Nigeria’s deferred presidential election gives the wrong impression to investors, say observers.
“The postponement of an election that has been on the cards for years sends the wrong signal to the international community that we are not a very serious destination for their investment in the short-term,” said Dr Ibilola Amao, principal consultant at advisory firm Lonadek.
“It does not augur well for our economy that we plan a national activity for a certain date and a week before the presidential election, the government comes up with contrary information that is suspect.”
A delay in the distribution of permanent voter cards and security issues in the north-east area of the country, where the Nigerian army is battling militant Islamist group Boko Haram, resulted in a rescheduling of the country’s elections to March 28, six weeks later than originally planned. Incumbent president Goodluck Jonathan will be running against General Muhammadu Buhari for the second time.
Oluseyi Bickersteth, national senior partner at KPMG Africa, remains optimistic. “While the postponement may slow down FDI, it will not necessarily stop investors from investing in Nigeria once the coast is clear after the elections. The truth is that the postponement has not impaired investors’ interest in Nigeria whatsoever as we continue to receive inquiries. However, it is certain that capital will not move until after the elections.”
Femi Edun, lecturer at the department of economics at Lagos State University, agrees: “Investors will be cautious in their investment decisions until after the elections.”
Funso Ojo, managing director at Templeton Business Consulting, is confident that rescheduling the election will not impact the flow of FDI into Nigeria. He adds that the majority of companies have already deferred their major investment decisions until after the election and six more weeks will not make much difference to their planning. However, the delay will add to the already palpable anxiety in the business community.
Greenfield investment monitor fDi Markets indicates that, in terms of project type, 91.2% of projects from January 2003 to December 2014 have been new investments. New projects have an average capital investment of $634.70m while the average capital investment for expansion and co-location is $524.50m.
“Investors understand that the return on their investments is high and what they are getting has been factored in as the risk of investing in this economy. They know they cannot get this high return on investments in advanced economies, therefore, when there is any little hiccup, they get jittery. Therefore I feel what is going on is expected,” adds Mr Edun.