Post-Election Outlook: Buhari emerges victorious – what next?

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President Muhammadu Buhari has emerged victorious in the 2019 presidential elections-one of the most keenly contested since the beginning of the Fourth Republic in May 1999-winning a total of 15.2 million votes compared to the 11.3 million votes of his main challenger, Atiku Abubakar.

Indeed, much of the nation’s economic activity in recent months have been conducted against the backdrop of electoral uncertainty. Now that the elections have been concluded, and the results announced, the question becomes: what does a second term for President Buhari hold for 2019 and beyond?

Below, we highlight several themes that are likely to play out within the first full year of the president’s second term:

  1. Sustained implementation of Economic Recovery and Growth Plan (ERGP) to support growth at 2.0%
  2. Central Bank governor has a better chance of re-appointment in June
  3. FPI’s to return to the equity market
  4. Expect sustained welfare programs
  5. Post-election events to watch out for

Sustained implementation of Economic Recovery and Growth Plan (ERGP) to support growth at 2.0%

A victory for President Buhari means consolidation of the progress made on economic growth since the recovery from the recession and sharp currency devaluation in 2017. The domestic economy has recorded improvements, albeit sluggishly. The economic expansion by 1.93% YoY in 2018 (vs 2017: 0.82% YoY, 2016: -1.58%) was predicated on the implementation of the ERGP and we expect the sustained execution of this plan throughout 2019 to culminate in a growth of 2.0% YoY. Key tenets of the plan include the diversification of the revenue base through import substitution policies, investments in agriculture, slow and steady progress on refinery expansion among others. However, in our opinion, the slow pace of execution falls short of providing the impetus to propel the economy beyond vapid growth of around 2% levels.

Central Bank governor has a better chance of re-appointment in June

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A Buhari second term signals continuity in prevailing monetary policy for the next four years, all else equal. These policies achieve price and exchange rate stability through routine interventions in the foreign exchange market and an elevated yield environment to attract/retain foreign portfolio investors. The incumbent governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has done a satisfactory job in aligning with the administration’s objective. As such, there is a likelihood to maintain the status quo rather than opt to appoint a new CBN governor. However, there remains the chance that the governor is replaced, as has been the case since 1999 (the inception of the Fourth Republic). The position has changed hands every five (5) years and has so far rotated across four of six geopolitical zones in the country, with the two remaining zones being North Central and North East. Considering the unofficial rotation policy, we believe there is the possibility of the central bank governor being replaced by an appointee from the Northern region.

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Cardinal Stone Research