by Kaisa Stucke, CFA
Nigeria will hold its presidential election on March 28, following a six-week postponement due to heavy fighting in the northern region of the country. The election promises to be a close one between the incumbent, Goodluck Jonathan, and a former military leader, Muhammadu Buhari. Jonathan represents the Christian, southern region of Nigeria, while Buhari represents the Muslim, northern region.
In the past, Nigeria has alternated between electing presidents from the north and south. The likely outcome from the upcoming election suggests that this pattern will not hold in the future. Consequently, the risk of civil unrest would increase.
Once hailed as one of the most promising emerging markets, Nigeria’s social stability, economics and democratic process have been challenged by insurgent fighting and the weak energy markets. The recent oil price collapse has had an outsized effect on Nigeria’s economy as more than 70% of the country’s revenues are derived from oil. As oil prices have collapsed, so has the local currency.
Aside from the economic problems, the country is also fighting the radical Islamic insurgency Boko Haram. The group has grown in size and danger since we last wrote about it. It has evolved from staging stand-alone terrorist attacks and kidnappings to holding meaningful territory under its control in northern Nigeria. The current government’s lack of attention to the fighting and its inability to defeat the group has caused a lack of confidence in the government in general. Recently, however, the incumbent president has intensified the military’s involvement ahead of the election and the fight against Boko Haram has been somewhat succesful.
This week, we will look at the upcoming Nigerian presidential election and how the persistent threat of the Boko Haram terrorist movement has complicated the democratic process. In turn, we will look back at the 2011 presidential election and analyze how the election facilitated the rapid spread of Boko Haram. Exacerbating matters further, the country suffers from a deepening divide between the Christian south and the Islamic north, which we will discuss in detail in this report. As always we will conclude with market ramifications.