DigitalSENSE
Business News
The president-elect in the just concluded 2015presidentialelection in
Nigeria, General Muhammadu Buhari (retired) has said that there will be zero
tolerance for corruption as far as his administration will be concerned, that
the evil of corruption is worse than the evil of Boko Haram terrorism even as
Naira began an upward climb.
Investigations by
DigitalSENSE
Business News indicated that in December of 2014, long before the
controversial postponement of the 2015 elections on the 7th of February 2015,
the International Monetary Fund (IMF) had already forecasted the slow growth
rate of the Nigerian economy to about 5 per cent. This, the IMF said, would be
due to falling oil prices, which would invariably cut revenues, spending and
the effect of capital outflows.
Global rating agency Fitch Ratings more or less sounded out the same forecast
when it reviewed Nigeria’s growth (or, rather, a decline) forecast from 6.4per
cent to 5.2 per cent. Seemingly working with the Fitch numbers, Nigeria’s
Ministry of Finance also did a downward review of the country’s growth forecast
from 6.4 per cent to 5.5per cent. While oil accounts for some 15per cent of
Nigeria’s Africa topping GDP, it makes up as much as 80per cent of government’s
revenues. The bulk of the projections was based on the falling oil prices. One
factor that was later taken into consideration in all of these was that Nigeria
had become an unpredictable political climate. This was not helped by the
February postponement of the elections.
According to Mr. Norbert Bielderman, Managing Director of the Nigerian
Aviation Handling Company (NAHCO),
DigitalSENSE Business
News gathered,estimated the worth of the postponement at over $2bn “as cost
and investor loss of confidence for existing and new foreign direct investment
that may have found its destination to other countries.” In today’s naira
terms, that is a loss of about N420 billion.
Indeed, when the U.S. Secretary of State, Senator John Kerry saidpolitical
interference with the Independent National Electoral Commission was unacceptable
the international community watched closely as the Nigerian government prepared
for elections on the newly scheduled dates. He was indirectly informing the
business community about Nigeria’s “politicalfluidity” while also warning the
Nigerian government about direct consequences in case of another postponement.
Another plot was the rumour that the President intended to remove the
chairman of INEC, Prof. Attahiru Jega. Ekiti governor, Ayodele Fayose, was
spearheading the move even as his party, the PDP, said the governor was acting
on his own. The President also said he had no plans to remove Jega.
This apparent political uncertainty was the reason why “after the elections”
seemed to be the most popular phrase in Nigeria then. Public and private
organisations were withholding their resources both for new and older projects,
wanting to see what happens “during” and “after” the elections. Everyone was
waiting for the elections to be over before making major moves in Nigeria.
Investors’ confidence in Nigeria was understandably not at its highest right
then. One would not need rating agencies to know that further “political
interference” in the electoral process would strike another blow at investors’
interest, with Nigeria’s growth numbers further taking a plunge. The economic
cost would be unprecedented. The political cost would be devastating.
And now the great turnaround as the election took place in an atmosphere of
freedom with the president conceding defeat."I thank all Nigerians once
again for the great opportunity I was given to lead this country, and assure
you that I will continue to do my best at the helm of national affairs until
the end of my tenure," Jonathan said."I promised the country free and
fair elections. I have kept my word."
DigitalSENSE
Business Newsgathered that the peaceful election was certainly the game
changer following the announcement of the president-elect on Wednesday. The NSE
All-Share Index went up by 2,635.32 basis points or 8.30 per cent from
34,380.14 to 31,744.82 basis points. Similarly, the market capitalisation of
the listed equities appreciated by N903 billion from N11.621 trillion to
N10.718 trillion. Market breadth remained positive with 65 gainers and three
losers.
Operators in the Nigerian financial market were optimistic that, the market
would bounce back with a comfortable lead by Gen Buhari, a disciplinarian that
has promised to reshape the national economy as they set agenda for a new
economy by the incoming government.
While it was business as usual at the money market and the interbank end of
the foreign exchange market, the value of the Naira got a boost at the black
market where it sold between N209 and 210 to a dollar.
A black market currency dealer said that the value of the Naira had been on
an upward swing since Tuesday when signs that Gen Buhari would win at the polls
emerged. “I however cannot say if the election results is the one affecting the
dollar or something else, but I just know that dollar has been falling”, he
stated.
The Nigerian capital market gained 8.30 per cent its single biggest daily
gain this year, wiping off the negative Year to Date (YTD) performance, after
the INEC declaration. In the first quarter, the capital market indicators lost
8.40 per cent as a result of the uncertainty surrounding election and poor
macro-economic factors. Market capitalisation of the listed equities under the
period went down by N76 billion to close at N10.718 trillion, while the NSE
All-Share Index fell by 8.40 per cent to close at 31,744.82 on March 31,
Capital market analysts said the one day gain is the highest that has ever
been witnessed in the history of the Nigerian stock market. Analysts at APT
Securities and Funds Limited, stated that “we believe that positive rally of
the situation is attributable to the peaceful conduct of the Presidential
election and the Statesmanship of the incumbent President in accepting defeat
and congratulating the President-elect, General Muhammadu Buhari. This has to a
great extent assuaged the fears of foreign investors about the capital market
as they are taking position by snapping up shares across the board.”
Buhari, 72, will be sworn in on May 29. He will take the helm at a critical
time, as Nigeria grapples with the violent militant group Boko Haram, serious
economic woes and corruption.
Analysts and investors who expected Nigeria’s presidential election to erupt
in chaos are celebrating the peaceful victory of opposition leader Muhammadu
Buhari and the excitement is evident in the country’s stock market.
“Financial markets have welcomed the result,” wrote Capital Economics Africa
analyst John Ashbourne in a note Tuesday, adding that as poll results continued
to roll in from around the country on Monday, the Nigeria All Share Index
gained 2.1 percent and the yield on Nigeria’s 2021 eurobond fell by almost 20
basis points, its lowest level this year.
Until now, investors had been particularly wary of the outlook for Nigeria —
Africa’s largest economy and the world’s No. 4 oil producer, fueled by crude
reserves in the Niger Delta. But global benchmark oil prices have fallen more
than 50 percent in recent months, taking Nigeria’s currency with them and leaving
a gaping hole in government revenues. The World Bank recently revised its
prediction for the country’s economic growth in 2015 down from 6.3 percent to
5.5 per cent.
The All Share Index was down last month and the country's currency, the
Naira, took a record tumble in the run-up to election. Many observers expected
increased anxiety at a time of increasing security concerns related to Boko
Haram violence in the northeast.
However, this weekend's election process was peaceful, despite a handful of
protest and 41 deaths due to Boko Haram attacks. It was a vast improvement over
the 2011 election, which led to violence that killed at least 800 people.
While Buhari is still an unknown quantity in terms of his fiscal and
monetary strategy, many Nigerians are optimistic about his anti-corruption
promises and are eager to move on from policies favoured by the incumbent
Jonathan. Stocks in competing countries such as South Africa and Kenya gained
roughly 90 percent since 2010, when Nigeria’s gain was just 11 percent under
Jonathan’s leadership.
Most important to Nigerians is that Naira appreciated during the first week
of April and their prayers is that that growth is sustained to make life better
for Nigerian investors.
Cyriacus Nnaji/GEE
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Pix: INEC Chairman, Prof. Attahiru Jega
