Democratic poll in Nigeria gives MTN a big boost
Shares surge as operator’s biggest market hands power to former military ruler
MTN’s share price took off this week, rising more than 8% after a largely peaceful election in Nigeria — the group’s biggest single market, in which it has almost 60 million subscribers.
Shares in Africa’s biggest cellular network operator ended at R219.78 on Thursday, nearly R17 higher than the close on Friday last week.
Nigerians elected former military ruler Muhammadu Buhari, who defeated President Goodluck Jonathan, the first victory over an incumbent since independence from the UK in 1960.
“Nigeria has gone through a democratic process which reenforces the country’s outlook,” said Bruce Main, a money manager at Ivy Asset Management. “There is confidence that there are not going to be any major legislative changes. That’s good news for a company like MTN, which gets a huge portion of earnings from Nigeria.”
MTN had 59.9 million subscribers in Nigeria at the end of 2014 and 223 million across all 22 markets. Sales in the country jumped by 12% last year, against a 6.4% increase in total revenue.
Nigerians chose, by a wide margin, an austere former general who once ruled with an iron fist to be their president, amid rising anger over corruption, inequality and a devastating Islamist insurgency in the north.
The election was the most competitive presidential race in Nigeria, one of the world’s largest democracies. Buhari scored nearly 55% of the vote to Jonathan’s 45%. Since the end of military rule in 1999, Nigeria has been governed by a single, dominant party: Jonathan’s People’s Democratic Party.
On Jonathan’s watch, Nigeria has been pounded by Boko Haram, its economic fortunes have plunged with falling oil prices, inequality is rampant and corruption scandals have tarnished the president’s image.
Buhari, while short on specifics for fixing a budget haemorrhaging revenue because of the fall in oil prices, has promised to tackle corruption vigorously, as he did when he was the country’s authoritarian military ruler two decades ago.
That in itself would help an economy that, by one estimate, has lost about $400-billion (R4.8-trillion) because of corruption since independence.
Buhari won in Lagos, Nigeria’s commercial capital. His supporters appear to have been more strongly motivated than those of a president whose reputation had suffered from repeated corruption scandals in his government.
Last year, after the governor of the central bank repeatedly asserted that billions of dollars in oil revenue owed to the treasury was missing, he was removed from his post. The missing funds could amount to “$10.8-billion or $12-billion or $19-billion or $21-billion — we do not know at this point,” the bank governor wrote to the Nigerian Senate before his dismissal, adding that the problem “has been going on for a long time” and could “bring the entire economy to its knees”.
An audit into oil revenues commissioned by the government has yet to be released.
Questions have swirled about how the government allocates crude oil to middlemen who then make huge resale profits. Beyond that, some corrupt officials have been pardoned; others suspected of abusing the public trust have been excused.
Jonathan’s handling of the Boko Haram insurgency, which has lasted nearly six years, has also stirred deep resentment.
In New York, a senior UN official told the Security Council on Monday that Boko Haram has killed more than 7 300 civilians in three states in northern Nigeria since the beginning of last year alone, and UN figures show that 1.5 million people have been displaced in Nigeria and neighbouring countries.
The government’s military campaign against the group has often been brutal as well, with officials and witnesses in the north describing mass killings of civilians by Nigerian soldiers, harrowing detentions of residents, and often little effort to distinguish militants from the innocent.
But this week Jonathan publicly thanked Nigerians for “the great opportunity I was given to lead this country”, congratulat- ed Buhari and said he had kept his word to deliver “free and fair” elections.
“Nobody’s ambition is worth the blood of any Nigerian,” Jonathan said. “The unity, stability and progress of our dear country is more important than anything else.”
Ebere Onwudiwe, a political scientist with the Ken Nnamani Centre for Leadership and Development, said: “It is very significant in our democratic growth, in grounding democracy and consolidating it. We can’t have a one-party democracy. We’re setting a very great example for the rest of the smaller states in Africa.”
Pierre Englebert, an African politics specialist at Pomona College in California, US, said the election result was “a giant leap for democracy in Nigeria and Africa, particularly at a time when many incumbents are trying to alter their constitution to extend their legal term in office”.
On Tuesday evening, jubilant crowds lined bridges and streets in Kano, Buhari’s stronghold in the north.
“I am very, very happy,” said Salu Saleh Mohammed, 19, a student. “I love Buhari. He is good [for] government and national security. He will draw Nigeria from bad government.”
There is confidence that there are not going to be any major legislative changes