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As economic and security woes mount, electoral calculations will shape policy and business strategy
With presidential and national assembly elections due in February 2023, political campaigns will go into overdrive this year as alliances are made and deals struck. Outgoing President Muhammadu Buhari and his allies will use his incumbency to try to influence the ruling All Progressives' Congress's (APC) choice of candidates.
Already there is a row over Buhari's refusal to sign an amendment to the electoral reform bill which would allow electronic voting and transmission of results, as well as direct primary elections to choose a party's candidates, instead of conferences of delegates run by state governors.
Much as the dramas of the election campaigns will dominate the political scene, they will not overwhelm concerns over the country's deepening insecurity and slow economic recovery from the side-effects of the pandemic.
A statement by the Auditor General on 4 January that by the end of 2018, police armouries had reported the loss of 178,459 weapons, including 88,078 AK-47s, got to the heart of the twin crises of governance and security.
The Lagos-based SBM intelligence consultancy reports that 'non-state actors' are reckoned to have more small arms than the law enforcement agencies. Proliferation of small arms and ammunition across the country was driving a wave of criminal and political violence, it added.
One of Buhari's responses was to back a 20% pay rise for the police but Finance Minister Zainab Ahmed and Secretary to the Federation Boss Mustapha are working on a wider plan to cut the public sector wage bill by restructuring the civil service. In the short term, the country's debts will keep rising.
Foreign debt is at a record high, having tripled over the past five years. Last-minute contracts and infrastructure projects will probably get approved this year. Some of the borrowing by federal and state governments will get diverted to political campaigns.
The two main parties – the APC and the opposition People's Democratic Party (PDP) – are scrambling for funds and have to resolve their internal rivalries. Even before Buhari's re-election in 2019, the APC's fissures were deepening, with some predicting an implosion. That is yet to happen, but factional disputes are disrupting many state chapters of the party, leading to parallel congresses and divided loyalties.
Those could shape the race for the presidential nomination, as could the 'zoning' principle, stipulating that the presidency should alternate between the north and south of the country. After eight years of Buhari, from the far northern state of Katsina, many in the APC argue it's time for a southern candidate.
This has left the door open for APC national leader Bola Ahmed Tinubu, who has the money, name recognition and grassroots organisation to kickstart his presidential campaign (AC Vol 62 No 25, Tinubu fights for his legacy). Although he may lack close ties to the Nigeria Governors' Forum, we hear he has appointed six serving state governors within the APC as members of his campaign team; some were served letters without the chance to refuse.
Tinubu's nomination and role in getting compliant leaders of the Senate and House of Representatives has kept the party together. That has also help Buhari's position, for which Tinubu expects some recognition. All that makes him the frontrunner for the APC presidential ticket.
His protégé, Vice-President Yemi Osinbajo, is rallying the troops quietly for a possible presidential bid. But he would need Tinubu's blessing and withdrawal from the race – an unlikely scenario.
Buhari confidants are drawing up a list of technocrats and businessmen from the south to discuss strategy with the President. The two favoured names to emerge are African Development Bank President Akinwumi Adesina and billionaire banker Tony Elumelu, both of whom have national name recognition and international sway. Buhari likes them both.
Either could stand as candidates in their own right, or as in Elemelu's case as a running mate to Tinubu. We hear that Elemelu, who runs a pan-African foundation sponsoring young entrepreneurs, plans to run for the presidency in 2027 but has already contributed generously to Tinubu's campaign.
Another rising star is Borno state governor Babagana Zulum, who has commissioned several infrastructure projects across his state. He has also accused the army and international organisations of worsening and even profiting from the Islamist insurgency in the north-east (AC Vol 62 No 1, Ready to rumble). His reputation for straight-talking and efficiency has won him plenty of goodwill – enough to get the APC's Vice-President ticket.
Whether the APC picks Tinubu, Osinbajo or Ekiti state governor Kayode Fayemi, the three frontrunners so
far, the party will run a strong campaign against the opposition PDP, whose candidate is likely to come from the north.
Former Senate President Bukola Saraki from Kwara state in the middle belt has declared his interest to run for the presidency again but he has strong rivals in both the core north and the south. Former Vice-President Atiku Abubakar, a multi-millionaire with extensive trading and oil logistics interests, is ahead of the field for the PDP nomination. Former Anambra governor Peter Obi is set to get on the ballot again as running mate.
Many younger people are going into politics, taking advantage of the #NotTooYoungToRun bill which was passed in 2018. The law cut the age limits of running for elective office from 40 to 30 years for president; 35 to 30 for governor; 35 to 30 for the senate; and 30 to 25 for other parliamentary seats.
Two governorship elections are due in the neighbouring south-western states of Ekiti and Osun. The APC controls both states but the opposition will make a determined push in both. It's vital for outgoing Ekiti governor Fayemi to ensure the APC wins to keep his name in the frame as presidential candidate.
Currently, the APC has 22 states in its fold to the PDP's 13. The outlier is the All Progressives' Grand Alliance (APGA) which retained control of the south-eastern state of Anambra in the November 2021 polls. Even if the opposition gained both Ekiti and Osun states, it would still require a far better campaign to win power in Abuja next year.
An unsigned letter from state security officials to Buhari warning that his advisors are routinely deceiving him on critical policy issues caused a stir in Abuja. But it's unlikely to trigger any major reorganisation. Attorney General Abubakar Malami and Central Bank Governor Godwin Emefiele, two of the most powerful officials around the president, will stay in place. Malami is eyeing the governorship of Kebbi State; some say Emefiele has been sounded out for a presidential run.
Buhari's officials wants to push ahead with the trial of south-east secessionist leader Nnamdi Kanu, although it might backfire for the APC's support in the region ahead of elections.
Yet some form of federal restructuring will get on the agenda of the presidential campaigns. All the APC's frontrunners back the idea, as do the PDP's Atiku and Saraki. The bigger question is how to make it work politically and economically with states controlling more of their revenues and government functions. That debate will heat up this year but there will be no action on it until after the 2023 elections.
The economy's modest economic recovery last year and government hopes that 2022 real GDP growth could exceed 3% hit the reality of rising debts, rocketing servicing costs and below-target revenues. The African Develoment Bank warned that Nigeria was spending over 73% of its revenues on debt service last year.
Official figures showing 5% and 4% growth in the second and third quarter respectively, point to a modest bounce back from recession in 2020. The International Monetary Fund (IMF) and World Bank forecast growth of just of 2.5% this year, which could fall lower due to disruption from the Omicron variant of Covid-19 and rising insecurity.
President Muhammadu Buhari signed the 17.1 trillion naira (US$42 billion) amendment, approved last month by the National Assembly, to his originally proposed N16.4 trillion 2022 federal budget. But the budget's increased size implies larger 2022 fiscal deficits, notwithstanding increased revenue projections that, according to Buhari, have been made without any justification. That is another warning light on the economy.
Probable revenue shortfalls will lead to further pressure on federal government finances and borrowing. Last month, the Debt Management Office in Abuja cancelled plans for a second 2021 Eurobond and is set to delay the country's return to the international markets. Lower revenue distribution to the 36 states may intensify the states' battle with the federal government over which should have the right to collect Value Added Tax.
Oil revenues will be vulnerable to global price volatility, even if Nigeria's persistently below-target oil production rebounds to pre-pandemic levels. Officials hope the new Petroleum Industry Act will provide a boost, but critics see the fiscal terms as too favourable to the oil companies (AC Vol 62 No 16, The oil economy breaks up).
The Central Bank will be under pressure to bring down inflation (still above 15%), stem declining foreign exchange reserves, and to protect the naira. The inflationary impact of another devaluation, and Buhari's backing of foreign exchange market restrictions, will counter the demands from IMF and World Bank economists that Nigeria move towards foreign exchange market unification.
A major reform proposed by the finance ministry, to replace fuel subsidies with a progressive and targeted transport grant in mid-2022, will require great political will to implement, and it could prompt more local unrest (AC Vol 62 No 25, Buhari gambles on cash transfers on his way out & Clogged-up commission). In a pre-election year, political calculations may override financial ones.
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