Even the world powers had to pause and looked carefully at a seeming dark cloud that was gathering over Nigeria. In fact, world leaders said what are considered as more than just passing remarks and comments.
Business men and women became covertly concern about what may become of their investments after the elections. A good number actually fled the economic environment, while a few simply sat on the fence.
Their permutation – if Buhari wins the Niger-Delta militants will resurrect, maybe this time in partnership with the militants of the South West – odua Peoples’ Congress (OPC). On the other hand, if Jonathan wins, then the killings that has characterized his past victories will resume again, maybe at a higher level. Whichever way, investors simply took to their heels.
Analysts at Afrinvest agreed that, as a result of the uncertainties in the air prior to the elections, the Nigerian economy suffered certain setbacks against the backdrop of weakening macroeconomic variables (exchange rate, oil prices, inflation, GDP) and massive outflow of Foreign Portfolio Investors (FPIs).
“These rubbed off on the financial market as investors became overtly cautious to jettison fundamentals for fear of the unknown. Investments were on a halt while investible funds stayed on the sideline, the question is; with the successful completion of the elections, is Nigeria …”Open for Business Again?””, they questioned.
Analysts extract from the All Progressive Congress (APC)’s manifesto gave an insight into what to expect.
On national security, it is expected that this issue will be urgently addressed via a well-trained, adequately equipped and goals driven serious crime squad to combat terrorism, kidnapping, armed robbery, militants, ethno-religious and communal clashes nationwide;
job creation and the economy.
The APC also promised to make our economy one of the fastest growing emerging economies in the world with a real GDP growth averaging 10.0 percent annually; to be driven by Information, Communication and Technology (ICT), manufacturing, agriculture and entertainment. This is to thrive under a sound macro-economic policy environment, run by an efficient government which preserves the independence of the central bank.
Under agriculture and food security, the in-coming government intends to use modernized agricultural sector hinged on a change from self-subsistence farming to medium/commercial scale farming;
Industrialization is expected to be through formulation of a private sector led Industrial base for the economy, entrepreneurship promotion, economic diversification and heavy investment in research and development.
Under oil and gas industry the in-coming government intends to facilitate speedy passage of the much-delayed Petroleum Industry Bill (PIB) and ensure that local content issues are fully addressed; Make Nigeria the world’s leading exporter of Liquefied Natural gas (LNG) through the creation of strategic partnerships.
On infrastructure, the APC government intends to generate, transmit and distribute power from current 5,000 — 6,000 MW to at least 20,000 MW of electricity within four years and increasing to 50,000 MW with a view to achieving 24/7 uninterrupted power supply within ten years, whilst simultaneously ensuring development of sustainable/renewable energy; construction of 3,000km of superhighway including service trunks and building of up to 4,800km of modern railway lines — one third to be completed by 2019 via a Public Private Partnership (PPP) arrangement;
“In our view, the Manifesto appears pregnant with promises of a brighter tomorrow, with promises hinging largely on huge expenditure bordering on health, education, infrastructure, agriculture and macro-economic advancement. Even though we continue to imagine the exact source of funding for some of the capital expenditure in the near term, we note the emphasis of the manifesto on the Public Private Partnership (PPP) as means of addressing the infrastructural development in the country. In addition, we imagine that the disposition of the incoming leadership towards corruption should block marked leakages in the system while moderation in the cost of governance will go a long way in supporting this plan”, said analysts at Afrinvest.
Parts of the challenges the in-coming government will face is the revenue base of the Nigerian economy which is expected to remain weak on lower crude oil prices. Some analysts see oil price trading below $60.00 in the near to medium term.
On the back of a successful and peaceful transition in government, the exchange rate could stabilize at an average of N200.00/$ at the interbank market as electioneering wraps up.
The depleting rate of the Nigerian external reserves (currently at $29.8 billion and dipped 13.6 percent year-to-date (YTD) may taper as increased foreign portfolio in the near term is expected. The eventual stop of the revenue leakages in the oil and gas space before the end of the year would increase the accretion of the external reserves.
The lag effect of the depreciation/ devaluation of the Naira will continue to take its toll on the Nigerian’s headline inflation rate. Afrinvest retains average inflation rate of 9.5 percent for 2015.
We retain our 5.0 percent GDP growth rate forecast for 2015 despite a challenging first and second quarters as a result of elections activities that staled policy implementation.