Buhari’s corruption focus makes contract renegotiation, cancellations feasible

Muhammadu Buhari, 72, a former army general and president-elect of the Federal Republic of Nigeria, after four attempts as an opposition candidate, will face the formidable challenge of navigating out of a troubled economic environment overshadowed by significant political and domestic security risks, a risk analysis of post-election Nigeria by global economic intelligence firm, IHS, has stated.

IHS also believes that near-term economic prospects would be tempered by significant headwinds from sharply lower global crude oil prices and the dampening effect of political uncertainty on business sentiments. 

Written by Murtala Touray, senior country risk analyst at IHS, the reports says that Buhari would almost certainly launch a corruption probe that would make contract renegotiation and cancellations highly possible in many sectors.

Buhari, while receiving his certificate of return, yesterday, from the Independent National Electoral Commission (INEC) assured Nigerians of a transparent and listening government in line with the rule of law, stating that his administration would not tolerate any form of corruption.

Before now, embedded corruption, which has over the years affected Nigeria’s economic development, held Buhari’s attention.

Analysts said his victory was almost certain to result in contract renegotiation and cancellation in some cases, as a result of corruption probes that would be carried out in sectors including power, bulk fuel distribution, defence, and infrastructural projects. They held, for instance that, investigations would raise the risk of suspension of arrears payments to fuel distributors.

Buhari’s presidency raises the prospect of reforms in the public sector, to reduce corruption and increase government revenue generation capacity. However, he will face significant challenges in implementing changes, given the vested interests, culture of corrupt practice, and aversion to compliance.

INEC, Tuesday, declared Buhari of the All Progressives Congress (APC), the winner of the March 28, 2015 presidential election. Out of the 26 million votes cast, Buhari secured almost 54% while President Goodluck Jonathan of the People’s Democratic Party (PDP) had almost 45%.

Buhari made the fight against corruption his administration’s priority. His 2015 election manifesto placed emphasis on the fight against corruption, tackling the Boko Haram insurgency, and creating employment.

“There is little prospect of significant oil sector reform before mid-2016, although corruption probes into the sector would probably be launched within the three-month outlook. The proposed Petroleum Industry Bill (PIB) is likely to be revised again, lowering the prospect of its passage until the end of 2015,” said Touray.

“Corruption probes are almost certain to be a key priority for the Buhari administration. Jonathan’s administration, particularly the petroleum ministry, under Diezani Alison-Madueke, had faced allegations of corruption.

“In February 2014, Jonathan suspended Sanusi Lamido Sanusi, the former governor of the Central Bank of Nigeria (CBN), for accusing his government of siphoning more than $20 billion oil revenue. The APC party has also raised concerns over corrupt practices in the privatisation process of the power sector, the award of some marginal oil field licences, as well as, defence and infrastructural project spending,” Touray noted.

The analysts also said, “Jonathan’s concession mitigates the severe risks of post-election legal wrangling that would have resulted in considerable government slowdown. Jonathan’s phone call to Buhari to concede defeat makes legal disputes over presidential election results unlikely and paves the way for a swift handing over of power.”

Besides the Boko Haram insurgency, Buhari faces the threat of an upsurge in militancy in the Niger Delta as militant leaders had threatened to disrupt the oil and gas sector if Jonathan lost the elections.

However, Niger Delta militants are more motivated by profits than political ideology. The real concern for Niger Delta militants and their former leaders will be the renewal of the amnesty programme, due to expire in 2015, and in particular, the multimillion dollar contracts, which were awarded by Jonathan’s administration, to secure oil installations.

“Niger Delta militants are likely to revoke the ceasefire pact and step up a campaign of violence as a negotiation strategy with a Buhari government,” said the Touray led team of country risk analysts at HIS.

“If these contracts are not renewed, the militants are likely to step up attacks on security forces and energy production and transport assets, posing a real threat to the country’s oil and gas output. Militants are still well-armed despite security forces managing to reduce the inflow of illegal weapons”.

The Movement for the Emancipation of the Niger Delta (MEND) declared a ceasefire in May 2014, after its campaign of violence under operation Hurricane Exodus in April 2013. MEND claimed responsibility for several attacks, including the May 18, 2014 attack on the pipeline terminating at the refinery jetty in Okrika, Port Harcourt.

“A renewed wave of attacks would increase kidnap and damage to oil pipeline”, the risk analysts said.

They also said Buhari’s victory was unlikely to lead to the immediate resolution of the Boko Haram insurgency. “Buhari, a Muslim and a northerner, escaped an assassination attempt by the militant Islamists. However, he is said to be better placed than Jonathan to engage Boko Haram in military operations and dialogue.

A key indicator to watch is whether Boko Haram would seek to disrupt the April 11 elections for governorships and legislative assemblies.”