Is Nigeria Still a Democracy?

Questions surround Nigeria’s recent elections, calling into question the African giant’s democratic stability. But what do these political developments mean for Nigeria’s economy?

If the very basic definition of a democracy is a government that exists by the consent of the governed, then the just-ended general elections in Nigeria, which brought the country a new government, also produced a highly questionable democracy. And while this question may not seem entirely relevant to an Emerging Market (EM) investor in Nigeria now, it is likely that in coming months, as President-elect Musa Yar'Adua moves to consolidate his power amid likely strident challenges to his rule by the opposition, the economic implications of a potential slide toward a kind of "democratic authoritarianism" will become more evident. In the short term, the likely post-election ultra dominance of the ruling party of the country's politics may actually improve overall economic performance as internal opposition to government policies will be quelled. Even the restive Niger delta may see some law and order. However, unless Yar'Adua and the opposition reach a détente soon, the country will likely slide down the "J-Curve" toward democratic authoritarianism as angry opposition figures lead campaigns against the new regime and Yar'Adua likely responds with a security crackdown. While overall macroeconomic performance will likely not suffer because of the West's need for Nigerian crude, other non-energy foreign multinationals may see their businesses targeted as local competitors allied with the regime lobby against them for being insufficiently supportive of the new and embattled government.

Despite the expected spate of legal challenges to the outcome of the general elections, it remains probable that short of an unlikely dramatic attempt by the outgoing National Assembly-which has been called into session on April 24-to impeach outgoing President Olusegun Obasanjo, annul the elections and install an Interim National Government (ING)-as happened in 1993-President Olusegun Obasanjo will step down on 29 May, and his chosen successor, Yar'Adua, will assume the presidency. But Yar'Adua will inherit a poisoned chalice and will have to move quickly to deal with strident calls by the country's opposition against his regime. Yar'Adua's handling of these challenges will determine whether Nigeria slides into democratic authoritarianism or maintains a semblance of multi-party liberal democratic rule.

The irregularities that marred the April 14 and 21 elections, often favoring the People's Democratic Party (PDP), showed that the party effectively controls almost all institutions of the state, save the judiciary, and is willing to use it against political enemies. It is probable that in the coming weeks and months, as the courts and certain strong-willed judges overturn some of the election results because alleged instances of fraud are proven, the country's judiciary itself may come under fire from the PDP. As for the legislature, while Obasanjo had only loose control over the last National Assembly, Yar'Adua will have a more effective control of the newly elected assembly, as two-thirds of the new members are mostly strong Obasanjo loyalists.

It is also very likely that despite initial pledges by the major losing presidential candidates-former head of state General Mohammadu Buhari and Vice President Atiku Abubakar-to use only legal means to seek redress for election irregularities, unless Yar'Adua moves quickly to find some means of reconciliation with both while still maintaining the support of Obasanjo, Abubakar's and Buhari's statements and activities challenging the legitimacy and constitutionality of Yar'Adua's rule will make them persona non grata, and they will wind up in jail, exile or under house arrest. If he does not find some accommodation with the two opposition leaders in coming weeks and months, it is unlikely that Yar'Adua will flinch from silencing them.

Alternatively, if after May 29 Yar'Adua does cut a deal with Abubakar and Buhari, he will need to do so without alienating Obasanjo, who on May 30 will become the powerful chairman of the Board of Trustees of the PDP. If Obasanjo objects to any rapprochement between Yar'Adua and the major opposition figures, Yar'Adua will either have to form a pan-northern Muslim alliance with the two but alienate Obasanjo and run into conflict with his own party, or face a stalemate with Abubakar and Buhari. Under either scenario, Yar'Adua will have to employ somewhat tough, authoritarian tactics against his political opponents-be they Obasanjo or Abubakar and Buhari. Either scenario also means that Nigeria's elite political wars are unlikely to abate anytime soon, and headline political risk from the oil-rich nation will continue for some time. While the military could be tempted to step in should tensions mount, the accommodationist rhetoric of powerful former head of state General Ibrahim Babangida, the "dean" of the ex-military establishment, suggests that the military will wait for some time to see what politicians do before it is tempted to intervene.