Nigeria #EndSARS protests more broadly politicised but low in list of risks
- #EndSARS started as protests against alleged police brutality but now morphed into broader complaint on social justice
- Cause of discontent: real income has declined 15% since 2015 and misery index (inflation + unemployment) is at least 40%
- Opportunity for rivals in ruling APC and opposition PDP to support protests but President Buhari has tools to crack down
Protests in Nigeria, under the #EndSARS banner, have been ongoing for over two weeks with sporadic violence. Protestor demands have expanded beyond the criticism of police brutality to include corruption and poor governance. The government has pledged to disband Sars (Special Anti Robbery Squad), investigate and prosecute transgressors, and Vice-President Osinbajo has publicly apologised for not acting sooner. President Buhari has the tools (loyalty of the Army) to crack down should he wish.
The widening scope of protestor complaints occurs in the context of:
Significantly poorer economic welfare (real income per capita has dropped close to 15% since 2015, inflation will average 13% this year, according to the IMF, and the Q2 20 unemployment figure from the Nigeria National Bureau of Statistics is 29%);
A youthful demographic bias in the population, which does not appear well represented in government, or in the broader political elite — c40% of the population is below 15 years of age, c30% is between the age 15 and 30, unemployment in the 15-34 age bracket is 35%, but merely a couple of members of President Buhari's roughly 50-strong cabinet was born after 1970);
The marginalisation of the formal political opposition after the sweeping defeat of the Peoples Democratic Party (PDP) in the 2019 general election; and
A looming tricky handover of the Presidency from the north to south during the 2023 election (according to Nigeria's unwritten zonal agreement for power sharing).
The disruptive potential from protests is material and the root causes of social discontent (low growth, high inflation, high unemployment, corruption in the political elite) likely persist regardless of whether the protests are organic (ad hoc mobilisation via social media) or manipulated (ie funded and organised by political rivals within the ruling All Progressives Congress, APC, or the opposition PDP, whether at a local or national level).
Protests rank behind other risks
However, for foreign investors in Nigeria, the specific risk from protests ranks than those that pre-date them:
Restrictions in the FX market (which prevent repatriation without large, c20%, discounts through routes like dual-listed stocks, eg NewGold Issuer, and are driving inefficient allocation of capital, with those able to access the official exchange rate disproportionately advantaged);
Slow growth due to low oil prices (and OPEC+ push back on output growth) and Covid-19 disruption;
Insecurity (herder-farmer clashes in the middle of the country, Islamist radicals in the north, militants in the oil-rich south); and
North to south transfer of power as the 2023 election approaches (and northern Buhari reaches the unwritten eight year limit).
Nigeria: Deep value or deep trouble? (Mar 2020)
Nigeria: Food ban entrenches flawed FX policy (Curran, Sep 2020)
Nigeria surprise rate cut (Ogunkoya, Sep 2020)
Sub Sahara Africa manufacturing potential (Sep 2020)
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- 2 Global Themes/Global Global Investment Themes for 2021
- 3 Strategy Note/Global Emerging-Frontier Equity Monthly – November: Our top picks after the rally
- 4 Sovereign Analysis/Kenya Kenya seeks IMF funding and possible debt relief
- 5 Flash Report/Nigeria Nigeria: A recession, deepening FX woes and expectations for MPC
This report is independent investment research as contemplated by COBS 12.2 of the FCA Handbook and is a research recommendation under COBS 12.4 of the FCA Handbook. Where it is not technically a res...