brake in the handover, it distorts a whole lot of things. That same analogy will also fit into this. The earlier we have people to take over from where the immediate past cabinet stopped the better for the economy and the continuity that this new dispensation is all about.”
Lead Director, Centre for Social Justice (CSJ), Mr Eze Onyekpere said it has been five months since the President was declared winner of the presidential poll and almost two months since he was sworn in for the second term, yet the cabinet which is the engine room of governance is not yet in place.
Onyekpere, a lawyer and public affairs analyst, said that the failure to appoint ministers all this while has grave implications including that Nigeria may sink deeper into economic, social, political and security challenges.
Similarly, a developmental economist, Mr. Odilim Enwegbara told Sunday Telegraph that the absence of ministers meant that key decisions which the government ought to had taken to encourage investments, generate employment, create wealth and enhance economic growth have been placed on hold in the last three months.
Enwegbara said that for an economy that recently exited recession, the laissez faire attitude of the Buhari administration was dangerous as the economy could experience another convulsion.
“Of course when an economy is struggling and is in need of public sector push in the form of government fiscal stimulus and the fiscal authority is non-existent, then it’s natural that the obvious is inevitable, which is fiscal contraction. The implication is another recession,” he said.
He accused President Buhari of deliberately shutting down governance and putting economic activities on the pause mode in order to achieve some ulterior motives.
“Buhari wanted to create this gap so that he can go ahead to operate a one man government. This will undermine the badly needed transparency and accountability as is part of economic democratization,” Enwegbara said.
The last Federal Executive Council (FEC) was dissolved on May 28, the eve of Buhari’s inauguration for a second term. Since then, the Permanent Secretaries have been in charge of their respective ministries.
According to a Permanent Secretary in one of the ministries, leaving the bureaucrats to run the ministries has its own challenges and limitations; especially in terms of funding of government programmes and projects.
Sunday Telegraph learnt that the Permanent Secretaries have a financial approval limit of N5 million, an amount that is a far cry from what is required to run an average capital project.
A senior bureaucrat, who spoke to Sunday Telegraph in confidence, said there is a standard procedure when finance is involved.
“In the Civil Service, there is standard on how finances are undertaken. Whether there is a minister or not, the Permanent Secretary has approval limit of N5 million. Any amount above that goes to a tender’s board. A tender’s board of a ministry comprises of the directors in that ministry. Then, if the amount is above the tender’s board limit, it goes to the Federal Executive Council (FEC). Whether a minister is in place or not, this is the rule,” he explained.
In defence of its slow pace in setting up the governance structure, President Muhammadu Buhari had pleaded with Nigerians to give him more time pick those who will work with him.. Buhari claimed that in spite of the six months delay before he formed the last cabinet, he ended up with persons he barely knew because they were nominees of his political associates and party bigwigs.
This time around, he said, he would want to take his time so as to be able to choose those personally known to him.
But as things stand, even if the President finally transmits the list to the Upper Chamber, unless the Senate agrees to call short its annual two-month vacation and reconvene to consider the ministerial list, the nation will have no cabinet members till at least October.
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