Probably “late” but not rushed

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Thursday, November 12, 2015 09:30AM / FBNQuest Research 

Some may argue that the wait of more than five months since President Muhammadu Buhari’s inauguration has been too long but the Federal Executive Council (FEC) was eventually unveiled yesterday.

It appears that the number of parastatals and permanent secretaries have been cut, which is a pointer towards savings. The highest expectations rest upon the shoulders of Babatunde Fashola, the former Lagos State governor.

Rumours suggested that he would have responsibility for power but works and housing have been added to his portfolio. Other recent state governors with portfolios include Kayode Fayemi and Rotimi Amaechi. Now that the FEC is in place, we expect fewer pronouncements from the CBN governor on trade and other economic policy.

The appointments confirm our frequently made point that the new administration is not free market in doctrine. Kemi Adeosun, the new finance minister, told the Senate in her screening that the CBN’s pursuit of exchange-rate stability had bought some time for the economy. This is not the language of an advocate of a third devaluation.

Unlike her predecessor, Adeosun does not have a coordinating role for the economy. If there is such a function, it is loosely held by Yemi Osinbajo, the vice president.

Nor is the FEC set to unpick all the policies of the old order. Audu Ogbeh, the new agriculture and rural development minister, has gone out of his way to praise the work of his predecessor, Akinwunmi Adesina. He insisted that the way forward is import substitution through the processing of local resources.

This thinking will also be applied to solid minerals under Fayemi.

The president is the new petroleum resources minister, and Emmanuel Kachikwu, the new group managing director of the NNPC, his minister of state. This combination should be able to reform Nigeria’s cash cow industry.

To give a sense of the scale of the task ahead for Fashola, Nigeria currently generates 4,324MW and notional peak demand for electricity is estimated at 12,800MW. On a per capita basis, Nigeria’s generation should be multiples of the former, using South Africa as a benchmark. As for housing, the shortfall is estimated at 17 million units.

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