The recent appreciation of the naira against world currencies on the heels of Nigeria’s presidential election signposts global endorsement of the polls and a welcome handshake to the next government, writes Correspondent, SAM NWOKORO.
All over the world, national elections and change of leadership at national levels are regarded as milestones. Advanced democracies, moreover, keenly watch developments in developing economies, those transiting from state-controlled to market economies, because in today’s global village, human interests and destinies have become intricately interwoven with commerce and politics.
Transnationalism, which welcomed the 21st century, has touched everywhere, reaching Africa. Information and Communication Technology (ICT) has quickened human interaction. Cultures have become almost inter-racial. Dollar, Euro and Pounds Sterling have become globally acceptable currency standard by which national economies gauge their productivity and every other indicator of their systems. The United Nations, notwithstanding her endless struggle against dictatorships, terrorism and other aspects of global security has managed, since 1945, to maintain at least a semblance of global unifying norms and codes to which nations subscribe to run their systems and give humanity a sense of orderliness. Indeed, the recognition and awareness of the concept of global village, never mind the ferocity of religious dogmatism, have become indispensable in the management methods of sovereign matters.
Factors such as debt profile of a nation, the ideological dispositions of the politicians angling for elective posts, the level of investment flows into a country, the Gross Domestic Product (GDP), the key fundamentals of an economy, the political structure upon which the sovereign economy is attached to, the sources of investment flows, per capita income, long and short term policies of incumbent economic managers, the type of prevailing foreign policy and agenda currently in pursuit, the sovereign rating of the economy at the time of national election, and even the credibility profile or otherwise of the state’s economic managers, all contribute in determining the reaction of the global community and key development partners whenever a sovereign election to change government or tenure is held.
In Africa, whose adoption of open economy is newer, the global community is naturally concerned about its presidential elections. No doubt, that is why key stakeholders all over the world reacted promptly at the announcement by President Goodluck Jonathan that he has accepted the result of the election held on March 28, 2015 in which Muhammadu Buhari emerged president-elect.
Acceptance of defeat and the economy
In his speech in which he conceded defeat, the president harped on the need for peace and orderly conduct on the part of politicians and their supporters in the spirit of the peace treaty signed between the leaders and principal candidates of the political parties. He had said: “I promised Nigerians free and fair election. I have kept my words. I have also expanded the space for Nigerians to participate in the democratic process. That is one legacy I would like to see endure.”
It is interpreted in diplomatic circles that a successful election by a nation like Nigeria, with a history of political frictions among its constituent parts and its notorious political class, amounts to a positive rating, even if marginally on its sovereign rating as a nation worthy of investing in.
Jude Anosike, a political scientist told TheNiche in a chat: “The president’s acceptance speech helped to douse tension that attended the presidential election before and after. It helped to throw up Nigeria’s image as one that is adhering to global ways and means. It actually helped the sovereign rating of the country, though nobody was monitoring all that.
“But you should realise that in rating a country, it is not only the economic factors that are considered. The nature of its politics is also considered because politics is just the flipside of economics. If a country’s politics is undemocratic or seen to have a leadership that does not bother about world opinions as you have in North Korea, Iraq, Iran and all these other stubborn autocracies, it affects its sovereign rating, as a place not investment-friendly.
These variables matter a lot and even as there is murmuring here and there about poll tally during the presidential election, the president demonstrated that he would not rubbish his hard-earned reputation by rejecting the INEC results. Such would have the possibility of projecting Nigeria as insensitive to world’s pleas for orderliness during and after election.”
Economic indicators as endorsement
No doubt, certain positive indicators registered as soon as the election result was released. The week following the March 28 presidential election, capital market operators reported that the naira appreciated some notches. From pre-election N195 to a dollar, the slide has been gradual coming down to N192 (official interbank rate).
However, a Lagos trader on gum arabic, Magnus Okpara, attributed the positive slide not to Buhari’s winning of the election, but “the peaceful conclusion of the presidential election”. He explained that what happened between the periods of election from the week preceding the election day up to last week was that “pressure on forex decreased and it registered on the value of the naira marginally over those days”.
“The election was scheduled for February 14 before it was rescheduled to March due to security reasons and INEC’s poor distribution of the voters’ cards. So you could safely see that right from January this year, the election fever has been on, and this particular election created much anxiety.
“Now businesses normally use foreign currencies; in fact virtually many businesses nowadays, since Nigeria started operating on market economy. Most transnational companies, and even local ones, had since this year held back on major investments and unit expansions in the economy, pending the conclusion of the elections. This means that within this period, there was less pressure on foreign currency, hence less pressure on foreign reserves for almost a quarter. So this registered on the value of naira. That was what happened. It is not as if anything has changed much. We are not yet into Buhari’s regime until he is sworn in.
“So the naira appreciation, which may soon cease in the days ahead, has nothing to do with Buhari winning the election, though it is a booster he will inherit and a signal to the president-elect that the international community and Nigeria’s development partners are prepared to do business with him,” he added.
On the other side, while briefing Business Correspondents in Lagos recently, Coordinating Minister of the Economy, Ngozi Okonjo-Iweala, said that Nigeria’s external debt is just about two per cent of the GDP. That registers good note before investors.
According to a business reporter, Greg Akpan, every nation does public relations (PR) about her economy.
His words: “In a liberalised economy of a developing country like Nigeria’s, public officials cannot be expected to be lamenting all the time how bad the economy is. Even in developed economies, figures are managed. As you do house cleaning, you don’t go shouting to everyone that your rooms are the dirtiest. That means you are discouraging the succeeding regime.”
Continuity vs constructivism
Observers of Nigeria’s foreign policy engagement insists that the new government may have little or no option than to follow the present Nigerian foreign policy focus which is to remain non-aligned, still retain Africa as the centrepiece of foreign policy and engage in all United Nations activities that serve her interest as well as that of the Economic Community of West African States (ECOWAS) and African Union (AU) agenda.
However, according to Tony Unegbe, a legal practitioner, “foreign policy is principled and subject to changes and adaption as any country’s interests dictate from time to time. Today, Nigeria is on the global league, in fact being regarded as a regional leader. So she is going to be more visible in the global stage from now on.”
He added that the foreign policy space has changed over the years, as many countries in the world embrace free market and democracy. So multilateralism is now the measure by which any effective foreign policy engagement is assessed.
“Nigeria has just elected a new president who was a military dictator. But he has told the world that he is a repented dictator, and now a democrat. The time he ruled the country, there were no democratic structures and the economy was still state-controlled; in fact it was a command economy. This implies that he is going to be more adaptive and he would need technocrats, not necessarily conventional politicians and civil service careerists as his ambassadors, but people who understand the tone and dynamics of today’s global economy and development.
“He would need someone who would relate well with Nigeria’s priority bilateral relations. He would need to pursue foreign engagements and policies that can add value to the nation’s drive for quick economic growth and recovery. He doesn’t necessarily have to dismantle all the engagements of his predecessors, but he can fine-tune some approaches where necessary. The focus should be getting the best out of our relations with the global community,” said he.
There is the fear that due to the hype on fight against corruption by the incoming government, the issue may end up rupturing relations with some Nigerian partners, even at home, if the agenda is pursued with same military fashion as it happened in 1984 against Second Republic politicians.
Notwithstanding these fears, there is the belief that with seasoned, spirited cabinet members, the military inclinations of Nigeria’s new president could be checked and Nigeria’s commitment to adhere to world’s standards of decency and rule of law achieved.
Says Unegbe: “Economic diplomacy, which the Jonathan administration effectively inaugurated, should be sustained. The thrust is attracting foreign investment and foreign capital for upscale development projects which the funds in the local banks can no longer be able to bankroll in the face of dwindling oil prices. A foreign policy engagement that sustains this momentum is more rewarding. Capitalising on the positive signs as seen in the appreciation of the naira will be more worthwhile.”
