The interinstitutional void (3): Making government whole
Nigeria's persistent interinstitutional void cannot be fixed by enlarging the government, warns a new column. For investors, weak coordination between agencies delays fiscal reforms and regulatory clarity, directly impacting naira stability and bond yields.
The argument that 'making government whole' requires better integration, not simply more bureaucracy, echoes past failures. Nigeria has reorganized its ministries and agencies repeatedly, yet policy implementation remains fragmented. This is especially problematic for investors who need predictable regulation in sectors like oil, telecommunications, and banking.
In the U.S., the Federal Reserve and Treasury coordinated aggressively during the 2020 crisis, showing how interinstitutional alignment can stabilize markets. Nigeria lacks a similar framework. Without a whole-of-government approach, fiscal measures—like subsidy reforms or tax changes—often contradict monetary policy, raising risk premiums on Naira assets.
The NGX All-Share Index has rallied recently, but the sustainability of that rally depends on improved governance. If regulatory bottlenecks persist, foreign portfolio inflows could reverse. The column suggests that simply creating new agencies or merging old ones will not solve the root problem of institutional silos.
O que observar: The next Federal Executive Council meeting may announce a new inter-ministerial task force. Also track the spread between Nigerian and U.S. 10-year bond yields—widening above 1,200 basis points would signal rising governance risk.
Frequently asked questions
How does government fragmentation affect the naira?
Fragmentation slows policy execution, reducing investor confidence and pressuring the currency. A more coordinated government could boost foreign reserves and stabilize the naira over time.
Is the situation unique to Nigeria?
No, many emerging markets face similar challenges, but the scale is larger in Nigeria due to size and revenue volatility. The U.S. benefits from strong legal and procedural frameworks that force alignment.
Which sectors are most vulnerable?
Oil and gas (licensing delays), telecoms (regulatory overlap), and power (multiple agencies) are most exposed. Investors should favor companies with strong government relations.
Reporting contributed by BusinessDay — BusinessDay · Título original: "The interinstitutional void (3): Making government whole"
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