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Politics takes centre stage in Nigeria
Thu, 18 Feb 2010 13:35

Nigeria's Acting President, Goodluck Jonathan

With a new acting president, Goodluck Jonathan, in charge and an upcoming general election, politics is set to take the centre stage in Nigeria for the next year or so. Jaco Maritz looks at how this will affect business and investment in the country

Politics in Nigeria has had a turbulent past few months. The problems have revolved around President Umaru Yar'Adua's long absence from office while being treated in a Saudi Arabian hospital for a heart ailment. Yar'Adua, who has not been seen in the country since 23 November 2009, failed to temporarily hand over authority to his Vice President, Goodluck Jonathan. This power vacuum led to a massive public outcry. Protest marches were organised in Lagos, Abuja, London and New York; court cases were filed by some organisations in order to resolve the leadership crisis; and the military even had to deny rumours of a military coup. In addition, the absence of leadership threatened to derail the Niger Delta amnesty programme.

The delay in transferring power to Jonathan hinged largely on contradictory interpretations of the Nigerian Constitution on the issue of succession where the Head of State is incapable of carrying out his duties.

Two weeks ago, in an effort to restore stability to the country, the National Assembly, however, declared that Jonathan would assume full presidential powers pending the return of Yar'Adua.

'The delay in appointing an acting president was a by-product of Nigeria’s hyper ethnic and religious diversity,' says Max Siollun, author of Oil, Politics and Violence: Nigeria's Military Coup Culture (1966-1976). 'With over 250 ethnic groups in Nigeria, the political system has mechanisms to try to include as many of those ethnicities as possible. The ruling political party has an informal arrangement whereby it rotates its presidential candidate between the northern and southern ethnic groups. President Yar'Adua's predecessor, Olusegun Obasanjo, was a southern Christian. Since the south had its 'turn' to produce the president between 1999 and 2007, some felt that a swift transfer of power from Yar’Adua (a northern Muslim) to Jonathan (another southern Christian) would deprive the north of its 'turn' to produce the president. Thus there was hard bargaining behind the scenes to find a compromise. I would not be surprised if come 2011, Jonathan stands down to allow another northern candidate to run for the presidency.'

In his less than two weeks in the hot seat, Jonathan has wasted no time in asserting his authority and getting to work. In his first full day in office he made a minor cabinet shuffle by redeploying the Attorney General of the Federation, Michael Aondoakaa, to the less influential position of Special Duties Minister. Aondoakaa allegedly played a critical role in hindering Jonathan from taking over Yar'Adua’s duties. Jonathan has also asked Nigerians to stop placing congratulatory adverts in the media over his assumption of office as Acting President. He similarly placed a ban on solidarity visits, saying that 'the nation is at a critical juncture where we must begin to focus on solutions to the daunting challenges that confront us'.

2011 general elections

The upcoming 2011 general elections will be a critical test for the strength of Nigeria's democracy. The eyes of the world will be on the country to see if the elections are free and fair with a smooth handover of power.

Siollun thinks the way in which the matters around Yar’Adua’s illness were handled is a good sign of Nigeria’s political stability. 'Nigerian politics has matured considerably since its military rule era. The recent absence of Yar’Adua was the sort of crisis that triggered military coups in the past. It is pertinent that Nigeria's military chiefs came out publicly and declared their loyalty to the government, and urged soldiers to keep out of politics,' Siollun argues.

If the recent gubernatorial election in the eastern state of Anambra is anything to go by, Nigeria is making progress in conducting acceptable elections. The incumbent governor of the state, Peter Obi from the All Progressives Grand Alliance (APGA), managed to emerge victorious following a strong challenge from various rivals. Obi's win was all the more extraordinary given the fact that he defeated the challenge from the ruling People's Democratic Party (PDP) candidate, the former Central Bank of Nigeria (CBN) Governor, Charles Soludo. The election was generally peaceful and seen as the freest and fairest polls conducted by the Independent National Electoral Commission in recent times. After the results were announced, the Acting President told Business Day that 'if the Anambra polls were any guide, then the country is surely getting out of the woods in terms of elections and succession politics'.

'The peaceful and successful organisation of the February 2010 gubernatorial elections in Anambra State is an indication that though we may still have some political, social and economic challenges as a nation, we seem quite capable to handle the outcome of the 2011 general elections in the country,' says Uche Nworah, columnist and author of The Long Harmattan Season. 'Our people fought for the democracy we enjoy today. It would be stupid of this generation to blow the chance we have now through careless electoral acts.'

Business and a change in government

Political risk is a great concern for foreigners looking to do business in Nigeria. A smooth transition of power in 2011 and continuity of policies is therefore of utmost importance if Nigeria wants to keep its much-improved image as a business destination.

When Yar'Adua assumed his position as president in 2007, he reversed many of the former incumbent's decisions. For instance, he lifted Obasanjo's ban on cement importation; he scrapped a contract to build health clinics around the country; and he temporarily suspended a project awarded to a Chinese firm to construct a rail network from Lagos to Kano for further review. It must be said that there were question marks over many of Obasanjo’s policies and contracts, and Yar'Adua's actions were generally welcomed. Investors need stability and any drastic changes in regulatory policies by a new government will certainly be strongly condemned.

Amos Sakaba, director and chief operating officer of the One Stop Investment Centre at the Nigerian Investment Promotion Commission, says there are a number of economic policies that will certainly continue after 2011. 'Government will continue to lay emphasis on infrastructure to support business; government will continue to liberalise, deregulate and make the private sector the driving force of the economy; and government would continue to diversify into the non-oil sectors,' Sakaba explains.

There are also fears that the handover to Jonathan and a subsequent new government in 2011 will disrupt Nigeria's banking sector reforms. In 2009 the CBN, under new Governor Lamido Sanusi, conducted an audit of all Nigeria's 24 banks. It identified nine banks that were undercapitalised, in a poor liquidity position and in what it called a 'grave situation'. The CBN is currently working on recapitalising the banks.

Speaking to CNBC Africa recently, Sanusi said such fears are unfounded. 'I think people need to understand that the Vice President has always been part of this process. He was part of key meetings with the President when the decision was taken in the early stages. And my conviction is that he is totally and strongly in support of this process and he will continue with it exactly as the President has done so far,' he said.

'Those who think he [Jonathan] is going to be soft on corruption are going to be very surprised. I think they are going to find that he is as committed to the struggle as the President was and that he is solidly behind this process,' Sanusi added.

Siollun is also confident that there won't be any drastic changes in government policy. 'The government has been trying to encourage foreign investment, and this goal has seen a massive expansion in the banking sector. All recent Nigerian governments have been committed to privatisation and free market liberalism. There is unlikely to be a significant change in economic policies regardless of who wins the 2011 election,' he says.

Nigeria certainly has significant potential for investment but government needs to make sure that politics don't scare away prospective business people. The handling of the problems around President Yar'Adua's illness demonstrated that the country has the capacity to resolve highly contentious political issues. This positive momentum needs to be kept going into the general elections and beyond.

I think it is too early too tell, but I think Jonathan will have the privilege of knowing the mistakes that UMYR has made, and hopefully not go down the same path.