African elections 2015: how the ballot box affects investors

Posted in Blog post Infrastructure Western Africa

By the end of 2015 voters in 14 African states are scheduled to have cast their ballots in general elections. The appetite for investment in those countries will rest upon the policies of the governments charged with taking them forward. In the infrastructure finance space we have already seen how the results of such elections have affected investment decisions and transaction management both positively and negatively this year.

Nigeria’s elections – a victory for democracy

In Nigeria, opposition candidate Muhammadu Buhari won a closely fought presidential election, achieving just under 54 per cent of the vote. The peaceful outcome of the election, with the incumbent president publicly conceding defeat (which has only happened five times in the last 65 years) and the smooth transition from the outgoing government to the newly elected government, was hailed as a victory for democracy. Despite considerable security threats the INEC, Nigeria’s independent electoral commission, helped to conclude a sound election result, delivering a more transparent and certain political climate which should form the basis of much greater investor confidence moving forward.

Prior to the election we saw that uncertainty over the electoral process and result created a greater impetus to close financings well in advance of polling stations closing so that lenders could finalise their syndications in good time. Post the election we have seen financings moving forward in transport, agribusiness, power and other infrastructure related projects, buoyed by investor confidence in the economic outlook.

Burundi’s bleak investor climate

By contrast, Burundi’s election attracted widespread condemnation from EAC, EU and UN observers, with President Pierre Nkurunziza re-elected with 69.4 per cent of the vote and amid claims from the opposition that a third term would be unconstitutional. The EU has imposed sanctions on the country and the ensuing violence has sparked fears that the country could be plunged back into civil war. In light of these developments we have seen a mooted telecoms financing shelved and little other enthusiasm to discuss opportunities until the situation improves.

Looking ahead – Burkina Faso’s elections

In November Burkina Faso’s citizens go to the polls, with investors hoping that the process will more closely follow the success story in Nigeria. Recent unrest, however, has seen former president Campaore resign and flee the country after an attempt to amend the constitution to extend his 27 year rule, sparking a military coup and the subsequent restoration to power of acting President Kafando. Despite the turmoil we have seen ongoing investment in infrastructure and the potential for growth; for example, we advised on a telecoms financing in the country, which ultimately closed successfully with government approval. We look forward to the results with interest.