Tag: World Markets

Nigerians head to the polls on Saturday, with an unprecedented youth turnout expected against a backdrop of widespread insecurity and economic hardship.

After 24 years of uninterrupted democracy since ending military dictatorship in 1999, Africa’s most populous nation and largest economy is conducting its seventh election.

Nigeria is at a pivotal juncture amid record unemployment and inflation, a massive debt burden, fuel shortages, worsening security conditions, endemic corruption and crumbling public services.

The record 93.5 million Nigerians registered to vote will choose among 18 candidates to replace President Muhammadu Buhari, who has reached the two-term limit.

The aspiring successor chosen by the ruling All Progressives Congress party, 70-year-old former Governor of Lagos State Bola Tinubu, is a frontrunner alongside former Vice President Atiku Abubakar of the main opposition Peoples Democratic Party, and Peter Obi, a relative outsider from the Labor Party.

Obi’s disruptive and decentralized campaign has resonated with young and professional voters disillusioned by the two main parties, and some polls now have him leading the race.

Leena Koni Hoffmann, associate fellow of the Africa Programme at Chatham House, told CNBC on Monday that the presidential election will be the “most unpredictable” since the transition to civilian rule.

“We haven’t had these technologies shaping Nigeria’s elections before, and we’ve never had a three-way race before, and the context is not primed for an easy incumbent win,” Koni Hoffmann explained. The Independent National Electoral Commission is rolling out an unprecedented technological innovations to ensure a free and fair election.

During a period in which West Africa has been beset by coups and violent extremism, Hoffmann added that the region “needs Nigeria to have a credible election.”

A deluge of international observers arrives this week, including a mission led by former Assistant U.S. Secretary of State for African Affairs Johnnie Carson and a Commonwealth of Nations delegation headed by former South African President Thabo Mbeki. The U.S. has also announced visa bans on individuals identified as undermining confidence in Nigeria’s democratic process.

Demographics

Nigeria has one of the world’s fastest-growing populations — currently near 220 million and forecast to double by 2050. It also has one of the world’s youngest average populations, with 42% of citizens under the age of 15 and a median age of just over 18, the UN estimates.

Political engagement has spiked in recent years, amid deteriorating prospects for Nigeria’s youth — eras of economic growth have not expanded opportunities, social inequality has increased, and youth unemployment hit 42.5%, according to the National Bureau of Statistics. Almost 40% of registered voters are between 18 and 34, according to INEC.

“Recent years have been particularly brutal for young people in Nigeria, having to live through two recessions and a failing economy and with inflation in double digits and the impact of food inflation,” Koni Hoffmann said.

Four in 10 Nigerians experience monetary deprivation and more than six out of 10 are “multidimensionally poor,” the National Bureau of Statistics finds.

“The kind of social mobility and independence that you would project for yourself in your early twenties, the last couple of years haven’t allowed young people that kind of space for pursuing opportunity, for self-determination, so that explains a lot of the frustration and discontent,” Koni Hoffman said.

Economy

First Lady Aisha Muhammadu Buhari in September apologized to Nigerians for the economic problems and growing insecurity they have experienced since her husband was elected in 2015. Alongside the Covid-19 pandemic and war in Ukraine, Koni Hoffmann noted “missed opportunities” and “self-inflicted crises” under Buhari’s regime.

In 2019, the government closed goods movement through Nigeria’s borders with neighboring Benin, Cameroon, Chad and Niger, ostensibly to stem smuggling of rice and other agricultural goods.

Economists panned the decision, which Koni Hoffmann suggested rendered Nigeria and its neighbors more vulnerable to the damage of the pandemic.

The administration has come under fire for its multiple exchange rate system, aimed at defending the domestic naira currency by artificially inflating its value. Critics argue that such interventions heighten volatility by driving greater fluctuations in price discovery.

The oil sector accounts for more than 80% of national budgetary revenues, leaving Abuja highly susceptible to oil price variations and low production due to large scale crude theft.

Tinubu’s foreign exchange policies are unlikely to deviate from those of the current administration, analysts say, while Abubakar and Obi propose more liberal economic measures and diversification, alongside greater fiscal prudence.

“No matter who wins the race to be Nigeria’s next president, the public debt-to-GDP ratio is likely to remain on an upwards path in the near-term, but victory for an opposition candidate could make the fiscal outlook considerably brighter further down the line,” said Virág Fórizs, Africa economist at Capital Economics.

“Opposition parties’ fiscal discipline pledges put Mr. Abubakar and Mr. Obi in a better position to get Nigeria’s fiscal house in order.”

Fórizs concluded, “The upshot is that, from an economic standpoint, the polls offer a choice between marginal steps away from growth-sapping policies and a more meaningful shift towards pro-market reforms that could unlock Nigeria’s economic potential down the line but involve near-term economic pain.”

Security

Buhari took office vowing to tackle Islamist militant organization Boko Haram, whose insurgency killed thousands and displaced millions.

Government forces seemingly succeeded, reclaiming large swathes of territory from the jihadist group. However, the extremist contingent splintered into competing groups in the north, complicating the challenge facing the incoming president.

Meanwhile, cattle bandits terrorize the north-central and northwest states, secessionists in the southeast clash with police and cattle herders battle farmers in “middle belt” states.

The Council on Foreign Relations Security Tracker documented around 7,000 violent deaths in Nigeria in 2022, down from 9,000 in 2021. It also confirmed an increase in state violence against civilians.

This came to a head in late 2020, when thousands of young people demonstrated countrywide against police brutality. Security forces sought to violently quash the protests, culminating in the Lekki Toll Gate massacre in October 2020.

Peter Obi, the 61-year-old former governor of Anambra State, rode that wave with a vision for policy and governance reforms, including proposals for tackling deep-rooted insecurity and corruption, while promoting social and political mobility.

“The dominant parties did not seem to provide the kinds of channels or vessels that young people wanted, so they have turned to Peter Obi, who is the nearest proximate for them, for how various sections of young people in Nigeria would like to remake the nation’s politics,” said Hoffmann.