The recent political turmoil in Israel has exposed the fragility of its democracy and the deep divisions within its society. The long reign of Prime Minister Benjamin Netanyahu, who is facing corruption charges and a possible jail sentence, has been challenged by a diverse coalition of parties that span the ideological spectrum, from the far-right to the Arab-led Joint List.

The coalition, led by former Netanyahu ally Naftali Bennett, has agreed to form a government that would end Netanyahu’s 12-year rule and usher in a new era of Israeli politics.

But what would this mean for Israel’s democracy and its future? How would the new government deal with the pressing issues of security, peace, economy, and social justice? And how would it cope with the internal and external pressures that threaten to tear it apart?

One thing is clear: when Netanyahu falls, Israel’s democracy will need new political realignments. The current coalition is unlikely to last long, as it is held together by a common desire to oust Netanyahu rather than a shared vision for the country.

The coalition partners have different and often contradictory agendas, such as annexing parts of the West Bank, pursuing a two-state solution, strengthening the rule of law, or weakening the judiciary. The coalition also faces fierce opposition from Netanyahu’s loyalists, who accuse it of betraying the right-wing voters and forming an illegitimate government with the support of Arab parties.

The new government will have to find a way to balance these competing interests and build trust among its members and the public. It will have to address the deep-rooted problems that plague Israel’s democracy, such as the lack of a constitution, the erosion of civil rights, the discrimination against minorities, and the influence of religion on politics. It will also have to restore Israel’s image and relations with its allies, especially the United States, which have been damaged by Netanyahu’s confrontational style and policies.

The new government will have a historic opportunity to reshape Israel’s democracy and society for the better. But it will also face enormous challenges and risks. It will need courage, wisdom, and pragmatism to succeed. And it will need the support of all Israelis who care about their country’s future.

Israel is a country that prides itself on being the only democracy in the Middle East, but it also faces many challenges and criticisms regarding its political system and its treatment of minorities and the occupied territories. In this blog post, I will explore some of the ways that Israel’s democracy can be improved, based on my own opinions and observations.

One of the main issues that affects Israel’s democracy is the electoral system, which is based on proportional representation with a low threshold of 3.25% for parties to enter the parliament. This system leads to a fragmentation of the political spectrum, with many small parties competing for votes and seats, and often results in unstable coalitions that depend on the support of extremist or sectarian factions.

A possible solution to this problem is to raise the electoral threshold to a higher percentage, such as 5% or 10%, which would reduce the number of parties and encourage more moderation and compromise among them. Alternatively, Israel could adopt a mixed electoral system, with some seats allocated by proportional representation and some by district-based voting, which would increase the accountability and representation of individual candidates and regions.

Another issue that undermines Israel’s democracy is the lack of a written constitution that defines the basic rights and principles of the state and its citizens. Israel has a set of Basic Laws that serve as a quasi-constitution, but they are not comprehensive or coherent, and they can be easily amended or overridden by a simple majority in the parliament.

A written constitution would provide a clear and consistent framework for the rule of law, the separation of powers, and the protection of human rights, especially for minorities and marginalized groups. A written constitution would also help to resolve some of the conflicts between the secular and religious sectors of Israeli society, by establishing the boundaries and limits of state intervention in matters of personal status, education, culture, and public life.

A third issue that affects Israel’s democracy is the ongoing occupation of the Palestinian territories, which has lasted for more than half a century and has created a situation of inequality, oppression, and violence for millions of people. The occupation not only violates international law and human rights norms, but also erodes Israel’s own democratic values and institutions, by creating a dual legal system, a military bureaucracy, a culture of impunity, and a climate of fear and hatred.

The only way to end the occupation and its negative consequences is to reach a just and lasting peace agreement with the Palestinians, based on the two-state solution that recognizes their right to self-determination and sovereignty alongside Israel. Such an agreement would also enhance Israel’s security, legitimacy, and integration in the region and the world.

These are some of the ideas that I have for improving Israel’s democracy, but I am sure that there are many others that could be discussed and debated. I believe that Israel has the potential and the responsibility to become a more democratic, inclusive, and peaceful country, for the benefit of all its citizens and neighbors.

Nigeria has a debt management bureaucracy. We hope it ends there, as if care is not taken, even the ministry of finance will become a ministry of debt management. Yes, our sovereign debt is looking amorphous, unbounded and unconstrained: “Credit ratings agency Fitch has sounded the alarm over Nigeria’s economic challenges, highlighting persistent foreign exchange shortages and a soaring debt service-to-revenue ratio as factors contributing to a precarious sovereign credit rating.

“Gaimin Nonyane, Fitch’s Director of Middle East and Africa Sovereigns, voiced concerns regarding the Central Bank of Nigeria’s (CBN) struggles to amass sufficient foreign exchange reserves, leaving them ill-equipped to clear the forex backlog and meet the substantial external financing needs of the private sector.”

Yet, we must acknowledge the efforts of those tasked with this challenge. That said, we hope they focus on not using finance-only strategy, but production-first strategy. The Federal Government of Nigeria can pick 6 cities in the six geopolitical regions and guarantee 24/7 electricity since it is obvious we cannot deliver such nationwide for 25 years. With that energy certainty, companies will at least know where they can cite their factories.

In AO Lawal’s textbook of economics, he noted that one of the factors which do affect the location and localization of industries is availability of energy. That remains till today, and Nigeria needs to fix that loophole for our Naira to rise again.

Nigeria's sovereign debt is looking amorphous, unbounded and unconstrained: “Credit ratings agency Fitch has sounded the alarm over Nigeria's economic challenges, highlighting persistent foreign exchange shortages and a soaring debt service-to-revenue ratio as factors… pic.twitter.com/6rC2zPYJ2I

— Ndubuisi Ekekwe (@ndekekwe) January 19, 2024

Fitch Sounds Alarm Over Nigeria’s Forex Shortages and Soaring Debt: Says it Poses Threats to Economic Stability

Credit ratings agency Fitch has sounded the alarm over Nigeria’s economic challenges, highlighting persistent foreign exchange shortages and a soaring debt service-to-revenue ratio as factors contributing to a precarious sovereign credit rating.

Gaimin Nonyane, Fitch’s Director of Middle East and Africa Sovereigns, voiced concerns regarding the Central Bank of Nigeria’s (CBN) struggles to amass sufficient foreign exchange reserves, leaving them ill-equipped to clear the forex backlog and meet the substantial external financing needs of the private sector.

Nonyane drew attention to the current 30% disparity between the official and parallel exchange rates, emphasizing the resultant pressure on the Nigerian naira.

“We think that the central bank is still very well short of the amount it needs to be able to clear the foreign exchange backlog and also meet the extremely large external financing by the private sectors,” she stated.

Toby Iles, Fitch’s Head of Middle East and Africa Sovereigns, echoed Nonyane’s concerns about Nigeria’s economic vulnerability, particularly with interest payments to revenue ratio exceeding 40%. This ratio, four times higher than the median for B-rated sovereigns, poses a significant weakness for the country’s credit rating.

Iles noted that interest-to-revenue ratios across Africa have more than doubled since 2014, driven by heightened borrowing and increased costs due to global interest rate hikes.

The Central Bank of Nigeria has initiated efforts to clear a substantial backlog of foreign exchange forwards, estimated to be around $7 billion, facilitating cash repatriation by companies.

The Minister of Finance, Wale Edun, had last year, acknowledged the impact of the overdue forward payments in the foreign exchange market on the depreciation of the naira. Edun stressed the importance of addressing this issue for the stabilization of the local currency.

To tackle the forex backlog, the CBN announced the government’s move to raise about $10 billion with the assistance of banks.

Earlier this week, the apex bank announced it has successfully cleared approximately $2 billion of the backlog in the past three months and pledged to ensure liquidity in the forex market.

Despite the macroeconomic malaise, including record-level inflation, a weakening naira, and sluggish crude oil production, Fitch currently rates Nigeria at B- with a stable outlook.

However, concerns over Nigeria’s escalating debt levels persist, with the debt service to revenue ratio skyrocketing to 183% in the first quarter of 2023.

The country’s total public debt stands at N87.9 trillion as of Q3, 2023. In the 2024 budget proposal presented to the National Assembly, the federal government intends to borrow N7.83 trillion to address a budget deficit of N9.18 trillion. Despite this borrowing plan, the federal government said it is making concerted efforts to diminish reliance on debts and increase revenue through the Committee on Fiscal Policy and Tax Reforms.

The outcome of these concerted efforts and the ability of the Nigerian government to navigate these economic challenges will play a pivotal role in shaping the country’s economic stability in the coming months.

As Fitch’s warnings denote, addressing forex shortages and managing the debt burden are imperative for Nigeria’s financial resilience and creditworthiness on the global stage.