Oil slump, Islamist war, power cuts greet Buhari as he takes over, but Nigerians have faith

Most homes go without mains electricity for hours on end, and while Nigerian pumps about 2m barrels of oil a day, almost none is refined domestically.

CRIPPLING fuel shortages, power cuts, slowing economic growth and Islamist militants wreaking havoc. Muhammadu Buhari took on a tough job as he was sworn in as Nigeria’s president Friday in a colourful ceremony to loud cheers.

Former military ruler Buhari, 72, swept incumbent Goodluck Jonathan from office in March elections by pledging to end endemic corruption and Boko Haram’s rebellion in the north. His stewardship of Africa’s biggest oil producer, this time as elected president, may depend on the price of crude, which supplies the government with more than two-thirds of its income.

“If you look at expectation and look at funding, there’s quite a gap,” Olusegun Sotola, a research fellow at the Lagos- based Initiative for Public Policy Analysis, said by phone. “Buhari is going to be running a government without the necessary funding, which is a big problem because expectations are very high.”

Buhari was inaugurated in the capital, Abuja, and  takes charge with Brent crude down 46% from last year’s peak of $115.71 in June. Lower prices are already hurting Nigeria’s economy.

Growth slowed to 4% in the first quarter compared with 5.9% a quarter earlier, the national statistics agency said this month. The naira has declined 8% against the dollar this year.

Voter faith

Even in the face of such challenges, voters who put Buhari in change of Africa’s most populous country have faith he will deliver.

“We want him to tackle the issue of insecurity in northern Nigeria and Nigeria at large,” said Ado Basiru, 49, who runs a cement-making business in Kano, northern Nigeria’s largest city. “We want him to bring steady power supply that would help to boost companies and industries that are collapsing.”

Most Nigerian homes go without mains electricity for hours on end, and while the country pumps about 2 million barrels of oil a day, almost none is refined domestically, leaving Nigeria dependent on fuel imports. Shortages and 12-hour waits at gas stations are common.

Fuel crisis

Nigeria’s worst fuel crisis in a decade during a dispute between the government and fuel marketers over unpaid bills, which ended this week, disrupted flights and shut banks. It also threatened the local operations of businesses including MTN Group Ltd., the biggest mobile-phone company on the continent, which like many relies on diesel generators to operate.

Though a military campaign by Nigeria and neighboring countries this year has scored victories against Boko Haram in the northeast, the group is still waging a six-year-old campaign of bombings and guerrilla warfare. Buhari, whose army background helped him electorally, has promised to crush the movement and has vowed zero tolerance for corruption.

“I am very hopeful that General Muhammdu Buhari will fight corruption and indiscipline,” said Abubakar Salim, 62, a retired health worker in Kano. “It is because of corruption that the power supply problem was not solved.”

Buhari has talked about cleaning up the opaque state-owned Nigerian National Petroleum Corp. and the military, though a quick fix won’t be easy, said John Campbell, a former U.S. Ambassador to Nigeria.

“The trouble with cleaning up corruption is that it takes time, and particularly when the corruption is structural,” said Campbell, now a New York-based senior fellow for Africa policy studies at the Council on Foreign Relations.

Gradual change

Even Buhari’s party has warned that solutions won’t be immediate.

“I don’t think Nigerians should expect an overnight change, it has to be gradual,” Atiku Abubakar, who ran against Buhari for the party’s presidential nomination and remains a key figure in the All Progressives Congress, said in a May 17 broadcast on Lagos-based Channels TV. “There is not going to be magic overnight.”

The elections that culminated in Jonathan’s concession of defeat, the first in Nigerian history, allayed fears the country might descend into the type of violence that followed previous votes, said Anna Rosenberg, associate practice leader for sub- Saharan Africa research at Washington-based Frontier Strategy Group,

“Many investors intend to accelerate their Nigerian expansion plans in the second half of the year,” she said by e- mail. “However, if Buhari’s government does not follow through on plans to cut spending and to tackle corruption and waste, the low oil price could affect the economy even more severely than it already has.”

Cash crunch

The oil slump forced the government to borrow 473 billion naira ($2.4 billion) in the first four months of the year to cope with a “cash-flow crunch,” Finance Minister Ngozi Okonjo- Iweala said this month. This year, close to 85% of the budget is swallowed up by official salaries, government running costs and debt payments, leaving little for infrastructure investment.

“Voters believe the new government will bring a better quality of living,” said Sotola at the Initiative for Public Policy Analysis. If nothing happens “they will start to perceive them as not performing, start comparing Buhari with Goodluck Jonathan, and they will say Goodluck was better,” he said.

—With assistance from Mustapha Muhammad in Kano and Terry Atlas in Washington.

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