The recent chaos and
post election violence in some parts of the north have been described
as a bad signal to investors and the international community.
Assessing the impact
and the implications of the crises, finance experts and industry
analysts said how it affects the economy and the confidence of investors
who may want to invest in the country depends on how the government
handles the situation.
Pockets of violence
had on Monday broken out in some cities in the northern part of the
country following the declaration of the April 16 presidential election
results.
”The next two to
three days are very important days for Nigeria,” Bismarck Rewane,
managing director, Financial Derivatives Company, a finance research and
analysis firm, said yesterday.
According to him,
nothing much is expected to change with the emergence of Goodluck
Jonathan as president-elect because he is expected to continue with his
ongoing policies.
”I don’t expect any
change in economic and government policy. We already have an idea of the
things he would be doing and the things he would not do,” Mr. Rewane
added.
He said there was
really no cause for alarm or anxiety, if every other factor was normal.
“If oil production remains high, and oil prices are high, the economy
would be relatively stable. However, I think it is still too early to
place assumptions and forecast. The next few days, we would be in a
better position to estimate and forecast on various economic variables
and on the economy,” he further said.
The president is
expected, among other things, to reform the power sector, sign the
Petroleum Industry Bill, restructure the Nigerian National Petroleum
Corporation, constitutionally preserve an oil-price based fiscal savings
programme, boost infrastructure development, and improve execution of
public affairs.
Investment implications
Samir Gadio,
emerging market strategist, Standard Bank Plc, said, “In terms of
political risk, we are less worried about who is the president and more
concerned about whether he can muster enough political muscle to deal
with Nigeria’s pressing reform issues. While Nigeria has substantial
natural resources, the authorities have struggled to unlock the
country’s potential over the past decades because of key structural
constraints.”
According to him,
this year’s presidential contest unfolded without any major
irregularities that could undermine the credibility of the vote and the
process appears to have been transparent.
“While some protests
broke out in the northern parts of the country and the Congress for
Progressive Change has rejected the poll results, we do not, however,
foresee a drastic spike in violence across Nigeria in the coming days
and weeks, even if the opposition disputes the outcome of the vote in
court (as it did in 2003 and 2007).
“In our view, the
relatively smooth electoral cycle in most of the country will be
positively perceived by international investors, with the potential to
mitigate previous concerns over Nigeria’s short-term political outlook.
We think Jonathan’s decisive win will ease investor concerns, both
domestically and Internationally,” Mr. Gadio said.
He added that the
transparent presidential election will boost Nigeria’s institutional and
democratic credentials, but the key test will be the extent to which
Mr. Jonathan’s administration is able to reform the power sector and
other critical areas.
“Such policy steps are urgently needed to unlock the country’s significant investment and economic potential,” he said.
Since May 2010 that
Mr. Jonathan has been the nation’s president, he has embarked on a few
policies which include the series of power reforms, and the recently
launched gas revolution which would require millions of dollars as
foreign direct investment.
Nigeria’s Eurobond was also launched under his government and the
Sovereign Wealth Fund, for ‘economic restoration’. It is anticipated
that he would be able to accomplish the policies he started before the
end of his tenure, when he is eventually sworn-in this quarter.
