Desperation politics and implications for investment

Nigerians have in the past one month witnessed with steadily growing alarm a heightening desperation exhibited by politicians in their bid to control the country’s federal government in the next political dispensation. This group of desperate politicians have been employing violent language, frightful innuendoes of war threats and drumming up of ethnic sentiments in the build up to next year’s general elections. Political desperation is not new among our politicians and it is taken for granted that politics goes with passion but the worry is that various politicians from different ideological, party and regional divides are demonstrating such destructive passions that have the potential of tearing the country apart. There have been, of recent, fears of possible disaster trailing the elections if the current trend of events is not checked. A failed election will not only be a setback but a threat to so many things the nation has worked hard to achieve. Any such disruptions will, aside hurting our already sluggish economy battered by corruption and mismanagement, seriously harm foreign direct investment and the fragile financial markets. Of course, it has the potential of further polarising the nation along ethnic lines given the flavour of campaigns.

The Presidency, aware of this possibility, penultimate week, assured foreign investors that the 2011 general elections will not affect the investment climate. Vice President Namadi Sambo pledged that lives and property of investors will be protected by the government. Addressing an energy delegation of Nordic countries, Sambo, seeking to reassure the foreigners that there will be no social dislocation to endanger their investments, said “Our programmes are very clear, Nigerians believe in our programmes and we are very popular and there will be continuity.”

The unsettling political desperation which had been gathering steam came to the fore immediately after the terrorist bombs that went off during the country’s independence anniversary celebrations.

The acrimonious debates arising from the embarrassing blasts that left 12 people dead, revealed the ugly side of Nigerian politics. The brouhaha essentially centres on whether President Goodluck Jonathan should run for president despite a gentlemanly agreement within the ruling Peoples Democratic Party (PDP) to rotate the presidency among the North and South. Northern politicians accuse Jonathan of reneging on the party’s agreement when he opted to contest for the position of president in the next elections. Jonathan is concluding the tenure of the late president, Umaru Musa Yar’ Adua, who came to power courtesy of the party’s power sharing formula which zoned the presidency to the northern region. He is, however, insisting on becoming president next year to the chagrin of the northern politicians who see a threat in the power of incumbency which he wields. Jonathan is seen as an opportunist, who is willing to betray his party’s zoning formula and risk an implosion because of his ambition. On the side of Jonathan are a former president, Chief Olusegun Obasanjo, South-South leaders, some northern leaders and repentant Niger Delta militants. Essentially then, the raging battle is between Jonathan and frontline northern politicians, especially those who are presidential aspirants. These include former Vice President Atiku Abubakar, General Ibrahim Babangida and their surrogates. Atiku’s desperation is understandable. At the time he was the country’s vice president, it was widely believed that he was going to be president but was schemed out by Obasanjo after they fell out. He has since then tried every trick in the books to get back to reckoning but has found it very daunting as Obasanjo continues to fight against his ambition. As for Babangida, it is an ego thing. He ruled Nigeria for eight years and was forced out by the military. He thinks he can become president again.

And so when Abuja was bombed, the Babangida campaign immediately came out with a scathing attack on Jonathan, accusing him of incompetence, because the terrorists had handed down a warning weeks earlier. Jonathan’s camp resorted to seeming intimidation when, Chief Raymond Dokpesi, the head of Babangida’s campaign organisation was arrested by the SSS. The tone of the arrest and pronouncements suggested that Babangida and the northern politicians were behind the bombing. The polity became so heated that northern politicians went on to ask Jonathan to resign because of perceived incompetence. Some notable politicians from the north went as far as threatening to make the country ungovernable for Jonathan if he became president. For good measure, Jonathan had all the dreaded ex-Niger Delta militants report to Abuja to rally behind him and subtly warn that they were ready to strike if any group of people frustrated Jonathan because of his ethnic background.

The war drums are silent for the time being but there is an uncanny air of uncertainty and apprehension pervading the land. In addition, the shade and colour of what to expect during and after the next elections have been rehearsed in two weeks of emotional heat and outbursts.

Why so much desperation in the political arena? The reason is partly because leadership in Nigeria translates to access to the nation’s treasury, which can be looted by those in power with very little opposition. Greed is, therefore, a major propelling reason for the do-or-die politics that is in the air.

The pervading apprehension that this state of affairs has thrown up, to say the least, is very unhelpful to investment. Wise investors will not listen to artfully worded statements emanating from public officials but watch the political terrain to determine whether there exists the possibility of an implosion. If the events and activities of the political class point to the likelihood of trouble, investors will decide to hold cash and wait to see how things work out.
Investors that are risk averse will simply look for more stable countries, where there is less likelihood of political violence. The implication here is that business will suffer in the period of the elections and if indeed there are political problems of significant nature, there will be a prolongation of the economic downturn that we are experiencing.

Already there is suffering in the land, although the political class is going on as if there is no problem at all. If the provocative utterances of the various protagonists from the north and the south-south continue to find expression, we should expect continuous suffering in the country as little will be done to address the tough economic climate. Violence will be highly probable.

What investors should watch out for at this time are signs for how the political logjam is resolved. Once it becomes clear that the elections will be successful, they should expect an upswing in investment activities and a corresponding rise in equities’ prices and returns on other forms of investment. Otherwise, they should only consider defensive stocks that have the stamina to withstand shocks and those that are renowned to recover fast after economic downturns.

Written by
Benjamin Tialobi
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