[The following guest contribution to the blog comes from Nigerian journalist and political analyst Salisu Suleiman, who writes for NEXT Newspaper, among other publications. Read his first of three installments here. – Editor] The presidential elections held this past weekend in Nigeria are being closely watched by the international business community, as they pose serious implications for global oil markets as well as domestic and international investment. While we continue to await the final tally of the votes which will determine whether or not a run-off will be possible, incumbent President Goodluck Jonathan is already claiming victory, despite growing protests and violence across the North. Early indications that the vote had been relatively clean are already crumbling … Jonathan’s leading opponent, Muhammadu Buhari has already lodged a complaint contesting numerous results across the North. Among other irregularities, the government has refused to comment on allegations that $2 billion of public money was set aside to deliver the vote for Goodluck Jonathan, but the campaign spending is visibly dominant. Reports from the April 9th parliamentary elections indicate that some voters were publicly bribed to vote PDP, while other reports indicated that electoral officials were induced with huge sums of money. Rising above all other issues being debated by the candidates this year is the economy – and how they plan to overcome the enduring challenges of transforming record high oil prices into new jobs and development, while cutting out the national cancer of corruption. Contrary to popular myth, Nigeria is a very wealthy country, but one that happens to be extraordinarily imbalanced. More than 70 percent of the country’s estimated 160 million people live below the poverty line. Unemployment is estimated at about 30 percent. Oil income provides over 90 percent of government revenue while critical sectors like agriculture and mining are underfunded.
At the moment, some of the major challenges confronting Nigeria’s economy include inadequate internal capital formation due to the vicious circle of low productivity, low income, and low savings. Government investments in critical infrastructure like power, roads, railways and public utilities have been grossly inadequate. This has slowed investment and stilted economic growth and job creation.The three major candidates contesting Saturday’s election are the incumbent president Mr. Goodluck Jonathan of the Peoples Democratic Party (PDP), Mr. Muhammadu Buhari of the Congress for Progresssive Change (CPC) and Mr. Nuhu Ribadu of the Action Congress of Nigeria (ACN). They have each proposed different solutions to Nigeria’s myriad economic problems.Mr. Jonathan says he will enhance job creation and reduce poverty by setting up a Business and Development Fund with the Bank of Industry (BOI) and private sector actors. “The provision of cheap funding to SMEs will come as a great relief to entrepreneurs who need to reduce their financial costs as they try to deal with high production costs for generating power and providing other operational infrastructure,” the president said. The problem is that his party has been in power for 12 years during which government has collected and lost track of some $200 billion in state budget. As such, few take the ruling party’s promises seriously.Mr. Ribadu’s policy themes include human capital development, the economy, infrastructure, governance, youth empowerment, agriculture, and food security. Others are defense and national security, Niger Delta, and foreign policy. He says he will plan for a steady and attainable economic growth rate of 7-8 per cent per year for the next five years, and 8-10 per cent per year for the years following that. Well thought out, except that they remain mere platitudes without specific plans for actualization.Mr. Buhari promises stringent fiscal policies to address government excesses. He says he would balance the economy across regions by the creation of 6 new Regional Economic Development Agencies (REDAs); create four million new jobs; encourage private sector enterprise and support to help areas currently reliant on the public sector; create freehold/leasehold interests in land and build at least 2 million additional middle-class new home owners by 2015 by enacting a national mortgage system that will lend at single digit interest rates for purchase of owner occupier houses.The Nigerian economy is direly in need of foreign investments and whoever emerges as the next president will encourage and protect foreign investment in all sectors. The country is one of the fastest growing in Africa with expanding financial, communication and transport sectors, but still lacks investment in critical infrastructure which is which is one of the many areas open for investment. Nigeria is the 12th largest producer of petroleum products in the world and the industry accounts for almost 80% of the GDP share and above 90% of the total exports, but even this vital national lifeline is underfunded. Nigeria’s imports and payments in 2010 rose by 37 per cent to $41 billion from $30 billion in 2009, and its exports also surged by $20 billion to $79.4 billion.Analysts agree that corruption is the bane of the Nigerian economy. While all the candidates have made promises to tackle corruption, few have indicated how to make headway in their implementation of such policies. As sitting president, Mr. Jonathan’s anti-corruption promises particularly come across as a joke to many Nigerians, as corruption has flourished under his tenure and, historically, under the PDP.Certainly, all the ingredients are in place to help Nigeria make the long-awaited leap up to the status of a regional and global economic player at the level of South Africa. The country boasts huge untapped resources and sectors, and a powerfully growing population eager to work and consume. Apart from crude oil, Nigeria has one of the world’s largest reserves of natural gas which remain uncaptured. Investment in agriculture has dwindled over time, but the country has about 68 million hectares of arable land and over 200 multipurpose dams, yet imports food; there are at least 34 minerals deposits in commercial quantity in more than 450 locations. Huge bitumen and gold deposits exist, and the Chinese have already gotten a head start in gold mining. While oil is far from the only commodity play in Nigeria, these other businesses have failed to develop due to poor legal and regulatory frameworks. All the candidates have promised to prioritize this issue to promote local and international investment in these untapped sectors. But the question is whether or not the political will exists.The campaign promises to address Nigeria’s economic inefficiencies are numerous. Ribadu has said he wants to build foreign exchange reserves back to a robust level of US$50 billion or more, while planning for an economic growth rate of 7-8 per cent per year for the next five years, and 8-10 per cent per year for the years following that, further urging development of the non-oil economy. Buhari on the other hand has promised to embark on a National Infrastructural Development Programme as a Public Private Partnership that will ensure the construction of 3,000km of express highways including service trunks and building of up to 4,800km of modern railway lines – one third to be completed by 2015. He also says he will enact new legal and regulatory frameworks to establish independent regulation and incentives to accelerate public and private sector investment in seaports, railways and inland waterways and explore ways to help create jobs for the most socially vulnerable.None of the candidates has promised any significant changes to the tax code, import duties or trade and investment policies; the country urgently needs international investment and is averse to introducing harsh business climates. The Petroleum Industry Bill which some oil companies say is too harsh may be passed, but will critical input from the oil majors. All candidates recognise the need to effectively utilize oil revenue and diversify the economy as well as overhaul the non oil sectors especially the agricultural sector enhance food production and create jobs. Nigeria’s oil production steadied at 2.4 million barrels per day as crude oil prices continue to rise due to the conflict in Libya.The potential for economic growth in Nigeria is very high. If the country successfully tackles corruption, implements investor friendly legal and regulatory frameworks in the vital untapped agriculture, mining and services sectors while managing to hold free, fair and credible elections, Africa’s largest country stands a good chance of stepping out from the shadows to a position of leadership.However this outcome, as demonstrated by the outbreaks of post-election violence, is far from guaranteed.