Following his controversial re-election, President Muhammadu Buhari faces the challenges of transforming the country’s economy and fighting corruption.
Muhammadu Buhari has won re-election as president of Nigeria, defeating businessman and former vice-president Atiku Abubakar in a result announced on 27 February.
Abubakar has claimed electoral fraud and is challenging the result in court, but as it stands Buhari has won a mandate to continue working to develop the country’s economy, which has been slow to progress and battling corruption.
Buhari, the nominee of the All Progressives Congress (APC), received 15.1 million votes – 55 percent of the electorate, while Abubakar of the People’s Democratic Party (PDP) received 11.2 million votes, 41 percent of the electorate. It was the lowest turnout – 35.6 percent – in the 20 years since the country returned to democracy.
The vote had been originally scheduled for 16 February, but was postponed at the last minute by the Electoral Commission until 23 February.
Looking ahead to the country’s post-election economic prospects, as President Buhari seems likely to remain in power, Nigeria’s credit challenges remain and include a low growth environment, very high exposure to fluctuations in oil prices of government revenues and export earnings, weak institutions, and high levels of corruption.”
The 2014 oil crash still casts a shadow, however, with high unemployment and slow growth. The government has made positive noises about diversifying, by getting into other industries, such as bitumen production and iron ore mining, but progress has remained limited.
Buhari needs to take the lead on developing the economy: Continued regulation under Buhari’s administration will be key. There is an appetite for public private partnerships in Nigeria, with several countries already seeking to partner on various infrastructure and development projects.
The president should work with those companies and countries to help put a stop to declining FDI rates in the country, by putting in place the right framework and policies that will create an enabling business environment. Fintech, start-ups, big data and digital health are all new industries that needregulation and policy in order to grow.
There were more entries from Nigeria than any other country in the recent London Stock Exchange Companies to Inspire Africa report, reflecting a great deal of economic potential within the country’s small and medium-sized enterprises (SMEs), which could help greatly with the diversification and modernisation efforts, if properly harnessed.
Similarly, Buhari came to power in 2015 on the promise of tackling corruption, but progress has been slow and Nigeria was 144th on Transparency International’s 2018 Corruption Perceptions Index, having shown no improvement over the past four years.
To trade or not to trade?
An important item on the agenda will be whether or not to commit Nigeria to joining the African Continental Free Trade Agreement (AfCFTA), which will create an African single market.
As the continent’s largest economy and its most populous country, Nigeria is a glaring absence from the agreement, which was signed by the majority of the continent’s 54 countries in March 2018. South Africa was the other high-profile absentee, but has since signed the agreement, as have several others, leaving Nigeria as one of only three not to have signed up.
Buhari and his government have repeatedly said that it is just a delay, not a refusal to sign, but the feeling within the country was that Buhari could not do so before the election, as Nigerian unions and manufacturers have opposed AfCFTA and he could not afford to alienate their support before the election. There will now be scrutiny on Buhari to see if he signs the agreement.
Nigeria plays a crucial role in the growth trajectory of sub-Saharan Africa, especially in pan-African trade and its participation in AfCFTA. It has to be seen as a forward-looking country, creating opportunities and leading the way for others to follow.
The importance of stability
The result is an affirmation of the confidence Nigerians have in democracy and the rule of law and Nigerians are optimistic about the growth potential of Nigeria, as one of Africa’s largest and arguably most important economies.
The three C’s in Africa: currency, corruption and certainty. By continuing to focus on creating an economy that has certainty and transparency, a stable currency and is void of corruption, Nigeria will be key to encouraging investment and this will help to grow the economy.
What is needed now is a swift return to political and economic stability and certainty. In his victory speech, Buhari spoke of the need to prioritise security, the restructuring and diversification of the economy and fighting corruption. If he can address these issues successfully, Nigeria will cement its position as an increasingly attractive investment destination in Africa.
Andrew Skipper is a partner at Hogan Lovells