LAGOS May 3 Nigerian President Goodluck
Jonathan's choice of cabinet ministers and top officials will be
key to the outlook for reform in Africa's most populous nation
after elections which were deemed the most credible for decades.
Jonathan emerged from last month's polls with a strong
mandate, having won 59 percent of the vote, but with a ruling
party (PDP) chastened by a weaker parliamentary majority and the
loss of several powerful state governorships.
Reaching out to his opponents -- particularly in the mostly
Muslim north, where hundreds were killed in rioting after his
victory -- will be vital if Jonathan, a southern Christian, is
to galvanise support for reforms and govern strongly.
Graphic on elections: link.reuters.com/xet78r
More stories, background and analysis: [ID:nLDE68H051]
Key pieces of legislation, including oil sector reforms and
the creation of a sovereign wealth fund, are sitting before
parliament and if they fail to pass before the current term
finishes at the end of May, they could be delayed for months.
Government spending rose ahead of the elections,
putting pressure on foreign reserves and weighing against
efforts to drag inflation into single digits. [nLDE72S213]
The finance ministry and parliament are at odds over a 2011
budget which keeps spending at last year's record levels.
The banking sector is emerging from crisis, with state "bad
bank" AMCON having soaked up all non-performing loans, but
capital markets reforms could be slowed down if a less
reform-minded government follows the elections. [nLDE72M0ZA]
Jonathan is due to be sworn in on May 29 after his election
victory last month and the process of selecting a new cabinet
will only officially begin after the inauguration. [nLDE73R151]
But negotiations behind closed doors have already begun.
Jonathan's path to the presidency has not been an easy one
and there is a list of regional and political factions who feel
he owes them for his victory. Such debts have in the past
crimped Nigerian leaders' ability to pursue their reform plans.
He had to convince powerful northern politicians in his own
party to back him at the primaries and eschew a tacit agreement
that power rotates between north and south every two terms, a
deal which would have ruled out his candidacy.
The opposition Action Congress of Nigeria (ACN) made strong
gains in the southwest, winning two state governorships from the
ruling party and gaining parliamentary seats, and Jonathan will
need their cooperation for legislation to pass smoothly.
His aides have said Jonathan will form an all-inclusive
Ex-military ruler Muhammadu Buhari, Jonathan's defeated main
rival, has said electoral commission computers were rigged to
sway the count against him in parts of the north and that the
PDP vote was inflated in some of its strongholds.
His Congress for Progressive Change (CPC) party has said it
has evidence and will go to court, potentially overshadowing the
start of Jonathan's new term.
What to watch:
-- The formal process of selecting cabinet ministers will
not begin until June, but some potential names may leak out.
-- Legal challenges to the election outcome.
POLICY AND REFORMS
The current parliament can still pass legislation before the
end of May and has several key bills before it.
Arguably the biggest is the Petroleum Industry Bill, which
will re-write Nigeria's decades-old relationship with foreign
oil firms and redefine the fiscal and legal framework governing
investment, including in its important offshore fields, expected
to yield most of its future production growth. [nLDE71L1SW]
The government has vowed the bill will pass before the end
of the current administration. Should it fail to do so, a new
parliament could set the process back once again, particularly
given the slimmer majority for the ruling party.
Investors in the planned privatisation of the power sector,
one of the cornerstones of President Jonathan's campaign, are
also unlikely to go beyond statements of interest until there is
clarity over the make-up of the new administration. [nLDE70H1SX]
Government spending had been rising in the run-up to
elections. Government borrowing had increased around 50 percent
by late 2010, dwarfing private sector credit growth of just 3
percent in the year. [nLDE6AM1P0]
Foreign exchange reserves have started to stabilise but
remain nearly a quarter below year-ago levels, although oil
prices and production are rising.
Parliament approved a 4.972 trillion naira ($32 billion)
budget in March, increasing planned spending by close to 20
percent from President Jonathan's initial proposal in December
and taking it almost up to last year's record level.
Finance Minister Olusegun Aganga has called the plans
"unimplementable" and pledged to talk with legislators.
There had been pressure on the naira currency NGN=D1 in
the run-up to the elections, but the central bank has said it
is determined to maintain exchange rate stability and has
introduced forex forwards to try to smoothen demand.
What to watch:
-- Passage, or not, of oil reforms before end of May
-- Revision of the 2011 budget
Last month's elections may have been deemed by observers and
many Nigerians as the most free and fair for decades but they
also threw religious and ethnic rivalries into sharp relief.
Youths launched violent protests in northern cities after
Jonathan, a Christian from the south, was declared winner,
defeating Buhari, a northern Muslim.
Mosques, churches, homes and shops were burned and more than
500 people killed in three towns in the northern state of Kaduna
alone. A curfew quickly brought the worst of the violence under
control, but soldiers still patrol the streets.
A judicial committee is expected to conduct an inquiry into
the violence, which the government has said was premeditated.
Should Buhari or those close to him be found guilty of
misconduct and punished, there could be further protests.
There were also several bomb attacks around the country in
the run-up to the elections and security is likely to remain
tight around Jonathan's inauguration at the end of May.
Some diplomats fear growing religious conservatism,
hostility to Western values and pervasive poverty could allow
radicals to gain a hold in the mostly Muslim north, and
countering a growing sense of marginalisation in the region will
be vital if Jonathan is to maintain security in the long term.
Jonathan is the first head of state from the Niger Delta,
the restive heartland of Africa's biggest oil and gas industry,
and his victory has been warmly received in the region.
But with many competing priorities, his administration will
need to ensure an amnesty for former militants remains on track
if they are not to return to attacks on oil installations.
What to watch:
-- Appointment of high-profile northerners to key posts to
assuage fears of marginalisation
-- Any punitive action against Buhari or those around him
which could trigger further unrest in the north
(For more Reuters Africa coverage and to have your say on the
top issues, visit: af.reuters.com/ )
(Writing by Nick Tattersall; Editing by Giles Elgood)