Who is likely to win Nigeria’s 2019 presidential election?

So far it appears that the incumbent Muhammadu Buhari will win reelection. According to Africa Confidential:

His street support is still impressive across the north and he remains a force to be reckoned with – even if his APC allies are divided or upset with the primaries or his overall approach to governance. With the powers of incumbency behind him, he may hold the upper hand. Many of the 21 APC governors will also hold this advantage, but more of them will be vulnerable to PDP challengers, especially in Plateau, Kaduna, Kogi, Imo, and perhaps even Lagos and Kano, although these latter two states look stronger for the APC.Screen Shot 2018-11-05 at 3.36.46 PM

Atiku’s deep experience in election matters may outflank Buhari’s APC handlers, but he will need more than just his deep pockets to outbuy or check the APC machine. He will also need to demonstrate genuine public support, mobilised by a major ground operation backed by local PDP networks.

At 71, Atiku is more energetic and comfortable with speaking on the stump than the taciturn, 75-year-old Buhari. That will be important for reaching Nigeria’s social media-savvy voters, who threw their weight behind Buhari in 2015 but have grown frustrated with his slow pace. If the election does end up close, as appears likely, the APC’s control of the security forces may prove pivotal and provoke a crisis. If, however, Atiku does in fact win and the APC respects the result, as Jonathan did in 2015, Nigerians may at least come to feel that elections, however flawed, can lead to change.

And here’s a great report from USIP on the factors at play in Nigeria’s 2019 elections.

 

Incentivizing Workshops as Substitutes for Actual Governing: The Case of Nigeria

This is from the FT:

According to figures released by the ministry, travel was the single biggest government line item from 2012 to 2014, at N248bn ($1.25bn) for the three years combined (the ministry did not provide annual figures). This is equivalent to an extraordinary 18 per cent of total government spending [Emphasis added].

……. A 2012 investigation by Nigerian newspaper Punch found that wealthy Nigerians spent $6.5bn on private planes between 2007 and 2012, making the country the biggest market for them in Africa.

Not all of them were bought with private funds. Under former president Goodluck Jonathan, Nigeria’s Presidential Air Fleet (PAF) acquired several new private jets, bringing its total to 11.

And you know a non-trivial proportion of these “study tours,” conferences, and meetings were either expensive shopping trips on the government’s tab or ploys to earn inflated per diems.

This is an instance where I’d endorse a move to “leapfrog” meetings, workshops, and conferences.

How to increase mass employment in Nigeria (and other developing countries)

David Mckenzie of the Bank writes:

The modal firm size in most developing countries is one worker, consisting of only the owner of the firm. Amongst the firms that do hire additional workers, most hire fewer than ten. In Nigeria survey data indicate that 99.6 percent of firms have fewer than 10 workers. This is in sharp contrast to the United States, where the modal manufacturing firm has 45 workers. Are there constrained entrepreneurs in developing countries with the ability to grow a firm beyond this ten worker threshold? If so, this raises the questions of whether such individuals can be identified in advance, and of whether public policy can help them overcome these constraints to firm growth.

In an attempt to figure out if policy can help grow firms in developing countries, Mackenzie evaluated a program in Nigeria that awarded 1,200 winners about $50,000 each (out of an initial application pool of 24,000; the top 6000 applicants were in the study). See a summary here. And the paper is available here.

………. winning this competition has large positive impacts on both applicants looking to start new firms as well as those aiming to expand existing firms. Three years after applying, new firm applicant winners were 37 percentage points more likely than the control group to be operating a business and 23 percentage points more likely to have a firm with 10 or more workers, while existing firm winners were 20 percentage points more likely to have survived, and 21 percentage points more likely to have a firm with 10 or more workers. Together the 1,200 winners are estimated to have generated 7,000 more jobs than the control group, are innovating more, and are earning higher sales and profits.

Two quick thoughts. First, this is a really cool finding that should get African central bankers excited about how the financial sector can be put to use in boosting mass employment. Second, it is a caution against the odd idea prevalent in development programs of trying to turn poor people into entrepreneurs (see below). The best solution to poverty is jobs. Entrepreneurship is a risk that shouldn’t be imposed on people with already super slim margins of error in terms of income security. As Mckenzie rightly observes:

The results of this evaluation show that a business plan competition can be successful in identifying entrepreneurs with the potential to use the large amounts of capital offered as prizes, and that these individuals appear to be otherwise constrained from realizing this potential. The prize money generates employment and firm growth that would not have otherwise happened. However, the results also highlight the difficulties of picking winners. Conditional on reaching the semi-finalist stage, neither the scores for the business plans, nor individual and business characteristics have much predictive power for predicting which firms will grow faster or benefit most from the program. This remains an area for active research, but also highlights the inherent riskiness of entrepreneurial activity.

How Goodluck Jonathan Lost the Nigerian Election

The Guardian reports:

Previous Nigerian presidents were too cynical to expose themselves to the unpredictable risk of a fair election. The election victories of PDP presidents during the past 16 years have been partially “assisted” by electoral malpractice. That changed when Jonathan nominated Professor Attahiru Jega as the chairman of the Independent National Electoral Commission (Inec) in 2010. Jega vowed to reform Nigeria’s electoral process to ensure free and fair elections.

The former university lecturer exuded calm authority and integrity. He has painstakingly prepared for the task over the past four years by studying the rigging methods used in previous elections, implementing an elaborate system of voter registration, training thousands of electoral staff, and introducing biometric readers to identify voters by reading their thumbprint.

Jonathan created the environment for the emergence of these changes and gave Jega the freedom and authority to conduct reforms that led to a credible election. But by giving Jega a free hand to play fair, he allowed Jega to craft the weapons that were used to oust him from power.

If Nigeria stays on the path towards greater democratic consolidation, Jonathan’s “accidental presidency” will forever remain as one of the variables in the process.

Nigerian President Goodluck Jonathan’s Concession Speech

I thank you all for turning out en-masse for the March 28 General Elections.

I promised the country free and fair elections. I have kept my word. I have also expanded the space for Nigerians to participate in the democratic process. That is one legacy I will like to see endure.

Although some people have expressed mixed feelings about the results announced by the Independent National Electoral Commission (INEC), I urge those who may feel aggrieved to follow due process based on our constitution and our electoral laws, in seeking redress.

As I have always affirmed, nobody’s ambition is worth the blood of any Nigerian. The unity, stability and progress of our dear country is more important than anything else.

I congratulate all Nigerians for successfully going through the process of the March 28th General Elections with the commendable enthusiasm and commitment that was demonstrated nationwide.

I also commend the Security Services for their role in ensuring that the elections were mostly peaceful and violence-free.

To my colleagues in the PDP, I thank you for your support. Today, the PDP should be celebrating rather than mourning. We have established a legacy of democratic freedom, transparency, economic growth and free and fair elections.

For the past 16 years, we have steered the country away from ethnic and regional politics. We created a Pan-Nigerian political party and brought home to our people the realities of economic development and social transformation.

Through patriotism and diligence, we have built the biggest and most patriotic party in Nigerian history. We must stand together as a party and look to the future with renewed optimism.

I thank all Nigerians once again for the great opportunity I was given to lead this country and assure you that I will continue to do my best at the helm of national affairs until the end of my tenure.

I have conveyed my personal best wishes to General Muhammadu Buhari.

May God Almighty continue to bless the Federal Republic of Nigeria.

Source: The Daily Post

Hundreds of South African Mercenaries Fighting Boko Haram

The New York Times reports:

Hundreds of South African mercenaries and hired fighters of other nationalities are playing a decisive role in Nigeria’s military campaign against Boko Haram, operating attack helicopters, armored personnel carriers and fighting to retake towns and villages captured by the Islamist militant group, according to senior officials in the region.

The Nigerian government has not acknowledged the presence of the mercenaries, but a senior government official in northern Nigeria said the South Africans — camped out in a remote portion of the airport in Maiduguri, the city at the heart of Boko Haram’s uprising — conduct most of their operations at night because “they really don’t want to let people know what is going on.”

This does not look good for the $2.3-billion-per-year Nigerian military. It also shows a complete lack of tact on the part of the Goodluck Jonathan administration. I mean, how hard could it have been to launder the South African mercenary involvement through some AU joint task force?

The way I see it, the problem here is not that Nigeria is using foreign fighters (even the mighty U.S. uses mercenaries, and as Tolu Ogunlesi writes in FT, the tide is turning against Boko Haram). The problem is in how they are being used. Is their use short-circuiting accountability chains between Nigerians affected and their government? How is it affecting civilian-military relations? And what will be the long-run consequences on the professionalization of the Nigerian military?

On the upcoming Nigerian elections

On February 14 Nigerians will go to the polls in what is arguably the most important election in the world this year. Here is a (small) collection of things you need to read before then:

1. Alex Thurston has a great backgrounder for CSIS on the upcoming Nigerian elections. Want to know about the coalitions angling for power in Abuja and state capitals all over Nigeria and how ongoing political maneuvers will impact the outcome of the presidential election? Then click here.

2. Earlier this month Nigerian journalist Tolu Ogunlesi wrote an excellent piece for FT that emphasized the fact that this will be Nigeria’s closest and most unpredictable election yet (a point echoed by Zainab Usman, a Nigerian DPhil Candidate at Oxford, over at African Arguments). The level of competition will no doubt put pressure on INEC, and the losing candidate, to ensure that the legitimacy of the process is not tarnished, regardless of the outcome.

3. Brookings has a nice summary of some of the key political and policy issues at stake in this year’s election.

4. In the only detailed forecast that I have seen ahead of the election, DaMina Advisors project that APC’s Rt. Gen. Muhammadu Buhari will win with 51% of the vote (and get 25% in at least 27 states). There have not been any reliable polling data coming out of Nigeria in this election cycle, so take DaMina’s projections with a Naija size grain of salt.

5. And lastly, here is an op-ed from the former Governor of the Central Bank of Nigeria, Charles Soludo, on the economic dimension of this year’s election, as well as incumbent Goodluck Jonathan’s many failures.

If you have suggestions on interesting analyses ahead of the election please do share in the comments section.

Africa’s First City

National Geographic has a fascinating take on Lagos. And since we are just under two months to the next Nigerian elections, here is my favorite paragraph:

When I asked Kola Karim if the federal government’s sorry reputation made Western investors wary of doing business in Lagos, the worldly CEO elaborately dismissed it as a nonissue. Companies partnered with companies, not with bureaucrats, he maintained. “What does government do for you anyway, apart from charging you more taxes?” he said. “Look, it’s not about who rules anymore. Lagos is a train that has left the station. And you can only slow it down—you can’t stop it. So it doesn’t matter who comes next. This is the fun of democracy! It’s not about [President] Goodluck Jonathan! It’s about progress! Forget politics!” [More here]

From a political economy standpoint, one of the most fascinating things to happen in Africa over the last decade or so has been the quiet property rights revolution. In Nigeria, and a few other African countries, millionaires and billionaires have come out of the woodwork, willing to have their estimated net worth published in Forbes and other similar magazines for all to see. Very few of them have been politicians. Yes, many made their money in no small measure because of their political connections. But the fact that they no longer feel the need to hide their wealth from the ever changing political class means a lot.

It means that entrepreneurship and politics are getting decoupled in Africa’s biggest and most important economies. This transition is important because it will allow the magic of specialization to flourish. For instance, Dangote must be a savvy entrepreneur. But I doubt that he would have created as many jobs across the Continent if he also had to worry about running Abuja.

Also, it matters that Forbes’ Africa list is increasingly dominated by politically relevant high net worth individuals, as opposed to “apolitical” migrant businesspeople. Dangote is Nigerian “through and through.” When the going gets tough, he is more likely to voice his concerns than simply exit. The chaps in Abuja can’t simply revoke his visa or work permit. His political views therefore matter a lot.

One hopes that at some point Nigeria’s Dangotes will start investing in higher quality political talent to ease the cost of doing business and improve human welfare through greater investment in public goods.  But of course there is another possible equilibrium path in which they decide that low quality political talent is what’s best for their business prospects.

Either way I hope to visit Lagos soon.

Africa’s newfound love with creditors: Bond bubble in the making?

I know it is increasingly becoming not kosher to put a damper on the Africa Rising narrative (these guys missed the memo, H/T Vanessa) but here is a much needed caution from Joe Stiglitz and Hamid Rashid, over at Project Syndicate, on SSA’s emerging appetite for private market debt (Africa needs US $90b for infrastructure; it can only raise $60 through taxes, FDI and concessional loans):

To the extent that this new lending is based on Africa’s strengthening economic fundamentals, the recent spate of sovereign-bond issues is a welcome sign. But here, as elsewhere, the record of private-sector credit assessments should leave one wary. So, are shortsighted financial markets, working with shortsighted governments, laying the groundwork for the world’s next debt crisis?

…….Evidence of either irrational exuberance or market expectations of a bailout is already mounting. How else can one explain Zambia’s ability to lock in a rate that was lower than the yield on a Spanish bond issue, even though Spain’s [which is not Uganda…] credit rating is four grades higher? Indeed, except for Namibia, all of these Sub-Saharan sovereign-bond issuers have “speculative” credit ratings, putting their issues in the “junk bond” category and signaling significant default risk.

The risks are real, especially when you consider the exposure to global commodity prices among the ten African countries that have floated bonds so far – Ghana, Gabon, the Democratic Republic of the Congo, Côte d’Ivoire, Senegal, Angola, Nigeria, Namibia, Zambia, and Tanzania.

In order to justify the exposure to the relatively higher risk and lending rates on the bond market (average debt period 11.2 years at 6.2% compared to 28.7 years at 1.6% for concessional loans) African governments must ensure prudent investment in sectors that will yield the biggest bang for the buck. And that also means having elaborate plans for specific projects with adequate consideration of the risks involved.

Here in Zambia (which is heavily dependent on Copper prices), the Finance Minister recently had to come out to defend how the country is using the $750 million it raised last year on the bond market (2013-14 budget here). Apparently there was no comprehensive plan for the cash so some of the money is still in the bank awaiting allocation to projects (It better be earning net positive real interest).

“They are fighting each other. By the time they have projects to finance, they will have earned quite a lot of interest from the Eurobond money they deposited. So, all the money is being used properly,” he [Finance Minister] said.

Following the initial success the country’s public sector plans to absorb another $4.5b in debt that will raise debt/GDP ratio from current ~25% to 30%. One hopes that there will be better (prior) planning this time round.

Indeed, last month FT had a story on growing fears over an Emerging (and Frontier) Markets bond bubble which had the following opening paragraph:

As far as financial follies go, tulip mania takes some beating. But future economic historians may look back at the time when investors financed a convention centre in Rwanda as the moment that the rush into emerging market bonds became frothy.

The piece also highlights the fact that the new rush to lend to African governments is not entirely driven by fundamentals – It is also a result of excess liquidity occasioned by ongoing quantitative easing in the wake of the Great Recession.

I remain optimistic about the incentive system that private borrowing will create for African governments (profit motive of creditors demands for sound macro management) and the potential for this to result in a nice virtuous cycle (if there is one thing I learned in Prof. Shiller’s class, it is the power of positive feedback in the markets).

But I also hope that when the big three “global” central banks start mopping up the cash they have been throwing around we won’t have a repeat of the 1980s, or worse, a cross between the 1980s (largely sovereign defaults) and the 1990s (largely private sector defaults) if the African private sector manages to get in on the action.

African governments, please proceed with caution.

The politics of reforming Nigeria’s oil sector

Nigerian legislators are attempting the impossible – to reform the management of their nation’s biggest cash cow – and failing. Decades of mismanagement and grand corruption have left Nigeria’s oil sector with entrenched and convoluted interests that are almost impossible to untangle and dislodge.

Africa Confidential reports:

Efforts towards comprehensive reform of Nigeria’s oil and gas industry are in tatters some five years after the first version of the Petroleum Industry Bill was presented to Parliament. After several redrafts, the PIB is still on the floor of the National Assembly and at the centre of partisan disputes, as parliamentarians pick over clauses which they claim favour one region of the country over another.Meanwhile, well connected companies and officials continue to benefit from an opaque system of management and operation that has allowed as much as US$100 billion to be siphoned off from state oil and gas revenue over the past decade, according to a report drawn up by the former anti-corruption czar, Nuhu Ribadu (AC Vol 53 No 9).

The failure to pass the reforms mooted in the PIB, which was intended to boost accountability and state revenue from exports, has developmental as well as financial costs. Nigeria has been unable to conduct a licensing round to award new blocks since 2007 because of uncertainties about new regulations and fiscal terms. This has limited new investment, raising the possibility that production capacity, which has been fixed at around 2.5 million barrels per day for a decade, could start to fall in the next few years.

More on this here.

Reason for African Petro-Rulers to be Worried

Africa’s petrorulers (heads of state of Angola, Cameroon, Chad, Congo-Brazzaville, Equatorial Guinea, Gabon, Ghana, Nigeria, South Sudan, and Sudan) may be headed for tough times later this year. According to a piece by (Steve Levine) over at FP, Saudi Arabia – the world’s leading oil producer – is considering flooding the global oil markets with the aim of sticking it to the Russians and Iranians. Saudi action of this nature could lower prices to as low as US $40 a barrel from the current $83.27.

With the exception of Ghana and Cameroon, such a drop in oil prices would almost certainly lead to political unrest in the rest of Africa’s oil producers. Sudan and South Sudan are already facing huge revenue shortfalls due to a dispute over the sharing of oil revenue.

More on “The Coming Oil Crash” here.

Inequality, Terrorism and Governance in Nigeria

On June 17th Nigeria experienced its first ever suicide bomb attack. Boko Haram, a militant Islamic group that seeks the imposition of Sharia Law in all of northern Nigeria, claimed responsibility for the attack.

Although the group’s principal aim – at least according to its press releases – is the imposition of Sharia Law, its motivating factors include economic, social and governance issues that the Nigeria’s infamously kleptocratic elite have so far chosen to ignore. According to the Christian Science Monitor:

The “nationalization” of the Boko Haram problem will intensify pressure on elected leaders and security forces to deal decisively with the group and prevent further attacks. Nigerian officials have proposed solutions ranging from crackdowns to outreach programs to amnesty offers. The government has to some extent pursued all of these options. Yesterday former Kano State GovernorIbrahim Shekarauproposed a hybrid approach of sorts, which would rely on intelligence gathering to defeat the group while advancing employment programs to deal with social and political grievances in Northern society.

Whatever course the government pursues, the Boko Haram problem has already led several Northern leaders, including the newly elected Governor Kashim Shettima of Borno State, to speak quite bluntly about the North’s serious problems of economic stagnation and political isolation. Northerners have been voicing such concerns for some time, but perhaps now these concerns will reach a broader audience and stimulate a debate that goes beyond just the issue of Boko Haram.

Since the unification of Nigeria in 1914, the north has continued to lag the south in a number of socio-economic indicators. Years of military rule by northern generals did not make things any better. Most of the country’s oil revenue wound up in Swiss bank accounts and as investments in properties in European cities – even as regular folk in Kano, Katsina and Maiduguri, and in the wider northern region, continued to wallow in poverty.

In a sense Boko Haram and its ghastly attacks on civilians and government installations is as much a rejection of Western/Christian education (its name loosely translates to non-Islamic education is a sin) as it is an indictment of northern Nigeria’s leadership. Even by Nigerian standards, the north is doing very badly.

Recently, the governor of Nigeria’s Central Bank, Professor Chukwuma Soludo, chastised the northern elite by noting that the “high and persisting level of poverty in the country is a northern phenomenon.” Nearly all northern states in Nigeria have poverty rates higher than 60%, with some at 90%. Prof. Soludo further added that “if you look at all the indications of development, what constitutes today the North seems to be lagging far behind that the gaps seem to have even widened.

It is hard to ignore the fact that regular southerners are inching ahead of their northern counterparts despite the generous revenue sharing arrangements among Nigeria’s 36 states.

What does this mean for national politics and governance in Nigeria?

Well, for one we know that the apparent north-south political divide in the last election was merely an artifact of presidential politics. Gubernatorial elections revealed that northern elites are also aboard Goodluck Jonathan’s gravy train.

Northern Nigerian elites are as much a problem in the north’s underdevelopment as the historical north-south divide.

In light of this, groups like Boko Haram show that the northern elite in Nigeria can no longer play the north-south card while keeping all the money from the national treasury to themselves. The men and women on the streets and in northern rural areas also want their cut.

I hope Abuja will not bury its head in the sand and pretend that Boko Haram is purely a security problem.

Kenya tried doing the same with the Mungiki group (with extra-judicial executions and all) without much success.

To Abuja I say: you must try to solve the problem you have, not the one you wish you had.

All politics is local, and more

Many have seen the BBC map below of the outcome of the just-concluded Nigerian presidential elections. The south voted for incumbent Jonathan while the north went for Buhari.

The state elections were a different kettle of fish. In these elections the president’s party – the PDP – held its own in the north. Available results show that PDP candidates won in Bauchi, Kaduna, Niger, Gombe, Kebbi, Jigawa, Kano and Buhari’s home state Katsina – in total eight out of the 12 states shaded blue in the picture above.

How is this possible, given the clear north-south divide in the presidential vote?

The answer to this question is threefold (and is here).

First, all politics is local. Given that both the PDP and CPC rode on personality politics with little ideological differentiation, once the presidential race was settled the game reverted back to local personality politics. PDP bigwigs could therefore hold their own in most of these states based on their own local connections.

Second, it could be due to the sequencing of Nigerian elections. In Nigeria, the gubernatorial elections take place weeks after the presidential election. Because patronage politics is the only real game in town, the rational thing for voters to do is pick the president’s man for governorship. This way one can increase the probability that pork will flow to one’s state when President Jonathan sets out to reward those who voted for him and the PDP.

Third, Jonathan might have panicked about having lost the north in the presidential election and therefore put extra effort into winning as many gubernatorial races as he could in the north in order to guarantee his administration a sense of national legitimacy.

In a sense the gubernatorial results are encouraging. It is calming to know that there are powerful local elites in northern Nigeria who are willing and able to work with Jonathan to help Nigeria realize its potential.

goodluck jonathan poised to win nigeria’s election

The Daily Nation reports:

Nigerian President Goodluck Jonathan has taken a wide lead in elections in Africa’s most populous nation, results showed today, putting him on a possible course for a first-round victory.

Millions of voters turned out for Saturday’s election as Africa’s most populous country bid to put years of rigging and badly flawed ballots behind it and hold the cleanest polls for head of state in nearly two decades.

Observers gave the polls an initial thumbs up, but concerns were raised over regional divisions, a scenario many analysts had hoped to avoid in a country as fractious as Nigeria, roughly split between Christians and Muslims.

Results from 30 states showed Jonathan had won 20, while ex-military ruler Muhammadu Buhari had nine and the former head of the anti-graft agency, Nuhu Ribadu, had one state.

Mr. Jonathan’s cross-national victories are a good omen for Nigerian unity moving forward. Now the big question is how Mr. Jonathan and the PDP will govern. Top on the agenda will be Nigeria’s energy problems. Sub Saharan Africa’s largest oil producer also happens to be one of its biggest importers of refined oil products. No new refineries have been built in the country in ages. The country also suffers frequent power outages despite the fact that millions of cubic metres of gas get flared in its oil fields daily. About 23 billion cubic metres get flared annually in Nigeria (second only to Russia).

That is 23 billion cubic metres of gas that can be harnessed for power production or LPG.

nigeria holds first transparent election since 1993

The last time Nigeria had a transparent election was in 1993. Then, opposition leader Moshood Abiola won the election only to be denied the chance to lead Nigeria by strongman Ibrahim Babangida. Mr. Abiola died in jail in 1998. Nigerians had to wait until May of 1999 to see the end of kleptocratic military rule. Mr. Olesegun Obasanjo, a former military ruler, was Nigeria’s first elected president since the early 1980s. His party (Mr. Obasanjo’s) the People’s Democratic Party (PDP) has since then won two elections under questionable circumstances, to put it mildly.

The latest election appears to be different.

Initial results show that PDP is set for a thumping in the legislative and governorship races, although its presidential candidate (Goodluck Jonathan) is still the front-runner with 62% approval rating.

Credit goes to Attahiru Jega, a professor of Political Science and head of the Independent National Electoral Commission (INEC), for ensuring that the Nigerian elections have credibility both at home and abroad.

Watch this space for the results of the gubernatorial and presidential elections in the coming weeks.