Prebendalism: Tinubu is ‘governing’ for the few, not the ...

Nigeria's political economy has entered a critical phase under President Bola Ahmed Tinubu's administration, characterized by what scholars term "prebendalism"—the distribution of state resources to political loyalists rather than through merit-based or transparent mechanisms. This governance model, while not entirely new to Nigerian politics, has intensified in ways that carry significant implications for the continent's largest economy and for European investors operating within its markets.

The Tinubu presidency, which commenced in May 2023, has demonstrated patterns consistent with patronage-driven governance. Key ministerial appointments, contract awards, and policy implementations appear to prioritize political affiliation and personal networks over institutional capacity or competitive merit. This approach stands in stark contrast to the technocratic governance models that international investors typically expect in emerging markets, and it represents a departure from earlier promises of institutional reform.

For context, prebendalism in Nigerian politics is not unprecedented. However, the scale and brazenness of resource allocation under the current administration have drawn criticism from civil society, academia, and international observers. The concentration of decision-making power within a narrow circle of loyalists has created bottlenecks in policy execution and reduced institutional predictability—precisely the factors that European investors assess when evaluating long-term commitment to African markets.

The implications for foreign direct investment are substantial. European enterprises operating in Nigeria's energy, telecommunications, financial services, and manufacturing sectors depend on transparent regulatory frameworks, consistent policy implementation, and institutional stability. When governance prioritizes patronage networks over institutional development, several risks emerge: regulatory capture (where industry regulators favor connected actors), inconsistent policy application, delayed contract enforcement, and reduced investor confidence in rule of law.

The World Bank and IMF have previously highlighted governance quality as a critical constraint on Nigeria's economic potential. Prebendalist systems tend to correlate with higher corruption indexes, lower business environment rankings, and reduced efficiency in public service delivery. Nigeria currently ranks 150th out of 180 countries on Transparency International's Corruption Perception Index—a metric that directly influences investment decisions across European pension funds and institutional investors.

Specific sectors face differential impacts. The oil and gas industry, heavily dependent on government concessions and regulatory approval, faces heightened uncertainty. Financial services benefit from relatively independent regulatory frameworks but remain vulnerable to political interference during licensing renewals. Agriculture and technology sectors, less directly dependent on government contracts, may navigate patronage systems more effectively.

The governance model also affects Nigeria's macro-stability. When state resources flow to political networks rather than productive investments—infrastructure, education, healthcare—economic growth potential diminishes. Nigeria's recent GDP performance, while positive at 2.7% in 2023, underperforms its potential given resource endowments and demographic advantages.

For European investors, this governance dynamic requires enhanced due diligence, particularly regarding local partnerships, regulatory relationships, and contract enforceability. The institutional environment matters fundamentally to investment success in emerging markets; when governance quality declines, risk premiums increase accordingly.