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Protest intensity in 2022 and Q1 2023* 2022 Q1 2023Cost of living : Low LowAll protest: Low Low
Cost-of-living protest risk in 2023*Wage protest: MediumFood/fuel policy protests: High
*Note: Protest intensity is calculated based on ACLED. Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of calculations, see the introductory essay.
Assuming that President-Elect and veteran political fixer Bola Tinubu of the All-Progressives Congress party is sworn in on May 29, he faces twin legal challenges from Atiku Abubakar of the People’s Democratic Party and Peter Obi of the Labour Party alleging election fraud.
In fact, as leader of Africa’s largest economy Tinubu will be confronted by a series of seeming intractable problems including breathing life into Nigeria’s
moribund economy. Nigerian GDP grew by 3.1% in 2022, down from 3.4% in 2021, barely keeping pace with the estimated 3% annual growth in the country’s population – now thought to be in the region of 220 million. But the picture is considerably bleaker than even these figures suggest.
Over the past seven years, the Nigerian economy has suffered two recessions, reducing economic growth to an average of 1.1% a year, less than the amount needed to keep pace with population growth. During that time, an estimated 133 million people – 63% of the population – have been pushed into poverty, defined as living on less than USD2 a day.
The COVID-19 pandemic, and the fallout from the Russia/Ukraine crisis from February 2020, have both had a negative impact on Nigeria’s economic performance. Yet the malaise runs far deeper than the impact of these external shocks. Under the eight-year rule of former President Muhammadu Buhari, the economy persistently under-performed, oil output stagnated, public debt quadrupled, the naira exchange rate tumbled, and inflation hit double digits.
Tinubu, whose campaign slogan “It’s my turn”, has pledged to kick-start the economy, abolish the fuel subsidy costing the federal government around USD10 billion a year, and bring an end to the climate of insecurity that saw violent secessionist movements in the southeast, an explosion of banditry in the northwest, persistent Islamic extremism in the northeast, and murderous sectarian conflict between Christian farmers and Islamic pastoralists in the middle belt.
Buhari failed to deliver on his election pledges to end corruption, insecurity and inequality, leaving the country in a far more perilous state than he found it, and there is little confidence that Tinubu will do any better.
The February decision by Paris-based Financial Action Task Force (FATF) to place Nigeria (and South Africa, which was listed at the same time) on its anti-money laundering ‘grey list’ is likely to prompt a marked deterioration in the cost of doing business. The grey-listing follows failures by both countries to meet their international obligations to reduce money laundering and the financing of terrorism, and to eliminate other financial crimes.
Both countries will now be subject to enhanced surveillance by the FATF, likely making sending money offshore and transacting with global banks and other international financial institutions considerably more expensive. The FATF is a G7 initiative that sets standards for some 200 countries, but the practice of grey-listing has negative effects on a country’s economy as fund managers must apply great due diligence before investing, which invariably leads to capital outflows.
In this context of greater uncertainty, it is likely risk of expropriation in Nigeria will rise, if only until such time as the uncertainty can be reduced and the country can move off the FATF list.
Tinubu was declared victor of Nigeria’s seventh elections since the return to civilian rule in 1999, with 37% of the votes cast. Abubakar came second with 29%, while Obi received 25%. But the turnout was a mere 29%, meaning that only 25 million of the 87 million people who registered to vote actually did so. Consequently, Tinubu became president-elect with only 8.7 million votes, while more than 15 million voters cast ballots for opposition candidates, hence the accusations of electoral fraud.
The election itself was marred by violent incidents, delays at polling stations and chaotic tallying of votes. International observers criticised the Nigerian election commission of poor planning and incompetence in counting the votes but stopped short of accusing the commission of vote-rigging. But there will now be months of uncertainty while the court reaches a verdict, which runs the risk of triggering large-scale violence.
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Nigeria inaugurated a new national counter-terrorism centre in March, in an effort to improve the coordination of national security and counter-terrorism strategy. This comes some 14 years after the eruption of the Boko Haram Islamic insurgency movement in 2009, which led to a marked deterioration in national security that saw 65,000 people killed, 2.1 million displaced, and vast increases in security expenditure, the latter to little avail.
Under President Buhari’s watch, Islamic militancy, sectarian conflict, banditry, kidnapping for ransom, oil theft, and secessionist violence erupted across great swathes of the country, ruining lives, destroying property and infrastructure, laying waste to millions of acres of agriculture, and leading to a marked deterioration of the quality of life for tens of millions of Nigerians.
Nigeria has a poor track record of policy coordination and, while the new counter-terrorism centre may improve things, the country’s record to date is so abysmal under eight years of Buhari rule that expectations are low.
Access to foreign exchange, especially U.S. dollars, is likely to remain heavily restricted. Moreover, unless the federal government improves its anti-money laundering and countering-the-financing-of-terrorism legislation, Nigeria could become the target of sanctions.
The exchange rate for the naira, which stood at 197 to the US dollar when Buhari took up office in 2015, had fallen to 750 to the dollar by the time he left office in 2023, putting many imports out of reach.
Inflation rose to 21.9% in February from 21.8% in January – the tenth consecutive monthly rise to an almost 18-year high – forcing the Central Bank of Nigeria to raise interest rates by 50 basis points to 18% in March. This is the latest in a string of benchmark rate rises as the monetary authorities struggle to control runaway inflation.
Inflationary pressures were particularly pronounced on key staples – made considerably worse by food shortages caused by the recent debilitating floods – which saw sharp increases in the price of bread, oil and fat, cereals, potatoes, yams, fruit, fish, meat, and vegetables. This has also seen mounting concern over the tens of millions of Nigerians being pushed into food insecurity.
Nigeria’s debt burden under Buhari rose from 12.5 trillion naira in 2015 to 48 trillion naira in 2023, greatly increasing the federal government’s debt servicing costs. Increased borrowing – domestic and foreign – fuelled ever-increasing federal budgets, which rose from 4.5 trillion naira to 20 trillion naira over the same period. This is a clear indication the country is living beyond its means, although the risk of a sovereign default remains small.
Returning to policies of debt sustainability and balanced budgets will be among the priorities of the new administration, along with boosting Nigeria’s flagging oil production, which has fallen to 1.2 million barrels per day – below its OPEC quota of 1.8 million barrels per day and less than the output of Angola. This is as a result of escalating oil theft and vandalism, and long-term under-investment.
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