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23 April 2019
Africa’s New Electoral Playbook

Africa’s New Electoral Playbook

Africa Current Issues Vol. 2019-02

23 April 2019
Africa Digest, Volume 2019-01

Africa Digest, Volume 2019-01

Bi-weekly summary report on the trends and issues in the macro-environment and industry to promote knowledge and raise understanding of business in Africa.

23 April 2019
African SEZs & GVCs in the age of automation

African SEZs & GVCs in the age of automation

Is the African dream of industrialisation via special economic zones (SEZs) hosting global value chains (GVCs) feasible? 

23 April 2019
Nigeria's business prospects, investment opportunities to grow in government's 2nd term

Nigeria's business prospects, investment opportunities to grow in government's 2nd term

Nigeria's President Muhammadu Buhari successfully secured a second term at the helm of Africa's largest economy. Despite the controversial circumstances surrounding the run-up to the February poll, this was a...

23 April 2019
Is Africa the next tourism growth frontier?

Is Africa the next tourism growth frontier?

Summary report of a panel discussion at the Africa CEO Forum, held in Kigali, Rwanda, on 25 and 26 March 2019.

12 April 2019
The Opportunity in Banking Consolidation in East Africa

The Opportunity in Banking Consolidation in East Africa

  The East African banking sector has made significant strides in the past several years. From an industry that was once blamed for its exclusion to now being praised for its...

22 March 2019
Belvie: Establishing a consumer goods business in West Africa

Belvie: Establishing a consumer goods business in West Africa

  BeIvie is a Niger-based non-alcoholic beverages manufacturing and bottling group founded in 2014. This case study looks at how, in a relatively short period, Belvie captured significant market share from...

22 March 2019
Trends and Events in Africa 2018

Trends and Events in Africa 2018

2018 has been an interesting year for Africa, with various events and trends becoming visible. 2016 saw the effects of the slowdown of China’s economic growth due to its rebalancing...

20 March 2019
Nigeria’s Opportunity to Enhance the CFTA

Nigeria’s Opportunity to Enhance the CFTA

  Synopsis: The Continental Free Trade Area negotiations should take the concerns of domestic stakeholders seriously, for its own sustainable development.

19 March 2019
Raising The Steaks: Africa’s booming meat industry

Raising The Steaks: Africa’s booming meat industry

  The rapid growth of meat consumption in Africa will provide attractive opportunities for investors, but making production more efficient, protecting the environment and improving the lot of smallholders, pose many...

05 October 2018
Cover story: Sudan: Lifeline for the banking sector

Cover story: Sudan: Lifeline for the banking sector

  Sudan, one of the largest countries in the heart of Africa, has been struggling to stay afloat economically since the US imposed crippling trade and investment sanctions in 1997. The...

04 October 2018
Involving youth in agriculture in Africa

Involving youth in agriculture in Africa

Africa’s youth bulge presents both an opportunity and a challenge. More must be done to involve youth in agriculture as a means of providing employment, say Johan Burger and MD...

27 September 2018
More Singapore firms venturing into “challenging” Africa

More Singapore firms venturing into “challenging” Africa

It is a “long-term” play, say experts, but there is potential in areas like services, infrastructure

27 September 2018
Manufacturing in Nigeria: Status, challenges and opportunities

Manufacturing in Nigeria: Status, challenges and opportunities

  According to the National Bureau of Statistics (NBS), the Nigerian manufacturing sector is dominated by the production of food, beverages and tobacco, with sugar and bread products generating the greatest...

24 September 2018
Africa Rising will Lift Singapore Boats Too

Africa Rising will Lift Singapore Boats Too

If there is one thing that the recent Africa Singapore Business Forum (ASBF) reminded me of, it is what a polarising prospect the continent remains.

07 September 2018
Unpacking South Korea’s engagement with Africa

Unpacking South Korea’s engagement with Africa

  Following the end of the Korean War in 1953, South Korea prioritised its alliance with the United States in pursuit of economic growth and military security. It took more than...

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Mr Buhari secured 56 per cent of votes cast, compared with the 41 per cent garnered by his main opponent, Atiku Abubakar. In total, he won an electoral majority in 19 of Nigeria's 37 administrative divisions. The ruling APC also secured a majority in both the Senate and the House of Representatives, a clear boost to its policy agenda.

With the post-election dust now beginning to settle, attention has turned to what the contours of a second Buhari term might look like, particularly in relation to the economy. Unlike 2015, there will be no honeymoon period extended to the incoming Buhari regime. Back then, a "Buhari dividend", stemming from the euphoric handover of power, led to an extended period of goodwill. However, a series of policy missteps soon undermined confidence in the economy. Conversely, the external environment is more favourable this time around, with oil prices more buoyant and external factors more supportive.

Against this backdrop, the domestic and international investment community is curious about what the policy priorities of the new administration will be.

Broadly speaking, Mr Buhari will continue to place a strong emphasis on rooting out corruption, infrastructure spending, as well as prioritising fuel and forex stability. Wild deviations from this are unlikely, both in the short term and medium term.

From a monetary policy perspective, the Central Bank of Nigeria governor, Godwin Emefiele, recently had his term extended by another five years. His retention is a first in a Nigerian context - no other central bank governor has stayed on for a second mandate since the advent of democracy in 1999.

An extension of Mr Emefiele's tenure will likely signal the government's persistence with multiple exchange rates in its bid to ensure stability of the naira. As such, a free-floating currency would be highly unlikely. Although businesses will be disappointed by the lack of market-friendly liberalisation policies, some investors would welcome the continuity and certainty another Emefiele term brings. Regardless of who is appointed to head up the apex bank, the policy outlook will remain broadly consistent with the status quo.

POLICY CONTINUATION

Fiscally, the appointment of a new finance minister will also be watched with keen interest. Mr Buhari will likely be quicker in forming his new Cabinet than in 2015, which should be positive for market sentiment. According to a research report by Agusto & Co, Mr Buhari in his second term would have to work to raise revenue while also restructuring government spending. This, it noted, would require politically unpopular but inevitable choices to offset growing fiscal pressures. Here, the key issues remain the adjustment of exchange rates, electricity tariffs and petrol prices - all to reflect market fundamentals. Other key issues such as the minimum wage, VAT increases and power sector reform will also feature strongly, as the government faces pressure from the IMF to step up reform efforts.

This leads to the question about whether Mr Buhari, no longer burdened by the challenge of re-election, will adopt a more market-friendly approach to the economy.

That he is an economic nationalist is no secret. The unorthodox and often draconian manner in which the current administration has dealt with regulatory issues relating to the private sector has rattled investors who remain wary about the unpredictable policy landscape. More than anything else, investors are looking for clear, transparent and coherent policy. Their hope is that Mr Buhari's second stint will be less eventful than the first.

Discussions with the business community in the country indicate there is some optimism that Mr Buhari's second term may see fewer populist inclinations and an environment which is more accommodating of the private sector's agenda.

There are two main reasons for this. First, the context this time around is vastly different from that in 2015. With oil prices more stable and some way off the lows of 2015, there is more room to manoeuvre and consequently scope for a more pragmatic approach. Second is the influence of the vice-president. Markets place a lot of trust and confidence in Yemi Osinbajo and his ability to influence policy in a more reform-oriented direction. Indeed, the biggest shift in policy occurred during Mr Buhari's extended absence when Mr Osinbajo took control of the economy. The continued strong working relationship between the two men has created a sense that a more practical rather than ideological stance to policy will be adopted in Mr Buhari's second term.

While there might be a directional shift, the chances of a major policy pivot are extremely optimistic. That said, working off the current low base and with a more supportive global backdrop, "neutral is now the new good" and may actually be sufficient to revive "animal spirits" and boost investor sentiment.

All considered, the stability brought about by a Buhari victory will facilitate a relatively quick transition and provide a sense of certainty for businesses which had adopted a wait-and-see attitude ahead of the election. With the risk of a messy transition mitigated, attention will shift to the policy landscape and personnel changes, where the most likely scenario is that the country continues to trudge along on its current path. Fiscal and monetary policy will remain broadly consistent, with growth remaining constrained in the absence of meaningful reforms or a major oil price spike.

The writer is a director of Signal Risk. He is also a consulting researcher for the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University (NTU) and the Singapore Business Federation (SBF).

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