Ev­ery­thing’s up in the air as busi­nesses await elec­tions

Finweek English Edition - - INSIDE -

At t his t i me of year, t he warm, har­mat­tan wind is s weep­ing ac r os s West Africa, leav­ing cities dusty and their res­i­dents chok­ing. Nige­ria is as breath­less as any­where. The weather here seems to be an ad­e­quate metaphor for the mood in Africa’s largest econ­omy in the weeks be­fore its pres­i­den­tial elec­tion: choked. Not by t he usual i ntr i ca­cies a nd com­pli­ca­tions of Nige­rian busi­ness, but in­stead by an un­usual lack of ac­tiv­ity.

Pro­cesses that usu­ally take days have slowed to weeks, pro­cesses that usu­ally take weeks have slowed to months. Pro­cesses that usu­ally take months... For­get about it.

This sta­sis is af­fect­ing all ar­eas of life; friends and con­tacts in sec­tors as di­verse as tex­tiles, oil ser­vices and in­fra­struc­ture all re­port the same. There’s no busi­ness to be done, so they’re not do­ing it. In­stead some are on hol­i­day, oth­ers sit ting bored in off ices wait­ing for the phone to ring again. Trans­ac­tion ton­nages are drop­ping, car­goes are mod­est, coun­ter­par­ties aren’t bit­ing.

Ner­vous­ness around the elec­tion ac­counts for the lion’s share of the rea­son why, es­pe­cially af­ter the orig­i­nally slated 14 Fe­bru­ary date was pushed to 28 March, os­ten­si­bly due to se­cu­rity con­cerns re­lat­ing to the Boko Haram in­sur­gency in Nige­ria’s north­east.

As t he t ight­est poll i n Nige­ria’s com­plex and t ur­bu­lent demo­cratic his­tor y, it ’s hard to make busi­ness de­ci­sions when, in a few short weeks, the coun­try could be un­der in­cum­bent Good­luck J onat ha n or Gen­era l Muham­madu Buhari. Or nei­ther, given mut­ter­ings about the pos­si­bil­ity of an in­terim gov­ern­ment.

Re­gard­less of t he out­come, t he af­ter­math of the elec­tion will not be straight­for­ward and is likely to bring with it so­cial un­rest and con­cerns over le­git­i­macy of the re­sult. None of th­ese are con­ducive to cre­at­ing the busi­ness con­di­tions that most in­vestors want when they have cash look­ing for a home.

Then there’s the naira, which has dropped 10% against the rand and 18.6% against the US dollar in the last six months.

Slid­ing prices of big­gest na­tional ex­port crude oil, fears over se­cu­rity and the elec­tion un­cer­tainty have hit the naira hard, while diff icul­ties get­ting hold of US dol­lars have t urned the for­eign ex­change thumb­screws fur­ther on in­ter­na­tional com­pa­nies op­er­at­ing in Nige­ria.

The g r een­back s queeze comes af­ter t he Cen­tral Bank of Nige­ria sold bil­lions of dol­lars in re­serves to sup­port the naira against de­te­ri­o­rat­ing s ent i ment t owards t he countr y ’s pre­vi­ously f lour­ish­ing econ­omy. The bank stopped th­ese dollar auc­tions last month in a bid to main­tain re­serves, and in do­ing so cut off a cru­cial source of dol­lars to com­mer­cial banks.

It’s of­ten said to in­vestors go­ing into Nige­ria that pa­tience is the great­est virtue. For now and for who knows how much longer, that pa­tience is more im­por­tant than ever.

Left: Gen­eral Muham­madu Burhari Right: Good­luck Jonathan

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