By Mark Mobius, Executive Chairman, Templeton Emerging Markets Group
A couple of years ago, many investors were optimistic about Nigeria and the stock market was booming, buoyed by strong economic growth and government reforms to improve the country. However, by 2014, the mood soured amid a series of unfortunate events, including the terrorist acts of Boko Haram, an Ebola outbreak and the weakening price of oil, which is the major source of income for the government and has a big impact on the economy.
Despite these challenges, we continue to pursue long-term investments in Nigeria for a number of reasons. Not only is Nigeria Africa’s largest economy and a major consumer market, but the outcome of Nigeria’s presidential election in March proved its people are ready for change—hopefully for the better.
After a delay, Nigeria’s presidential election took place in March in a relatively peaceful environment. After lots of active and noisy election campaigning, the results showed that the incumbent, President Goodluck Jonathan, was losing, and he conceded defeat to former military ruler Muhammadu Buhari. Buhari has claimed a commitment to democracy and a new way forward for Nigeria, although I think his first order of business will be to bring stability to the country.
The fact that he was elected democratically and had run unsuccessfully in 2003, 2007 and 2011 seems to be an indication that he would be more inclined to favour the democratic process, although we certainly can’t know what might happen in the future; we must remember that he has a military background and participated in a military coup that brought him to a short-lived presidency in 1983. We do feel his military experience should help him battle terrorism and corruption in Nigeria, so in that sense the election results seem positive.
The election outcome was not surprising to me, because it was clear that the general population was unhappy with the current situation in the country. Nigeria’s stock market reacted positively to the election results right after they were announced, indicating that many investors may now feel new hope that there could be change for the better.