Monday, May 10, 2010


Written by: Erik L. van Dijkon


President Umaru Yar'Adua of Nigeria died on May 5th. Yar'Adua suffered from a kidney disease that has hindered him ever since he took office in 2007. In November 2009... he left for treatment in Saudi Arabia without formally handing over presidential powers to Goodluck Jonathan, his Vice President. It was not until almost 3 months later that the Nigerian Court ordered the government to solve this issue. From then on until Yar'Adua's death Goodluck Jonathan was de-facto President of Nigeria. So basically, in this respect there won't be too much change.
Late President Yar'Adua - Nigeria (1951-2010)
Not given the time to work on his anti-corruption agenda

Yar'Adua was born in an aristocratic Fulani family in the northern state of Katsina, a part of Nigeria where Muslims are the majority. Under Yar'Adua's governorship the state did adopt the Sharia in 2000. This local fact became world news in 2002 as a result of the case of Amina Lawal, a woman that was convicted to death penalty by stoning for adultery. In an appeal in 2003 the lower court was overruled. Many believe that Yar'Adua played a role in that.


When looking at the career of the late President, he was a remarkable figure. Not so much as a speaker or charismatic leader, but more because he was one of the few politicians in Nigeria who had a reasonably impeccable reputation without signs of corruption. Corruption was and still is one of the largest problems in the country. But in this respect things have definitely improved under his rule. He increased the powers of the Bureau of Public Procurement and worked on new laws. But probably at least as important was the fact that he and Goodluck Jonathan delivered on a promise made before the presidential elections in 2007. They were the first politicians in Nigeria to openly declare their assets. Yar'Adua had assets with a total value of USD 5.8 million and his Vice-President Goodluck Jonathan had assets of USD 8.6 million. It is of course not sure if these numbers can be trusted completely, but when comparing it with the things that happened in Nigeria before it is a huge gain.

Example: Former military dictator, president Sani Abacha (see picture to the right) had bank accounts of many billions of USD (!) in Switzerland. Under pressure by both Nigeria and the international community's growing interest in fighting corruption part of the money - USD 1.2 billion - was transferred back to the Nigerian central bank in 2002. But the amount of funds still at the disposal of Sani Abacha's son Mohammad are huge and could even make him a dangerous force in politics in the background. He could buy anyone or anything if necessary.

But Yar'Adua was nominated as presidential candiate for the People's Democratic Party in 2006 with 10 times more votes than candidate nr 2. A remarkable landslide victory for a candidate who was relatively unknown outside his own Katsina region. Some believed that former president Obasanjo wanted a nobody so as to steer and control in the background. Others felt that both the former president and other top-level politicians in the country understood that the only way to internationally benefit fully from the country's oil wealth was to fight corruption and attract more foreign capital. Nigeria is one of the top-10 oil nations in the world with total reserves of 36 billion barrel as of Dec 31, 2008 (data Energy Information Administration BP). It is also one of the 10 largest exporters of oil to the US with a total of 769,000 barrels a day (data as of June 2009, Energy Information Adminstration BP). But at the same time utilities in the country itself hardly function. Anyone who has visited the capital Abuja will know that the streets are dark at night, with power failures a frequent event: a strange phenomenon in an oil rich country.

In 2007 the tandem Yar'Adua - Goodluck Jonathan won the election with 70 percent of the votes. Notwithstanding this absolute majority Yar'Adua offered 2 other parties to create a cabinet of National Unity so as to grow his power base even further while working on his political agenda that was primaly aimed at fighting corruption. Unfortunately his illness hindered him. Nevertheless we believe that Nigeria now is a better place than 10-15 years ago.

Goodluck Jonathan (picture see left) already indicated that doing something about the power situation in the country will be one of the three main themes on his political agenda as the new president, the other one of course being the continued fight against corruption. Due to the disastrous reputation that was built during the decades of the previous century, investors - with the exception of oil firms - basically avoided the country, notwithstanding its huge potential in oil and other commodities. And even these 'brave' oil companies had a difficult time. They had to struggle with incumbent rebels in the Niger Delta. Led by the president himself, the Ministry of Finance and the Central Bank try to put Nigeria on the investment map. When taking commodity price trends in account, the country will be one with a more than interesting potential if Goodluck Jonathan will succeed in continuing with the political agenda started by Yar'Adua.

We hope the best and give Nigeria a little plus for those of you who can
bear a bit of speculation in their portfolio. But beware: the military
and even the likes of Mohammad Abacha are always there in the background
in West Africa's biggest democracy. The democracy is still shaky - with
observers always worried about the process -, but Goodluck Jonathan
announced that electoral reform will be the third pillar of his policy.

LMG Emerge believes that brave investors should consider the following industries: commodities and banks. Nigeria's banks have developed into the most important of West Africa and due to the inflow of money from commodity exports, the financial infrastructure will improve further.

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