With the ruling party facing a credible opposition for the first time since the restoration of civilian rule, Nigeria’s upcoming general elections are expected to be highly contentious. Risks will emanate in a wave of voting disruptions in the northeastern states and possible post-electoral reprisals in the event that the results are deemed invalid.
With less than a month before Nigerian citizens head to the polls, the upcoming general elections of February 2015 are expected to be a watershed. Marking the fifth democratic contest since the end of a protracted military rule in 1999, the incumbent People’s Democratic Party (PDP) faces a consolidated umbrella opposition party that poses a credible threat to the PDP’s longstanding political hegemony.
Regardless of the possible challenge, the current state of play still shows the PDP likely to win the elections, with Goodluck Jonathan expected to claim a slim victory after the February 14th presidential contest. Although the All Progressive Congress (APC) has risen to become a serious contender over the past year, recent events point to the assertion that the APC has lost its initial momentum.
In light of these developments, GRI anticipates a PDP victory materializing – but we do not discard potential downside risks to this scenario, in particular possible voting disruptions in the northeastern states and post-electoral reprisals in the event that the results are voided.
Emerging as an important hindrance to the integrity of the elections is the fact that the Independent National Electoral Commission (INEC) has been sluggish in its task to register voters and distribute their electoral cards. As of last week, only 38 million voting cards had been distributed, out of the 69 million registered voters – in a country of an estimated 177 million inhabitants – raising the issue of a possible electoral delay.
Reacting to this pre-electoral conundrum, Nigeria’s National Security Adviser has called in favor of a postponement, something which the APC is adamantly opposed to, as it would allegedly allow the incumbent party to capitalize on this delay, (and use federal resources to entice swing voters to their camp).
If this was not enough, Boko Haram has continued to bolster their attacks in the northeast, with a recent suicide bomb attack in Gombe and the notorious killing of an estimated (albeit contested) 2,000 people in Baga marking their latest in an erratic series of bloodbaths.
With the Nigerian army continuing to struggle against the Islamist armed group, voting disruptions are likely to undermine the electoral process in the states of Borno, Yobe and Adamawa – all opposition’s strongholds.
A likely PDP win
In spite of the growing dissatisfaction with President Jonathan’s inability to fight Boko Haram and the inflationary pressures that are mounting on the back of falling oil prices – exacerbated by FX pass-through effects – the PDP seems to have an advantage in its prospects of winning the elections.
Expect it, however, to lose ground in the form of reduced parliamentary and governorship seats following the national assembly elections of February 14th and the gubernatorial ones of February 28th.
This reduction will be particularly felt in the state governor-ships where PDP governors have reached their maximum two-terms, leaving the contest open to new candidates not benefiting from the advantages brought by incumbency. The likely outcome is still a PDP win – but not with an outright overall majority (currently set at 25% of the votes in two-thirds of the 36 states).
The APC is then likely to regain significant ground in the northeast vis-à-vis the 2011 elections, but it will struggle to convince swing voters in the middle-belt and the southwest.
On the other hand, the PDP will largely benefit from the perks of being the incumbent party. In a country where patronage politics still plays an important role, access and recourse to state resources in one form or another inevitably advantages the PDP through its ability to mobilize federal funding during the electoral campaign.
Already the pro-PDP bias within security agencies raises some doubts about the extent to which there are distorted disincentives for police and armed forces to enforce security in the APC’s northern strongholds. This could indubitably play in favour of the PDP as voting becomes more hazardous in the northeast.
It is also possible that this may increase the probability of post-electoral violence in the event that APC sympathizers deem that their voting capacity will be significantly diminished by poor federal security enforcement.
Technically, the PDP is currently incumbent in more states than the APC (20 vs 14) – which should a priori be indicative of the higher chances for a PDP electoral victory. A crucial caveat, however, is the fact 18 governors have reached their term limits, thereby leaving the race for governorship open in half of the states.
This raises some doubts about the PDP’s ability to win an outright majority and avoid a presidential run-off, particularly as it goes into the 2015 elections with a more feeble political position than in 2011 (it controlled 27 states back then) and the fact that the APC has gained territory within the National Assembly via PDP defections, largely reducing the incumbent’s majority share (see Figure 1).
The electoral fortunes of the APC
In September of 2013, the electoral fortunes of the PDP looked dim. Simmering tensions between members of the PDP erupted into a full-blown crisis when 37 dissatisfied PDP lawmakers – led by former Vice-President Atiku Abubakar and seven state governors – defected from the party to create a splinter PDP group with most of them eventually joining the ranks of the APC.
At the time, there was much uncertainty about Mr. Jonathan’s intentions to re-run for President and most of the defections were strategic (in the sense that they were motivated by electoral endeavors as opposed to political allegiances to the APC).
In recent months, there has been a slight reversal of this trend, with disillusioned APC figures returning to the ranks of the PDP – including a heavyweight like the ex-governor of Kano. At present, even if the APC has chosen former General Muhammadu Buhari as their presidential candidate, there is little indication that he will be able to generate enough momentum prior to the elections.
Having said that, however, the appointment of Yemi Osinbajo as his running mate has lifted some hopes for the electoral fortunes of the APC, particularly as voting is still expected to run primarily along ethno-religious lines. As a Muslim northerner, Buhari is expected to gain large voting shares in the northeastern states.
With Osinbajo – a Christian from the Southwest and former Attorney General for Lagos – on his side, the APC frontrunner could be able to turn the tables around, depending on the degree to which the APC is able to court the Christian vote in the Southwest.
Boko Haram – the electoral spoiler
Boko Haram’s activities have surged in recent months. Notwithstanding the scale and intensity of their attacks, other pockets of violence have emerged. Since the start of the year, various attacks have been carried out by alleged agents of the main competing parties. In the state of Kano, fear of lynch mobs has prevented PDP supporters from campaigning, while President Jonathan’s bus was attacked in Jos and seven opposition members were victims of a gun attack.
The government announcing that voting will still take place across the insecure state of Borno – where Boko Haram allegedly controls 70% of the territory – signifies that there will be less oversight work carried out by international observers, raising doubts over the potential validity of the final vote.
As the Islamist armed group presses in its endeavor to edge closer to the strategic Borno capital of Maiduguri (2 million inhabitants), violent disruptions ahead of the polls are a likely reality.
Such disruptions will no doubt hamper the work of the INEC, which has already been forced to halt its activities in the high risk areas of the northeast (see Figure 2). Although a Senate resolution last December ordered the INEC to make sufficient provisions to allow internally displaced persons (IDPs) to vote, most IDPs have not been able to register or get a hold of their voting cards. This bill has not been passed – thereby disenfranchising an estimated 1 million IDPs who would a priori be more likely to vote for the APC.
With Boko Haram continuing to displace people in Borno, Adamawa and Yobe – states from where most of the ACP’s supporters herald – the main opposition party is likely to be adversely affected, thereby improving the electoral fortunes of the PDP.
In the event that the elections do not truly reflect the voting expectations of the APC, Buhari’s party is likely to contest the elections, with potentially violent incidents arising, depending on the way security forces react and President Jonathan responds to allegations of electoral irregularities.
If so, expect two likely scenarios. The first one is akin to Ghana’s 2012 elections, where the opposition’s disputed results were peacefully resolved through a Supreme Court ruling.
The second could be more in line with Kenya’s 2007 elections, where discriminatory violence erupted in the wake of the disputed results. Hopes are that, if anything, only the first scenario could materialize.
What is in for investors?
For investors, stability and continuity matters. With the elections looming, foreign investors have already shown signs of weariness, as reflected in the significant sell-off that hit the Nigerian Stock Exchange (NSE) from October to November 2014. Relating to an anticipation of the devaluation in Naira-denominated assets, many investors perceive the election with caution, particularly if the PDP loses out or if the election results turn out to be highly contested.
With the economy taking a hit from the sharp fall in oil prices, the Central Bank of Nigeria has devalued the Naira and rightfully raised the benchmark interest rate to 13% in an attempt to halt the current trend of portfolio outflows. Having said that, given the pledge that the PDP has arguably maintained in its willingness to implement important economic reforms, investors are likely to prefer a PDP victory.
One of the key reforms made this year was the privatization of the electricity sector, whereby the federal government handed over 15 state-owned electricity companies to private owners.
With the expectation that this will, down the line, reduce the prevalent blackouts across the country and the overt reliance on motor generators for electricity, investors are likely to see the continuation of the PDP as key for the ongoing efforts to privatize companies in sectors where the state is deemed incapable of providing public goods at a reasonable price.
Opening up investment opportunities for the private sector has been a pledge made by President Jonathan on several occasions and investors seem to favour credible continuity under the incumbent government over uncertain renewal under an APC government.
Most importantly, the passage of the Petroleum Industry Bill (PIB), although still stalled in Parliament, is likely to be passed in the wake of the election, particularly in light of the troubles that the Nigerian oil industry is currently facing. In this setting, however, the number of parliamentary seats won by the two dominant parties will matter for the expedited passage of the PIB.
Given the rising pressures by international oil companies, particularly those currently selling their blocks in response to the prevalent oil bunkering activities in the Niger Delta, both parties will be forced to reach a parliamentary consensus for the approval of the PIB if Nigeria wants to continue attracting foreign capital for its oil industry.
All in all, GRI sees a PDP victory as most favorable for investors. Notwithstanding the important necessity for a much-needed fiscal consolidation, expect the incumbent government to push through its promised reforms – even if the timing of implementation remains unclear.
Source: globalriskinsights.com
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