The macroeconomic environment is closely linked to politico-economic activities. Political stability and economic prosperity are intertwined. A deep dive into growth trends during previous election years show GDP growth figures for 2007, 2011, 2015 and 2019 were 6.6% y/y, 5.3%y/y, 2.7% y/y and 2.3% y/y respectively. In 2015, the economic shock from slippage in global oil prices was the core reason for the slower pace of growth.
However, a y/y uptick was recorded in the growth figure for 2019 which was eventually reversed by the impact of the emergence of the COVID-19 pandemic. Three election cycles ago i.e. 2011, the outperformers in terms of sectorial growth were telecommunications and technology services, trade, construction and the segment which captures ‘hotels and restaurants’. As for 2015, the pace of growth for most sectors slowed visibly.
The build-up to elections can result in a flight of foreign portfolio investors. This occurs when a serious contender has an anti-business agenda or where markets fear a very close result challenged on the streets and in the courts.
However, it is worth noting that the principal, non-electoral reason for current net outflows has been largely due to economic conditions triggered by the COVID-19 pandemic which peaked in 2020 and were exacerbated by the trickle-down effects of the ongoing Russia-Ukraine crisis. Given the preference for relatively safe and liquid assets with low price volatility, foreign investors remain on the sidelines while monitoring the macroeconomic environment, as well as gaining clarity on policy direction on the back of the imminent transition.
Turning attention to voter attitude, based on data from INEC, 68.83 million Nigerians registered to vote in the 2015 general elections. However, the election recorded only 29.43 million votes cast, representing a 42.8% voter turnout. Meanwhile, 84 million Nigerians registered to vote in the 2019 general elections with 28.61 million votes cast, which is an abysmal 35% voter turnout.
The most recent presidential elections in Kenya recorded a voter turnout of 56%, Ghana recorded a voter turnout of 79% in 2020, while Liberia had a voter turnout of 56% in its 2017 elections.
This year, industry sources suggest that 93.46 million Nigerians are registered to vote. If we go by the visible passion (regarding the 2023 elections) expressed by nationals via social media and other media platforms, there are expectations that voter turnout in 2023 will be considerably high. Indeed, receiving the permanent voters’ card (PVC) is a laudable step but this is futile if the card is not utilized on election day.
Insights drawn from the respective manifestos of the frontline candidates give a glimpse (to an extent) into their views around select macroeconomic themes. Regarding market orientation, the manifestos of the three major candidates are similarly aligned and contain plans to strengthen the private sector as well as improve social welfare.
On fiscal discipline, the major candidates are eager to ensure fiscal discipline to varying degrees. However, there are indications that two of the three may have a more expansionary stance with regard to fiscal policy. On taxation, there was minimal detail in their manifestos. However, one of the major candidates has plans to review the corporate tax downwards but all three have indicated a willingness to utilize tax credits and tax holidays to boost domestic manufacturing.
As for focus areas from a sectorial perspective, emphasis was placed on the agriculture sector by all the major candidates. In no particular order, each manifesto provides a deliberate focus on boosting agriculture activities. The plans include privatizing the commodities exchange, developing agricultural commodity boards, farm cooperatives and grain reserves as well as providing support for small-scale agriculturists. For the manufacturing sector, the three major candidates placed emphasis on production–centered growth, support for SMEs, and plans to foster competition and develop regional industrial hubs.
Upgrading the country’s infrastructure was central in all the manifestos, and the plans proposed by the candidates largely revolve around attracting investments into key infrastructure areas like housing, power and transportation.
The oil and gas sector remains a priority sector in Nigeria. For this sector, the plans range from harnessing Nigeria’s domestic gas potential to privatizing all government-owned refineries and incentivizing indigenous participation in the upstream oil and gas industry. The three major candidates all expressed intent to end the subsidy regime.
Nigeria does not suffer from a lack of policy creation or a buffet of strategic plans, it is the absence of effective implementation that is the core issue.
Active steps including proper implementation of reforms and policies are required to navigate the current hazy macroeconomic environment and as such, the new administration must be ready to roll up its sleeves and apply the right economic/policy tools that would serve as defibrillators to resuscitate weak areas of the economy.
