From May 29, 2015, Nigeria’s newly
elected governors will be saddled with the management of the many
states that make up Africa’s largest economy, worth over N87 trillion in
2014.
With the import dependent nature of the economy
and headline inflation edging up to 8.4 in February from 8.2 percent
recorded in January, analysts say the challenges are enormous.
Also, with growth prospect being
downgraded from an earlier projection of 5 percent to 4.8 percent for
2015 according to the IMF Article IV report and dwindling revenue
occasioned from the falling oil prices at the international market, the
negative impact on government revenue poses downside risk for domestic
GDP growth in 2015.
The governors of the nation’s biggest three states may have a somewhat easier time though.
Among these, Akinwunmi Ambode (APC) will
command Nigeria’s commercial capital of Lagos, which has an economy
almost the size of Ghana’s, at $45 billion (N9 trillion), according to
Lagos-based Renaissance Capital.
The incumbent governor, Babatunde Fashola
has been magnanimous enough to sign a N489 billion budget for 2015
“…with zero deficits.”
In Kano State, Abdullahi Ganduje (APC) will hold sway in the $17 billion (N3.4 trillion) northern commercial hub.
This extends the APC reign in Kano State – this time fully aligned with the incoming Buhari-govenrment.
Former FCT Minister, Nasir El-Rufai’s
victory in Kaduna State, means he takes over from incumbent Governor
Ramalan Yero, to manage a $13 billion (N2.6 trillion) state economy,
geographically sandwiched between Abuja and Kano State.
El-Rufai’s past experience in managing
the federal capital territory, will be his greatest asset to the benefit
of Kaduna’s citizens.
The other governors will face a tougher
task and need bigger thinking caps and more grit to enhance their
internally generated revenues, (IGRs), amidst the growing and dynamic
needs of the citizenry.
Of recent, payments of salaries and wages have suffered delays in
a number of states, suggesting that aggregate demand has been
relatively suppressed, a development that requires careful planning by
the new governors.
Besides, election related expenses and
the rising electricity tariffs are potential headwinds that could
accelerate inflation in the medium term.
The attendant arbitrage and rent seeking
opportunities following the devaluation of the local currency, the
naira, has also presented the governors with a common challenge that
requires putting together economic management teams for full utilisation
and harnessing of resources.
Consequently, this would continue to fuel
speculative demand and heighten currency substitution and dollarisation
of the economy which are becoming serious issues in domestic monetary
policy that is impacting negatively on the states.
Analysts believe that this could lead to agitation for wage increase by labour, even in the face of these obvious challenges.
Ayodapo Shoderu, president, Nigerian
Council of Registered Insurance Brokers, said that the result of the
election was already impacting positively on the economy, given the
response of market forces to the political process. According to him
“there is an inextricable link between politics and economy and whatever
affects one would definitely affect the other.”
Shoderu challenged the governors to start
giving serious thoughts to strategies for growing the nation’s economy
through the provision of infrastructure development and creation of jobs
in order to enhance quality lives for Nigerians, and by so doing,
increase their disposable income.
Bismarck Rewane, in the current note from
the Lagos Business School (LBS) meeting, observed that the new
government would “face resistance from outgoing administration as the
patronage network is dismantled.
Economic policy pronouncements are likely to be ambitious and politicisation of economic policy will slow the reform agenda.
“Fiscal expenditure will remain dominated
by recurrent spending and subdued outlook for oil will continue to
drive fiscal deficit. Also that current account will slip into deficit
in 2015-16 as well as growth will remain below potential.”
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