Nigeria’s multiple crossroads

Nigeria faces “multiple crossroads” in 2015 – political, economic, security and social – and multiple possibilities, scenarios and outcomes exist depending on our choices and their implications. The most visible challenge is political – the imminent federal, state and parliamentary elections due in February 2015.

There is now a technical possibility that the elections could be postponed from the February 14 and 28 scheduled dates, but any such possibility is not supposed to change the May 29, 2015 termination date of the incumbent’s current presidency. I suspect that in spite of protestations by the opposition and the US government, if a sufficiently large proportion of Permanent Voters Cards (PVCs) are outstanding by the end of the first week of February, the president may force a postponement.

I describe the four possible outcomes of the elections as four “Cs” – continuity, change, coalition or crisis – each of which I consider sufficiently plausible! Continuity represents the re-election of President Goodluck Jonathan and Vice-President Namadi Sambo; Change signifies an opposition victory that puts the Muhammadu Buhari/Yemi Osinbajo ticket in Aso Rock; Coalition could be de facto or de jure – a de jure coalition is most likely to occur if Jonathan wins and feels an imperative to invite the APC and smaller opposition parties into a coalition to heal a divided nation.

It could also happen in a de facto manner, if Buhari prevails and a large number of PDP members, especially from the North, migrate into the APC thus creating, in substance, if not form, a “government of national (or Northern!) unity”! The fourth possibility, crisis, could arise in a multiplicity of ways – the elections are inconclusive or aborted; the results are vigorously and violently contested, and the outcome  is disputed; either party wins and one insurgency escalates while another resumes in the North and Niger-Delta, respectively, and significant sections of the nation feel unable or unwilling to accept the announced outcome.

Read also: Putin’s political party scores majority win in Russia’s parliamentary elections.

And there is now the matter of Buhari’s disputed educational qualifications which could in theory result in his exclusion from the contest by a court! (By the way, does it seem like our judiciary workers union orchestrated a strike in order to delay hearing of a suit filed against Buhari regarding that matter, until he had been able to “assemble” his certificates?) It does seem that, in a manner of speaking, the 2015 presidential election may degenerate into a selection by voters of their preferred location of insurgency – vote for Buhari so the Boko Haram menace can be removed and a Niger-Delta equivalent re-started or vice versa! The ex-militants in the Delta have already indicated that a loss by Jonathan will be viewed by them as a signal that they (and their oil!) are not wanted in Nigeria! So while Nigeria has been bogged down in a politically-destabilising Boko Haram insurgency since 2010, it may also have to deal with an economically-debilitating Niger-Delta insurrection aimed at our economic jugular, oil.

And this takes us to our economic challenges, which are no less serious! As this columnist warned over the last two years, Nigeria had severe vulnerabilities to the global oil market and the risk of an oil price shock destabilising the Nigerian economy has always been high. In my view, it was, in fact, geo-political issues (Libya, Crisis in the Middle East, etc.) that delayed the collapse of oil prices which has now happened in the fourth quarter of 2014. Unlike 2008 and 2009 when oil prices fell due to global recession, and Nigeria had $63 billion of external reserves, this time our buffers are by-and-large gone and our exposure stronger. There is enough blame to go around regarding that – the president correctly set up a Sovereign Wealth Fund (SWF) by law, but some governors went to court to prevent its operation; governors similarly raised incessant demands (reaching the point of blackmail!) for sharing the excess crude account which they insisted was unconstitutional; the National Assembly regularly raised the oil price benchmarks suggested by the executive, diminishing our capacity to save during the high oil price periods; the central bank was probably the largest culprit in reserves depletion by sustaining an over-valued currency and refusing wise counsel to adjust the currency values; the president did not exercise strong political will in pushing through implementation of his policies which could have prevented crises (SWF, low oil price benchmarks, excess crude savings etc.) and even ordinary Nigerians, from my experience, always sided with those who argued that there was no point saving if all of Nigeria’s problems had not been solved! Unfortunately, in economics, you cannot eat your cake and have it!

The consequence is low buffers constrain our ability to defend the naira and may see the currency reaching the mid-N200s to the dollar! But there may be positives to the debacle. Policy may become more sensible and businesses and households may adjust in response to the exchange rate. The current economy penalises imports, foreign currency exposures and imported consumption and economic activity may begin to change in response as sectors and businesses on the exports, non-oil and non-dollar inputs side become more competitive. Government will seek to diversify income and the era of taxes may finally be here!

There are social landmines too, and their conjunction with political and economic problems is potentially explosive. Irrespective of who wins the governorships and presidency, elected officeholders will face challenges dealing with macroeconomic instability and dwindling resources and yet managing a social context that requires large-scale social intervention.