Tuesday, March 05, 2019 08.40AM / By FDC
Euphoria for champions of continuity and skepticism for those who believe that a management and leadership change of style is imperative for economic success in Nigeria.
The incumbent President, Muhammadu Buhari, has emerged the winner of the 2019 Presidential election held on February 23rd, surpassing his close contender (Atiku of PDP) by 3.93 million votes. Indeed, the race was a two-man contest as both parties accounted for 96.82% of the total valid votes (27,324,583). Despite the low turnout of 35.6% relative to 44% in 2015, the recently concluded presidential election showed a wide margin of 3.93 million relative to 2015 (2.57 million).
The NSE ASI endured a three-day losing streak up to February 28th, losing 2.5% to close at 31,718.70 pts from 32,515.52 pts on February 22nd, a day before the election. This can be partly attributed to the outcome of the presidential polls. However, the market gained 0.34% on March 1st. The rejection of the election results by the main opponent who had dominant support in the South-south (mainly oil producing states) could trigger agitations by the militants. This poses further threats to trading activities in the stock market.
On the other hand, the foreign exchange market has shown resilience to heightened political tensions as the naira traded flat at 360/$ in the parallel market.
Impacts on the Market Players
The banking sector, which accounts for approximately 70% of the total volume traded on the Nigeria Stock Exchange, lost 6.25% between February 22 and 28.
The naira appreciated at the IEFX window by 0.14% to N360.99/$ on February 28th from N361.48/$ on February 22nd. This is positive for manufacturers and traders as they could utilize the opportunity to reduce their cost of importation.
With the re-election of the incumbent president, the FGN may want to consolidate on its existing policies while also exploring new options for accelerated and sustainable growth of the country. We anticipate a continuation of the social investment programmes such as N-power, trader moni etc and also, we expect the ERGP to be intensified. To ensure prudent management of public resources, the administration could intensify its fight against corruption. However, for the success of these strategies, the administration needs to explore and consolidate its revenue base.
To hit the ground running, the president needs to assemble his cabinet to guard against the delay experienced in the last inauguration.