Nigeria President Buhari returned on Saturday after being away in the United Kingdom for over 100 days on medical vacation.
His return has been cheered by a lot of his supporters while his critics still believe he should have been more transparent about his illness and should have even resigned.
He also gave a speech earlier on Monday, focusing mainly on security threats and ethnic tensions brewing across the country. Surely, political stability and security are also critical pointers towards investor confidence, so investors will also be looking to see how he responds to the growing threats across the country.
However, his absence hasn’t been negative as the stock market has rallied to gain over 40%, thus becoming the best performing stock market in the world.
Now that he is back, investors will be assessing the impact of his return and if there could be positives for the economy. We found a few we would like to share.
Cabinet Reshuffle – Since the initial appointment of the cabinet in late 2015, the Buhari Administration is yet to change any member of his cabinet except for those who left voluntarily. Presidents typically embark on cabinet reshuffle in the second half of their 4-year term, so we will not be surprised to see a movement in this direction.,
Oil Licensing – The NNPC are expected to conduct new oil licensing rounds sometimes this year following the expiration of some of the oil mining licenses issued by the previous Jonathan administration. Reports suggest about 11 oil blocs licenses expired in 2016 and are yet to be renewed. The President could expedite the renewal of these licenses especially as portions of the PIB has now been signed into law.
Infrastructural development – The Federal Government earmarked about N2 trillion as capital expenditure spending for 2016. Achieving this will be a tall order considering the revenue shortfall currently being experienced by the government. However, with Buhari around, it is hoped that he can provide the leadership required to ensure priority projects are treated as such.
Forex unification – Much of the surge in the Nigerian stock market has been largely attributed to the introduction of the investor/exporter exchange rate window. President Buhari’s opinion about the handling of the exchange rate is well-known. The president has often voiced out his preference for a fixed exchange rate regime, believing that frequent depreciation of the naira has not strengthened the exchange rate. However, the economic crisis of the last two years has taught us many lessons, one of which is that you cannot control your exchange rate policy and expect to control the inflow of forex from investors. Now that the CBN Governor has given foreign investors what they want expectations are now beginning to shift towards a unification of the several exchange rate bands that we have in the country. Buhari could obviously be an enabler or a disrupting element depending on how is expectation is managed. Any suggestion or rhetoric that gives an impression that he doesn’t support the current FX policies could throw the market into turmoil.