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Last Updated: Monday, 14 April, 2003, 17:30 GMT 18:30 UK
Can Nigeria's elections benefit the poor?
By Briony Hale
BBC News Online business reporter

People walking past election posters
It's been a hard-fought campaign

The average Nigerian is going to the polls this month poorer now than at independence in 1960.

Two thirds of the population are living below the poverty line, even though Nigeria is Africa's second largest economy and has reaped more than $280bn from oil in the past 30 years.

Despite these startling facts, the election campaign has not been fought on economic issues.

Economic policy has barely featured in the manifestos of the campaigners who are caught up in the country's ethnic and religious unrest.

"Economics is just not what Nigerian politics is about," says one regional expert.

Nevertheless, the economic issues that have been put on the backburner during the campaign are sorely in need of some attention.

Overdue attention

"President Obasanjo has left the issues of the economy aside to address the issues of the masses," said Idowu Ogedengbe, head of research at Nigerian stockbrokers CSL Securities.

Nigeria's election campaigns
People want to see oil money in their communities
"His desire to be elected has impeded the pace of economic activity," he added.

But there is also cautious optimism that, if President Obasanjo is re-elected for a final term as expected, he will begin to tackle key issues.

"There is growing hope that Obasanjo will finally turn his attention from popular issues to the economy, and aim to leave a lasting impression of good," says Razia Kahn, chief African economist at Standard Chartered Bank.

The hefty overdraft on Nigeria's current account will give him plenty to concentrate on.

Back to the IMF?

Despite the years of consistently high oil prices and steadily increasing production, Nigeria's civilian government has run a deficit for most of its years in power.

Lavish government spending is characterised by the new sports stadium last week. It is estimated to have cost $472m - more than is budgeted on either health or education this year.

Graph of Future revenues of Nigeria's government
Nigeria has also failed to service in full many of its external debts, and has chosen to abandon its relationship with the International Monetary Fund (IMF) in favour of home-grown policies.

But some experts are expecting the IMF to be brought back into the picture following the elections.

Nigeria is likely to face declining oil prices and it has not saved any money during the boom years, says Ms Kahn.

The future lack of funds might make the government more willing to listen to prescriptive policy, she says.

But the IMF will want to see less corruption, more controlled government spending, better fiscal policy and less intervention in the currency market before handing out money.

Allowing the Naira to weaken would be a particularly unpopular policy among Nigerians, since the country is heavily dependent on imports and price rises would be inevitable.

Opec dilemma

The one statement President Obasanjo has made about future economic policy is a grandiose promise of achieving 7% growth by 2007 despite the fact that the economy actually shrank last year.

Derry Wilcox wants to see more women in politics

The hopes of growth rely entirely on a significant expansion in oil production over the next few years.

The government estimates that its current production of two million barrels a day will rise to 3.5 million b/d by 2004 and 5 million b/d by 2010.

Analyst forecasts are slightly more conservative, but a doubling of production is likely within the next five years.

Either way, the increase would earn the government billions of extra dollars in revenues if exports were unconstrained.

But Nigeria has its hands tied: it is not free to export more oil since it is a member of the Opec oil cartel that limits the amount of oil exported by its members in order to shore up prices.

And it has a serious amount of negotiating to do with its Opec peers before being able to increase its quota - negotiations which analysts think will be unlikely to happen until Iraq's position as an oil exporter is clarified.

Wealth distribution

Nigeria also faces a more immediate problem with its oil exports: the ethnic unrest in the oil-rich Delta region which normally accounts for 40% of Nigeria's oil exports.

"We won't see any economic growth here until the issue of ethnic unrest in the Delta is solved," Mr Ogedengbe says, adding that President Obasanjo needs to make a clear statement about the focus of future oil policy.

The unrest - together with the sabotage of pipelines and halted production - is not something that experts feel will be quickly resolved.

"The oil money isn't going back into developing the oil producing regions in any way," said Julian Lee, senior analyst at the Centre for Global Energy Studies.

"The regions feel they have been suffering for no real gain," he said.

And that is the problem at the heart of Nigeria's economy: poverty is still rife.

While economic development is not an explicit part of the election campaign, the more effective distribution of wealth is the one thing that almost everyone is hoping to see.











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