| LAGOS, June 1
LAGOS, June 1 Nigeria enters a crucial period as
President Goodluck Jonathan assembles his new administration in
the coming weeks, a team which could make or break the nation's
hopes of forging ahead with reforms over the next four years.
Jonathan, who was sworn in for his first full term on May 29
after winning April elections, has said he will form his cabinet
within two weeks of taking office. Ministries in Africa's top
oil exporter will be run by civil servants until then.
Nigerians and foreign investors alike are hoping Jonathan,
who first came to power last year when his predecessor Umaru
Yar'Adua died in office, will surround himself with reformers.
The finance and oil ministries will be particularly closely
watched, with some analysts hoping that Finance Minister
Olusegun Aganga, who has overseen the establishment of a
sovereign wealth fund, will be retained. [ID:nLDE74Q1U2]
Jonathan is the first head of state from the minority Ijaw
ethnic group in the oil-producing Niger Delta and the new
cabinet will also need to balance out regional interests to
ensure other parts of the country retain a political voice.
National security is a growing concern. [nLDE74T1LJ]
Hundreds were killed in rioting in the mostly Muslim north
in April after Jonathan, a Christian from the south, won the
election. Bomb blasts tore through popular drinking spots in
three separate locations hours after he was sworn in on May 29.
Jonathan made the first appointment of his new team on
Monday, naming ex-Senate president Anyim Pius Anyim secretary to
the federal government, a powerful position which coordinates
between ministries and the presidency. [nLDE74T1V4]
It was not seen as a particularly inspiring start. Anyim,
while respected, has no real reformist credentials and some
critics said the onus is now on Jonathan to demonstrate his
commitment to change with subsequent nominations.
A weak government made up of politically motivated
appointments rather than ministers picked for their abilities
could undermine the fight against endemic corruption and slow
progress of economic reforms.
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.
Jonathan emerged with a credible mandate, having won 59
percent of the vote, but the ruling People's Democratic Party
(PDP) saw its parliamentary majority weaken and lost control of
several powerful state governorships.
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
government. Appointees will need to be approved by the Senate
and vetted by the secret service before the cabinet is formed.
What to watch:
-- Choices for key ministries including finance and oil
-- Reformist strength of the new cabinet
The April polls may have been deemed the cleanest for
decades but they threw regional rivalries into sharp relief.
Jonathan, a southern Christian, won a sweeping victory in
the south but his rival, northern Muslim and ex-military ruler
Muhammadu Buhari, won a majority in most of the north, where
there is resentment in some areas over the outcome.
Youths rioted in northern towns after Jonathan was announced
the poll winner. Mosques, churches, homes and shops were razed
in what the government said was orchestrated violence. Human
Rights Watch said more than 800 people were killed. [nLDE74F2D6]
Bomb attacks in the north have rapidly replaced militant
raids on oil facilities in the southern Niger Delta as the main
security threat in Africa's most populous nation.
Investigations have begun into the series of blasts which
killed at least 16 people in the hours after Jonathan was sworn
in, but no arrests have been made and no public comment has been
made on who might have been behind the attacks.
The style of the strikes, targeting popular drinking dens,
one of them inside an army barracks, was similar to a car bomb
in the capital Abuja on New Year's Eve which killed at least 10
people. The perpetrators of that attack have never been caught.
There is also a longer-term fear that economic and political
marginalisation of the north will make it an increasingly
fertile recruiting ground for militant Islamists.
Radical sect Boko Haram, which wants sharia (Islamic law)
more widely applied across Nigeria, has carried out almost daily
killings and fire bombings of police stations and government
buildings in recent months in the remote northeast.
It is unclear how many followers the group has but poverty,
unemployment and a lack of education have enabled its leaders to
build a cult-like local following which is as much violently
anti-establishment as fervently religious.
What to watch:
-- Further bomb attacks in the north or the capital
-- Evidence of who was behind the May 29 blasts
POLICY AND REFORM
Jonathan signed an amended 4.485 trillion naira ($29
billion) budget at the end of May, spending which on paper will
keep sub-Saharan Africa's second biggest economy just within a 3
percent deficit target. [nLDE74Q1U2]
The final figure was a compromise between parliament, which
wanted to spend more, and the government, which wants this year
to mark the start of a period of fiscal consolidation.
There have been other positive moves.
Jonathan signed a bill to create a sovereign wealth fund
meant to better manage the OPEC member's long-squandered oil
savings, although its establishment is only the first step and
its success will depend on how efficiently it is managed.
Analysts welcomed the move, saying it was an early sign that
Jonathan was bent on better economic management.
Dollar demand remains high, putting continued pressure on
the naira currency NGN=D1, which has been trading at around
156-157 to the dollar in recent weeks. Foreign reserves stand at
around $33 billion, still down significantly on a year earlier.
The central bank is taking a tougher line to resolve a
banking crisis, giving lenders rescued in a 2009 bailout until
the end of September to reach deals with new investors or face
effective nationalisation or liquidation. [nLDE74U22M]
Disgruntled shareholders in some of the banks have been
holding out for better deals, delaying the central bank's
efforts to push ahead with reform.
Jonathan also signed a Freedom of Information act at the end
of May which is supposed to make government more transparent.
But there is less progress in other areas.
Wide-ranging legislation to overhaul the mainstay oil
sector, the Petroleum Industry Bill (PIB), is unlikely to pass
until the new parliament sits, a delay which means it may not
see the light of day this year.
Billions of dollars of investment by oil firms is on hold
until there is clarity over the bill, which will redefine the
fiscal and legal framework for projects, dashing Nigeria's hopes
of a significant rise in oil output in the coming years.
What to watch:
-- Further pressure on naira, foreign reserves
-- Any last-minute effort to pass PIB
(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)