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Triumphant Buhari can forget honeymoon as Nigeria woes mount

A man stands near campaign posters of Muhammadu Buhari, Nigeria's president and candidate of the ruling All Progressives Congress party (bottom left) and Atiku Abubakar, candidate of the main opposition People's Democratic Party (top left) in Lagos Nigeria on Feb. 16, 2019.

GEORGE OSODI/BLOOMBERG

By PAUL WALLACE | Bloomberg | Published: March 3, 2019

Muhammadu Buhari will have little time to celebrate his resounding victory in Nigeria's presidential election before facing the multitude of problems dogging Africa's biggest oil producer.

The court challenge to last weekend's election promised by his main rival, Atiku Abubakar, is the least of his worries. Add to that a listless economy, Islamist State attacks wreaking havoc in the northeast and an explosive cocktail of worsening poverty and rapid population growth.

The 76-year-old former general came to power in 2015 on a wave of optimism after becoming Nigeria's first opposition leader to win at the ballot box, with promises of fighting endemic corruption and ending the economy's addiction to oil. So far, progress has been slow.

"President Buhari can expect an even briefer honeymoon than he did in 2015," said Matthew Page, a former State Department specialist on Nigeria, who's based in Cambridge, England. "Unless Buhari experiences an epiphany and adopts a more dynamic, reform-minded, and business-friendly strategy, we can expect Nigeria's socioeconomic situation to stagnate during his second term."

In his first four years, Buhari was a strong proponent of a statist economy. He called on the central bank not to let the naira weaken and made it clear he disagreed with the pledges of his multimillionaire rival, Abubakar, to privatize inefficient and loss-making oil refineries and the Nigerian National Petroleum Corp.

His administration's drive to clean up business practices brought him into conflict with some foreign companies. South Africa's MTN Group Ltd. is fighting claims that it owes $2 billion of backdated taxes, which have dragged its shares down. And the government is suing firms including JP Morgan Chase and Royal Dutch Shell in Europe for what it says was a corrupt oil deal in 2011. All companies deny the allegations.

OPEC's sixth-biggest producer is still struggling to recover from a 2014 crash in oil prices, although they have risen 22 percent since 2018 around $65 a barrel.

Other reasons for optimism include the first shipments this month from the massive Egina offshore oil field, which will boost Nigeria's production 10 percent to around 2.2 million barrels a day. And billionaire Aliko Dangote says he'll complete an oil refinery near Lagos, the commercial capital, in the next two years that could drastically cut the nation's import bill for fuel.

"Nigeria offers vast opportunities, and a lot of low hanging fruit," said Mathias Althof, a money manager in Stockholm at Tundra Fonder, which is bullish on banking stocks. "People have quite low expectations of Buhari since the first four years lacked major reforms. Hopefully, he has saved them for the coming four years."

Economic growth accelerated to 1.9 percent last year, the fastest since Buhari took office, but still far below the average of 7.4 percent in first 15 years of this century.

Huge difficulties remain. Unemployment has soared to 23 percent and rising debts are curbing the government's ability to spend money on infrastructure. Interest payments are projected by the International Monetary Fund to soak up more than 80 percent of the federal government's revenue by 2022.

The stock market has dropped 3 percent since Monday, as it became clear Buhari would win.

"Nigeria's credit challenges remain and include a low-growth environment, very high exposure to fluctuations in oil prices, weak institutions, and high levels of corruption," Aurelien Mali, an analyst at Moody's Investors Service, which rates the country five steps below investment grade, said Tuesday.

Security problems have also proliferated. While Buhari succeeded in eroding territorial gains made by Boko Haram militants in the northeast, since December they and a breakaway group affiliated to Islamic State have ramped up attacks in the state of Borno.

Separate clashes between farmers and herders over grazing land led to around 2,000 deaths last year, mainly in central parts of the country, according to Amnesty International, while a spate of kidnapping and raids has displaced thousands of people in the northwestern state of Zamfara.

During his first term, Buhari could point to the failures Abubakar's People's Democratic Party, which ruled Nigeria for 16 years after the return of civilian rule in 1999 and did little to improve security and infrastructure, while corruption was widespread.

After four years in power, "he will not have the bogeyman of the last administration to blame," said Tunde Leye, an analyst at Lagos-based SBM Intelligence.

The president must also deal with the fallout from the election, which although more peaceful than some votes in the past, saw at least 39 people lose their lives. While the U.K. said "the Nigerian people can have confidence in the result" despite the vote's shortcomings, the opposition claimed Buhari's 56 percent to 41 percent margin of victory was the result of massive rigging.

"It's one of the most disputed elections in Nigeria's history and has further widened divisions," said Idayat Hassan, director at the Centre for Democracy and Development in Abuja, the capital.

Government officials say the bitterness will fade.

"Somehow, when it comes to the point of all hell breaking loose," Petroleum Minister Emmanuel Kachikwu said in an interview Thursday, "Nigerians calm down."

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Bloomberg's Ruth Olurounbi, Tope Alake and Paul Burkhardt contributed.

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