Wednesday, February 10, 2010

Q+A-What will shift in power mean for Nigeria?

Nigerian Vice President Goodluck Jonathan's takeover as acting head of state eases immediate concerns over who is in charge after President Umaru Yar'Adua's absence of more than two months for medical treatment.

Below are answers to questions on what it could mean for key sectors and initiatives:


OIL INDUSTRY

The fate of a ceasefire and amnesty programme for militants in the Niger Delta is crucial for the oil and gas production on which Nigeria depends for some 90 percent of foreign earnings.

The ceasefire had been put in doubt by Yar'Adua's absence and above all on delivering benefits to militants who had threatened to resume violence which at its height shut in as much as a quarter of Nigeria's oil output and helped push up world crude prices by a few cents on the barrel.

Main militant group MEND said it was still weighing options.

But Jonathan's arrival could get things back on track, at least in the short term, by ensuring that funding is pushed through and discussions continue.

The fact that he is from the delta should on the surface give him greater leverage with militants from his Ijaw tribe who for the first time see one of their own at the helm in Nigeria.

But politics in the delta is complicated by local rivalries and some resistance to making Jonathan acting president actually came from others in his home region.

That means it will be essential for him to be able to bring on board all the potentially troublesome local political strongmen, who could easily stir up trouble, as well as to satisfy the militant gangs.

The other key front is a bill to reform the oil industry which is currently up for discussion and parts of which are seen as unfavourable by multinationals such as Royal Dutch Shell, ExxonMobil and Chevron.

Having Jonathan in place means this could be passed more easily, however the constitutional doubts over the way that Jonathan came to power mean any legislation is in danger of being challenged in the courts.


THE ECONOMY

Jonathan's more formal role as acting president should now allow him to sign the 2010 budget, taking a brake off government departments -- as long as that does not lead to a legal challenge to his constitutional authority.

In his first speech as acting president, Jonathan clearly set out priority areas -- power, infrastructure, creating jobs and boosting business -- all of which could require significant spending increases.

Past Nigerian governments that know their lifespan is limited have been among the most free spending of all. With elections scheduled before May 2011 as well, there is every likelihood of a repeat this time.

The risk is not only in terms of potential inflationary pressures -- which stood at 12 percent in December -- but that increased spending could be wasted on ill-judged projects or lost to corruption in a country ranked 130 of 180 on Transparency International's most recent corruption index.

Local markets have largely shrugged off the political bluster. The naira NGN= is barely changed versus the dollar at 150.8 since Yar'Adua left the country. The All-Share Index is up nearly 8 percent since then.


BANKING REFORM

Yar'Adua won plaudits locally and internationally for appointing a central bank governor who took rapid measures to stabilise the financial system, bail out undercapitalised banks and clean up a sector riddled with mismanagement.

In so doing, however, Central Bank Governor Lamido Sanusi trod on many powerful toes -- sacking the heads of nine banks that benefited from a $4 billion bailout and putting in others to run them.

Yar'Adua's absence had raised questions over whether Sanusi would still be able to push through the next steps in the face of opposition from powerful vested interests.

Sanusi's reputation at home and abroad means it would be hard for anyone to openly challenge the reforms and knock them completely off track without badly damaging perceptions of Nigeria.

But there is a much greater chance that reforms could be delayed and of quiet resistance to Sanusi's measures.

This could stir Nigeria's ethnic hornet's nest too. Some opponents of Sanusi's tough measures accused him and Yar'Adua of being Muslim northerners out to take over the largely southern based banking system.

The shift in power to Jonathan could certainly help embolden Sanusi's foes.


POLITICS

Behind the scenes electioneering is already underway for the ballot due before mid-2011 and calculations over how that would play out were undoubtedly a factor in the weeks of tense wrangling before Jonathan formally assumed executive powers.

Yar'Adua is highly unlikely to run because of his illness and Jonathan may not contest because of an unwritten agreement within the ruling party that power rotates between north and south after every two presidential terms.

That leaves the field open for other northerners who would want to contest for the leadership of the ruling People's Democratic Party, who will be a shoo-in for the presidency.

If Yar'Adua were to resign or die before the election, it would then make Jonathan president instead of acting president and would leave the vice-presidency open for any northerner seeking a springboard for the presidency.

A political reform bill which is in the pipeline could also mean elections are held as early as late 2010.

Despite the uncertainty in recent weeks, Nigeria's military made clear that it is standing on the sidelines and did not plan to seize power as it did frequently before 1999 elections ended army rule.

The army cannot be excluded as a political force however. Uncertainties of the constitutionality of a government, chaotic political environments and unchecked corruption have all provided excuses for ambitious soldiers in the past.

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