Nigeria: Policy continuity expected ahead following President Buhari’s reelection
On 27 February, Nigeria’s electoral commission declared incumbent President Muhammadu Buhari, head of the ruling center-left All Progressives Congress (APC), winner of the 23 February presidential election. Although analysts expected the election to be a tight race between Buhari and former vice president Atiku Abubakar, from the center-right opposition People’s Democratic Party (PDP), Buhari won by a comfortable margin in the end, securing 55.6% of the votes compared to Abubakar’s 41.2% and a second term to lead the continent’s largest economy. Abubakar subsequently challenged the results in court; however, given Buhari’s solid victory, it is unlikely the outcome will be overturned. As the incumbent, Buhari is set to maintain the status-quo to policymaking, with his agenda centered on tackling corruption, addressing insecurity and improving the economy.
Considering that a potential Abubakar presidency could have brought about a significant shift in economic policy, particularly in the management of the exchange rate and the vital oil and gas industry, those risks have largely dissipated with Buhari’s re-election. During his campaign, Abubakar contemplated floating the naira and called for replacing Central Bank Governor Godwin Emefiele, whose term ends in June. Buhari’s victory means that a move towards a free-floating exchange rate regime is unlikely, while the conduct of monetary policy, regardless of whether Emefiele’s term is renewed, is expected to remain largely unchanged. Furthermore, whereas Abubakar had advocated for in the liberalization of the all-important energy sector, Buhari has been opposed to these moves and the state-dominated oil industry is thus set to remain in place.
Irrespective, Buhari is confronted by a myriad of major economic challenges ahead. The oil industry is in dire need of upgrade as mismanagement, lack of investment and systemic corruption have hindered from developing it to its full potential. Furthermore, despite growth accelerating and hitting an over three-year high in the final quarter of 2018, the economy is yet to recover fully from the 2016 recession, triggered by the 2014 crash in oil prices. In addition, unemployment has surged to 23.1% in Q3 2018 from 9.0% when Buhari first took office in 2015, while inflation remains stubbornly high, coming in at 11.3% in February, despite tight monetary policy conditions. Widespread poverty, with almost half of the population living in extreme poverty, and rampant inequality exacerbate the country’s woes. Thus, although no radical changes to the policy environment are expected, bold action will be required to take Nigeria “to the next level”, as Buhari promised throughout his campaign.