Nigeria Senate Confirms President Buhari’s Ministerial Picks
Nigeria’s Senate approved the final list of 18 cabinet nominees submitted by President Muhammadu Buhari on Thursday, bringing to 36 the total number considered fit to be ministers.
Senate President Bukola Saraki read out the names, which the lawmakers approved by voice vote, enabling Buhari to set up his cabinet five months after he took office. Buhari’s cabinet list to lawmakers didn’t say which ministries nominees will head.
Buhari, 72, has been criticized by opposition figures and some analysts for being slow to name his cabinet or articulate economic policies since his victory over Goodluck Jonathan in March elections that ushered in the first democratic transfer of power from one party to another in Africa’s largest economy.
Nominees confirmed include Kemi Adeosun, tipped by some analysts to be the finance minister; Emmanuel Kachikwu, head of the state oil company; Babatunde Fashola, a former governor of Lagos, the country’s commercial capital; and Kayode Fayemi, a former governor of Ekiti state and a key policy figure in Buhari’s All Progressive Congress party.
Buhari’s economic team will need to restore confidence in Africa’s largest crude producer in the face of low oil prices that has put pressure on public finances, slowing economic growth and attacks by Boko Haram militants. Without a finance minister, the central bank has imposed currency restrictions to conserve the country’s declining reserves.
Nigeria’s economy is growing at the slowest pace this decade as oil prices drop. Companies are complaining they can’t get the dollars they need to do business. And trading in the naira has long since dried up.
There are many good reasons why Godwin Emefiele, who runs the central bank of Africa’s biggest economy, should lift currency controls and let the naira depreciate. One of the things holding him back is politics.
Devaluing the naira may give opposition parties the opportunity to claim that Emefiele’s main supporter, President Muhammadu Buhari, has lost control of the economy. With his backing, the policy chief will be able to resist his critics into 2016 before the worsening economic slump eventually forces him to capitulate, according to Standard Chartered Plc and Bank of America Corp.
“They could probably hold out for at least six months, maybe even a year,” said Ayodele Salami, chief investment officer for London-based Duet Asset Management Ltd., which manages about $200 million of African equities. “The central bank has chosen currency stability and the price they’re paying for that is growth. They could hold the line for a lot longer than the markets expect.”
Africa’s top oil producer introduced curbs on buying foreign-exchange from late 2014 in a bid to prop up the naira as prices for crude, the source of two-thirds of government revenue and 90 percent of export earnings, plummeted. These measures have all but fixed the exchange rate at 198-199 per dollar since March, even as other oil exporters from Russia to Colombia and Malaysia have let their currencies slide.
Barclays Plc and HSBC Holdings Plc still think the central bank will be forced to weaken the naira to between 220 and 230 before the end of 2015. The currency dropped 0.1 percent to 199.05 by 4:25 p.m. in Lagos, the commercial capital.
The International Monetary Fund says the currency measures are detrimental to Nigeria, where growth slowed to 2.35 percent on an annualized basis in the second quarter. Former central bank Governor Muhammadu Sanusi II said last week his successor was “in denial” if he thought he could continue propping up the naira.
Former general Buhari, who took office as president in May, acted to stabilize the naira when he ruled Nigeria in the 1980s, and since coming to power this time around has said a devaluation wouldn’t be “healthy.” The government put out a statement late Thursday reiterating its opposition to debasing the naira. Emefiele has also warned a devaluation would stoke inflation.
“The central bank governor is doing what he thinks the president wants,” David McIlroy, chief investment officer at Alquity Investment Management Ltd., which oversees $100 million of frontier market stocks and is put off buying more Nigerian shares until the currency weakens, said.
Strategists who earlier this year cut their naira forecasts on expectations Emefiele would capitulate have pushed them back up. The median year-end estimate in a Bloomberg survey fell to as low as 230 per dollar in May and has since been increased to 200.
While companies including Dangote Cement Plc, the country’s largest publicly traded stock, and Sahara Group, a power plant operator, have complained that they are struggling to pay for imports, Buhari insists the central bank is provides “legitimate businesses” all the dollars they need.