Guest Post: Nigeria Hit by Domestic, Regional, and Global Headwinds

This is a guest post by Jim Sanders, a career, now retired, West Africa watcher for various federal agencies. The views expressed below are his personal views and do not reflect those of his former employers.

Last month at the World Economic Forum on Africa in Addis Ababa, Ethiopia, the Africa Progress Panel’s 2012 Africa Progress Report highlighted the threat to Africa of "rising inequality and the marginalization of whole sections of societies."  Experts warned that "inequality in sub-Saharan Africa could threaten political stability and growth after a decade of rapid economic expansion.”

While inequality is rising, the movement of money out of emerging markets bodes ill for Africa.  Michael Aronstein of Marketfield Asset Management told me that even though Wall Street continues to make emerging market investments (because of recent success,) the big emerging markets—Brazil, Russia, India, and China—have had a bad eighteen months, and their fundamentals are shakier than previously realized.  Their GDP levels alone do not tell the whole story, Aronstein advises. These countries are important investors in Africa.  Similarly, as Rob Arnott (chairman of Research Affiliates and manager of Pimco’s All Asset Fund) explained to Fortune magazine: "Everyone sees emerging markets as the growth engine for the world economy.  If so, why are they trading at a big discount to the parts of the world that are not the growth engine?"

For Nigeria, such trends could make a bad situation worse.  A confluence of political-class infighting, (most recently, it appears, over the independence of the central bank) substantially lower oil prices, (Brent dipped below $100/bbl recently), a tragic airplane crash, which drew attention to systemic governance failures, and an ongoing insurgency in the North, portend more disorder, not less.

Regional developments are also inauspicious. The real threat posed by Mali to Nigeria may not be so much one of terrorist contagion, although it is receiving much attention in the international press.  Instead, it may be that Boko Haram insurgents may draw strength from the example of the collapse of an ineffective civilian government run by entrenched political elites, disconnected from the realities faced by ordinary people, and increase their efforts.  While, on the other hand, ordinary Nigerians, particularly youth, may begin to act on their frustrations in a more organized way, a la Mali’s Collectif Action Verite and its billboard campaign.

Globally, democracy is at risk.  Arguably, that of Greece has collapsed.  West Africa is not immune.