Possible Scenarios for Nigeria’s Upcoming Elections

Nigeria’s general elections were postponed to March 28, 2015 from the originally scheduled date of February 14, 2015. The Electoral Commission cited security concerns as reasons for the postponement. And indeed, against a backdrop of slumping oil prices, the worsening Boko Haram insurgency, and the rising chasm between the North and South, Nigeria’s elections in the next several weeks pose some serious risks to political stability. However, it is important not to underestimate Nigeria’s ability to muddle through, as it has done in previous crises.

Who will win?

What matters in these upcoming elections right now is not yet who will win, but how the losers will react. The two main candidates for president – incumbent Goodluck Jonathan and his opponent Muhammadu Buhari – are evenly split in popularity going into the elections, which means that the outcome of the elections is impossible to predict.

Ultimately, what matters to MNCs is how the country deals with the victory of either candidate and whether or not political stability is maintained in the aftermath. Below is our view on likely post-election scenarios.

What will happen after the elections?

Base Case (65% likelihood): Nigeria will muddle through

  • Scenario: Even with clashes and fierce campaign rhetoric, the majority of Nigerians accept the election results, which stabilizes the political situation and improves business confidence. Despite a delay, the newly elected government enacts economic and political reforms to control the Boko Haram insurgency and adjust the economy to the current low oil price. Nigeria faces tough economic times but remains afloat. The elections strengthen Nigeria’s democracy as, for the first time since 1999, two relatively equal political parties competed against each other and the People’s Democratic Party (PDP), which has held the presidency since the return to democratic rule, faced a legitimate challenger in the All Progressive Congress (APC).
  • Signposts: Election results are not disputed by either party and political leaders ensure that there is no violence from either side.
  • Actions: Executives should prepare to increase investment in expectation of improved performance in 2016 as reforms take hold. They should reconnect with business partners and customers to determine if their confidence and willingness to make longer-term investments has improved after the elections.

Downside (25% likelihood): Nigeria implodes

  • Scenario: The losing party refuses to accept the results, sparking rising tensions between Christians and Muslims and Northerners and Southerners; and among tribal factions. Violence erupts in many areas of the country, including previously stable areas, seriously undermining business confidence and stalling investment .
  • Signposts: APC or PDP supporters (depending on the results) accuse each other of electoral fraud or refuse to accept the election results. Anti-Muslim, anti-Christian rhetoric increases, and intertribal animosity worsens. MEND, a former militant group in the Niger Delta, becomes active again. Boko Haram attacks Lagos.
  • Actions: Business executives should implement contingency plans in case the security situation deteriorates dramatically, including in previously safe areas. They should reconsider targets as rising instability will likely depress demand across industries. 

Upside (10% likelihood): Strong unity results from volatility

  • Scenario: The elections pass peacefully without further disruptions or violence. Economic problems and the Boko Haram insurgency unify Nigerians around a sense of common purpose. The defeated party vows to work closely with the new government and to support the country’s economic and democratic development. Economic reforms are fast-tracked and are generally supported by the population.
  • Signposts: Hostility between political opponents subsides, and the defeated party calls for calm and publicly congratulates the winning party, vowing unity and collaboration. The winning party promises to focus on bridging Nigeria’s economic, social, and religious divides.
  • Actions: Multinational companies should increase investment in the market ahead of the competition; executives should ensure that local partners have the skills, training, and technical capacity to increase sales as demand improves across the board.

For additional insight you can also listen to my recent interview on CNBC Africa – watch the interview here.

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