By Rafiq Raji, PhD
There are some concerns about emerging markets at the moment; for no fault of theirs in some respect, as central banks in advanced economies normalise hitherto extraordinary monetary policy measures. Peculiarly structural issues in some EM countries like South Africa, which though being tackled, continue to cast a shadow as well. In general, debt and inflation are ascendant. Thankfully, the two key EM countries on the African continent, South Africa and Nigeria, are doggedly on a monetary tightening path to curb accelerating prices. That is, even as these economies are in dire need of growth to moderate retractable problems like high unemployment. Similar restraint has not been exercised towards indebtedness, however. Even so, veteran EM investors know to look below the surface. There are myriad opportunies for the discerning.
Still, rising political risk ahead of polls in 2019, necessitate some caution; albeit more so in the case of Nigeria than in South Africa. Cyril Ramaphosa, the technocratic president of South Africa provides some comfort. Evidence of this can be seen in the relative success of his investment drive. And he is almost certainly going to remain in office for at least another five years. However, most agree a competent and well-meaning head of state atop a system with many palpable governance weaknesses may still flounder nonetheless. Revelations at the ongoing judicial inquiry into so-called “state capture” during the presidency of Jacob Zuma show how deep the structural fissures are, for instance. And the enormity of the task to repair them. Curiously, Mr Ramaphosa has chosen to play it safe. A recently underwhelming cabinet reshuffle by the South African president, some argue, was a missed opportunity to sanitize the cabinet of old party cadres. Especially as it is increasingly obvious most of them got their hands soiled in one form or another during the administration of Mr Zuma. The other argument is that the president is playing for time. A likely stronger mandate in 2019 would enable him make revolutionary changes then, his supporters argue.
In the Nigerian case, there is a predominant feeling that President Muhammadu Buhari could have done more to attract investment and make doing business easier. The administration refutes such assertions by pointing to the country’s improved ease of doing business ranking by the World Bank. There is more that could have been done regardless. And without a doubt, the disaffection between the executive and legislative arms of government, even as they are both governed by the same political party, weighed greatly on the economy. The appointment and clearance of government officials took ages, budgets were approved far too late; to name a few. And with elections on the horizon, much is now in abeyance till afterwards. But would much change then? Atiku Abubakar, the leading opposition contender for the presidency, argues they would. It helps that he is perceived to be more business-friendly. Ironically, Mr Abubakar is also seen as representative of the mostly corrupt elite. How much food has been put in the mouths of Nigerians by Mr Buhari’s anti-corruption stance is a common rebuttal by Mr Abubakar’s supporters. They also argue corruption has been rife under Mr Buhari. So, it probably would not matter much who wins. What is more important is that the polls be free, fair and peaceful.
Nonetheless, there is reason to be optimistic. If, as is often argued, poor governance and corruption are the major constraints on Africa’s development, increased accountability and citizens’ engagement, owing to social media especially, suggests better African leaders would increasingly emerge. A case in point is the Nigerian case, where a couple of seasoned technocrats have joined the presidential race this time around. Although, they have not attracted as much media coverage as the two leading candidates, their participation has greatly enriched the process. It is so gratifying now to see Nigerian politicians arguing over policies. True, politics remains extremely monetized. But even beneficiaries of such largesse increasingly engage the political leadership.