Four more years, and more of the same

Muhammadu Buhari of the All Progressives Congress (APC) has won a second term following the presidential elections held on Saturday with a 56% share of the vote, compared with 41% for Atiku Abubakar of the Peoples Democratic Party. Subject to any credible challenges to the outcome, his term will begin in late May after the mandatory period of transition. Unlike in 2015, he should be able to move fairly quickly to forming a new government since most likely candidates for posts have been vetted.

  • The leopard is not expected to change its spots. A Buhari administration tends to over-centralize decision-making and has a policy stance that is caricatured as “pro-poor”. It is not anti-business, rather at times wary of it.
  • We expect therefore more of the same, although hopefully at a faster pace of implementation. Being his second and final term in office, Buhari has an opportunity to create a bit of legacy. This suggests a further acceleration of the FGN’s capital releases for the infrastructure, and of its social interventions (such as TraderMoni, the N-power programme, the conditional cash transfers and the school feeding project).
  • These steps are designed to soak up new entrants to the labour market, rebuild household budgets and support the diversification of the economy. The scale of the acceleration depends upon the FGN’s ability to reinforce the modest gains it has achieved in revenue collection.
  • Investors hopeful that growth rates will return to those of the early 2010s will have to be patient. Indeed, we wonder sometimes how they were achieved.
  • In this context, we should watch carefully for signs that the new administration is able to translate its healthy majorities in both houses of the National Assembly into a positive working relationship with the legislature. If it is, we can look forward to smoother passage of the annual budgets and perhaps some progress on the petroleum industry bill. If it is not, we return to the institutional logjam of the first term.
  • The administration is likely to feel comfortable with the CBN’s exchange-rate policies. Indeed, we saw no substantial changes this year in our 2019 Outlook (One hurdle in Q1, others to follow) because we expected a second term as well as stable oil prices.
  • We met a large number of foreign portfolio investors earlier in the year, and the majority anticipated Buhari’s re-election. Any post-election rally on the NSE is therefore likely to be based upon relief that the process is over and that the FGN can revert to pursuing its policy agenda.

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