Background
The PDP as a party had been instrumental to the economic renaissance of the Nigerian economy over the last 17 years. Nigeria’s GDP grew from around 40 billion dollars in 1999 to a staggering 520 billion dollars by 2015. All Nigerian heads of state under the PDP grew the Nigerian economy by significant amounts. The Yar Adua government faced a far more threatening global economic downturn than the economy inherited by President Buhari. President Yar Adua’s government however had a number of blessings. It inherited (1) low debt (2) low debt service obligations and (3) over 60 billion dollars from its predecessor which enabled it to stabilize the value of the Naira and allowed the FG to continue to stimulate the Nigerian economy. It also inherited a fairly competent CBN governor from its predecessor and within a year appointed its very own very competent CBN governor to help with monetary policy and the stabilization of the banking sector. The mix of fiscal and monetary policies helped to sustain the growth trajectory of the Nigerian economy. President Buhari by contrast inherited relatively sparse savings, huge debts, high debt service obligations, an incompetent CBN governor and an unrealistic and fanciful fiscal policy team. President Buhari did not help himself when he spent 6 months being a sole administrator and appointed ministers and basically gave them a budget already determined before his ministers were appointed.
Recently, it was reported that the CBN governor (when testifying to the senate) expressed surprise that the Nigerian economy is being afflicted with stagnation and hyper-inflation at the same time. As I had indicated many times in the past, inflation caused by a markedly declining value of the NAIRA (imported inflation) cannot be cured by restrictive and contractionary monetary policies (like very high interest rates and high cash reserves ratio) that kills domestic industries, discourage investments and discourages borrowing by companies and customers alike. All he would get is very little domestic economic activity and still have hyper inflation.
The CBN governor has succeeded in employing a bad FX policy that all but chased away foreign investors and with them went huge foreign currency inflows and has succeeded in thoroughly depressing the domestic economy. The fiscal policy response by the Buhari government was predicated on a FG based stimulus package aimed at expanding the domestic economy. The problem was that the policies of the CBN ensured that FG income from the ports, customs and FIRS (all of which accounts for 50% of FG income) would be significantly reduced. The fall in oil price and the sabotage of the oil installations by the Niger delta avengers has ensured that oil derived FG revenue (which accounts for over 90% of FG externally derived foreign exchange and 50% of FG revenue) has also been significantly slashed. The projected borrowing envisaged by the Buhari government will not fly because no commercial lender or savvy investor will advance money to an entity that has very high debt service obligations and collapsing incomes flows. Points made by me in a number of articles published over the last year.
Critical Electoral Zones
As indicated in previous articles, the critical parts of the Nigerian electorate are the North Central and the South West. They are what I will call the pragmatic zones and they will determine who governs the country in 2019. The NW and NE and the SS and SE are the dogmatic zones. Their support or opposition are more emotional than reasonable. The NW and NE are pro APC and the SE and SS are anti APC and pro PDP. The NC and SW tend to move in similar directions politically based on policies of the government of the day. The most recent NOI polls therefore should make alarming reading for the current APC government. The breakdown vis a vis geo-political zones shows that the total percentage of people that disapprove or strongly disapprove of the performance of President Buhari have reached:
63% for the SE
58% for NC
54% for the SS
52% for SW
22% for the NE
15% for the NW
Buhari has effectively reduced his electoral map back to the map he had before his CPC merged with the ANPP and ACN. The question to be asked is whether these numbers will stay the same up and until 2019. I am of the view that the figures for the dogmatic zones will. The critical analysis is whether the figures for the pragmatic zones will stay the same.
I am of the belief that the adverse state of the economy, the security situation flowing from the activities of the herdsmen and militants and the increasing perception of a creeping Northernisation and nepotism of the federal government has adversely affected the perception of the Buhari government by the SW electorate. All but the economy can still be addressed by the FG before 2019. The economy in my view will not. The CBN governor’s term runs out in 2019. The man is clearly incompetent and the effect of his incompetence will override everything that can be done by the fiscal management of the economy under Mr Udoma (minister of budget and national planning). The only way the economy can improve is if oil prices go back up to over 120 dollars a barrel which will allow the FG to spend its way out of trouble and the Niger delta militants stop sabotaging Nigeria’s export capability. The former is most unlikely and the later remains a possibility. For the NC, the activities of the herdsmen and the performance of the economy seems to me to be the vital factors there. My analysis on the economy has been made. All now depends on whether the NC can be made to feel secure having a Fulani as head of state in the middle of large scale massacres all over the NC by his kinsmen. On the herdsmen issue, proactive measures can still be taken to shift the perception of the NC on this issue. I do not envisage any change to the economy with the present CBN governor still in place and the state of the oil market as it currently is.
PDP
In my view, Buhari has a 80% chance of being defeated in 2019 should he seek re-election. His only chance of victory will depend more on the character of the person chosen by the PDP as its candidate and the zones from which they come and not on the performance (or lack of it) of President Buhari. President Buhari was elected in 2015 because of the incompetence of his predecessor and not for his own “qualities” as a leader. His re-election will also be determined by the qualities or lack of it of his opponent rather than his performance or lack of it. I have always believed that the best chance of victory for the PDP is to pick a Donald Duke from Cross River and pair him up with a muslim person from Kwara or Kogi. If the PDP is hell bent on choosing a Northern candidate then the top of the ticket should come from NC (Kwara or Kogi) and the deputy from the SS (Cross River or Akwa Ibom). No mileage will be gained from choosing a candidate from the NW or the NE. That person will most likely rule in much the same manner and with the same biases as the current president in my view.