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Nigeria’s shot in the arm

For the first time, a democratically elected administration in Nigeria has handed over power. West Africa’s largest economy has come of age and should rekindle investor confidence.

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Perceptions matter. They drive investors’ sentiments, helping to shape market forces and the state of the economy.

In Africa, perceptions and reality often merge into one homogenous picture: a continent of 55 nations constantly struggling with underdevelopment, graft, poverty, political instability, wars, capital and human flight, epidemics, fiscal quandary and general socio-economic disorder. There is, however, a time in the history of a nation when the harsh, sour, reality of its national condition begins to succumb to political inoculation.

For Nigeria, it would appear that time has come.

Nigeria may not have met all of the UN Millennium Development Goals by the end of 2015. Its economy may also be at its lowest point ever. Savants of African political economy will remember 2015 as the year Africa’s most populous nation replaced its culture of political acrimony with a new set of democratic ethos, underpinned by the will and wishes of its citizens.

One political party, the People’s Democratic Party (PDP), has governed Nigeria since 1999. For the first time since independence in 1960, a democratically elected administration in Nigeria will be handing over power – in May – to another democratically elected political party, the opposition, All Progressive Congress (APC).

All things being equal, this seamless transition should rekindle investor confidence in the economy and once again place Nigeria on the radar of the global community – this time for positive reasons.

Goodluck Jonathan, in power since 2010 and perhaps Nigeria’s most vilified leader, will now go down in history as the first major presidential candidate in Nigeria to accept defeat while results were still being announced. And suddenly that ne’er-do-well image, that has defined the world’s view of Nigeria, may have begun to change for good.

Nigeria has had 55 years of arrested development. Governments have failed to build savings buffers. Hobbled internally for so long by ethnic and religious strife, the global view of Nigeria has been defined by its ignoble contradictions: a youthful population, which means it is a commercial Eldorado in the making; economic underperformance and the slow pace of development despite the country’s abundant human and material resources; and despite all these, the consistent positive contributions of Nigeria to the global humanitarian, scientific, economic, and cultural order over the years.

The do-or-die perception created by Nigeria’s political gladiators over the last 12 months did not help. Preoccupied by power games, they heated up the polity and created an atmosphere of apprehension and discomfort. Governance and economic management took a back seat. The dominant mood across the nation was gloom. Domestic and international investors held on to their pockets, watching and hoping that Nigeria Inc. would not self-destruct.

The postponement of the elections to March and April 2015 further ruffled already frayed nerves. Speaking to the Britain’s Guardian newspaper, Nigeria’s only Nobel laureate, Professor Wole Soyinka described the build-up to the elections as the most vicious, unprincipled, vulgar and violent he had ever witnessed.

“This one was like a no-holds-barred kind of election, especially, frankly, from the incumbency side. One shouldn’t be too surprised anyway given the kind of people who are manning the barricades for the incumbent candidate,” said Soyinka.

He said the elections were “most expensive, most prodigal, wasteful, senseless, I mean really insensitive in terms of what people live on in this country… And of course the sponsoring of violence in various places, in addition to this festive atmosphere in which every corner, every pillar, every electric pole is adorned with one candidate or the other, many of them in poses which remind one of Nollywood. I just hope we won’t go down as being the incorrigible giant of Africa.”

Soyinka’s worst fears now seem like a mirage. Eventually, the president suffered an electoral loss and secured a moral victory, helping to enthrone peace in his motherland much to the relief of the international community.

Sources within the Presidency confirmed to FORBES AFRICA that Jonathan was cajoled and encouraged by one past Nigerian military leader, an influential cleric and members of the international community including Ghana’s former president, John Kufuor, to throw in the towel.

The immediate verdict on the impact of the Jonathan presidency on business and the economy has been somewhat complimentary. Fisayo Soyombo, editor of The Cable, an online newspaper, believes that, “in the final analysis, history will be kinder to Jonathan than his underwhelming four years deserve – because he will not be remembered as the one who made life difficult with fuel price increases less than a year into his tenure; or the one under whose watch Boko Haram blossomed; or the one in whose time the naira fell to its all-time low; or the one in whose care billions disappeared without consequence; or the one who granted state pardon to one of Nigeria’s most notorious and ignominious public-office thieves. Jonathan will be remembered as the first civilian president to peacefully hand over power to another. That, matter-of-factly, is an undeservedly glittering end to what has been an unflattering four years.”

So, what do Nigerians and the rest of the world require from the incoming managers of Africa’s largest economy?

International investors and business folks with entrenched interests in the economy had secretly hoped that Jonathan’s main challenger, the 72-year-old retired army general Muhammadu Buhari, who was Nigeria’s head of state between late 1983 and 1985, would lose. The rationale for this was business continuity and perceived instability that a change in government might bring.

Nigerians however cared less about business continuity. Their choice of the APC was a vote for transparent and prudent governance. We need a seismic shift in the style and character of governance, says Olu Akanmu, a policy and public affairs commentator.

“A prudent government under the current situation is critical… We do not need 40 ministers and hundreds of special advisers and assistants,” Akanmu says, hinting at the need for Nigeria’s new leader to revamp the executive and legislature.

Nigeria’s public sector costs have been adjudged to be one of the highest in the world relative to the size and productive output of economy.

Inevitably, Buhari must now begin to govern a nation riddled with a despicable culture of corruption. No easy task in a nation brimming with politically connected moguls, many of whom might have supported his bid for the nation’s top job.

Buhari’s campaign was based on change. Winning the election with this anti-corruption mantra was the easy part. Leading and fulfilling the expectations of this potentially wealthy but impoverished country will be harder. Change will not happen overnight. Crude oil accounts for over 80% of Nigeria’s earnings. Crude oil prices have stalled below the $50 per barrel mark for months. Nigeria’s foreign reserves have been depleted to around $30 billion, an all-time low barely enough to cover four months of imports.

For years, the APC reveled in lampooning the policy decisions of the PDP-led government. Now, they will be taking over the unfinished business of fixing education, healthcare, unemployment, power, police-community relations and the huge infrastructure deficit. They have the next four years to succeed or fail.

Nigerians should also expect to say goodbye to some of the brilliant technocrats in the outgoing PDP-led administration, including Ngozi Okonjo-Iweala, Finance Minister since 2010 and a renowned economist who is respected around the world.

She struggled with ‘political forces in power’ to instill a savings and investment culture throughout her tenure and has absolved herself of responsibility for the failure of fiscal policy over the last six years. As the economy faltered, her club of admirers became increasingly critical of her views.

Jide Akintunde, editor of Financial Nigeria magazine, believes that real economic change will require accelerating reforms and deepening the gains of the last decade, especially in the key petroleum, services and agriculture sectors.

“Nigeria’s potential is currently locked in agriculture. The potential here needs to be unlocked. With more investments in the agriculture value chain, we will save more money, grow external earnings, create more sustainable jobs.”

A source in the Johannesburg office of the International Finance Corporation (IFC), the private sector lending arm of the World Bank, told FORBES AFRICA that international investors will be watching Nigeria closely over the next several months.

“A new party in power, no matter how well intentioned or how well prepared, always has a lot to learn,” says the source.

Buhari and his team will need to win the confidence of his nation and the international community quickly.

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