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).
Market Reacts
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.
Policy
Direction
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.
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