An Eye on West Africa

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Had things gone to plan, I would have been writing this after the presidential election in Nigeria, and talking about the potential impact of the result on the hospitality industry. No fewer than 73 candidates were in the running, although I did notice that some of the smaller parties dumped their candidate at the last minute to endorse a better ‘runner’. The two front runners were President Buhari, the incumbent since 2015, and Atiku Abubakar, a former Vice-President of Nigeria. And the winner was… chaos and confusion!

To paraphrase Robbie Burns, the best-laid plans of mice and men go oft awry. A few hours before voting was to start on the morning of 16 February, a date that was set a year ago, the election authority announced (in the middle of the night) that it wasn’t ready, having sworn blind for weeks before that there would be no problems. What happened?

Well, one could say that Nigeria happened. INEC, the election commission, said that due to the bad weather, the poor roads and other logistical and operational challenges (including sabotage at three election centres earlier in the week), essential election materials couldn’t be distributed as planned, and the election was postponed by a week.

The election was delayed to 23 February (as too was the election for state governors in early March, from 2 to 9), but the hospitality industry is counting the cost of what happened.

Lagos almost literally shut down on 15 February so that people could travel to their home towns to vote. The ports, schools, shops, banks, virtually every business closed either early or completely for the day, to enable their staff to travel in daylight, safely.

Friday night is a big night in Lagos, with bars and restaurants doing brisk business, but instead they were dead. And on Saturday, polling day, there was to have been a curfew all day, restricting all movements, so again the town was dead, and that continued into Sunday morning. The formal hospitality industry lost millions. But spare a thought also for the informal sector, the street vendors who had stocked up on perishable food to sell to the lines of voters. The Lagos Chamber of Commerce put the loss to the city’s economy due to the postponement of the election at $1.5 billion. Whatever the actual figure, it’s a lot. But we should be used to it – the elections were delayed not only this year, but also in 2015 and 2011.

So now there will be another dead weekend, when we should have had to live with just the one. Staff will have to take more time off, spend more money travelling home to vote, and the hospitality industry will have another lean weekend.

Nigerians want to vote, they want to participate, but they also perceive a real possibility that there could be post-election violence, based on historical precedent. If Nigerians perceive that threat, then foreigners perceive it to a much greater degree, and that severely affects the hotel sector. I know of several expatriates (and Nigerians) who left the country to avoid being here during the election, and several other people who delayed their travel to Lagos until after the election – not just after the date of the election, but for a few days afterwards, to avoid any “after effects”. That means the hotels had low demand, exacerbated now from cancellations as people change their plans to avoid yet another date.

Some fascinating research undertaken by Lagos-based FDC shows that elections can positively impact GDP, inflation and exchange rates when they are credible and transparent, and especially when power changes without rancour to the opposition. Unsurprisingly, they found that if an election goes badly, the impact is negative, especially on the nation’s currency and, depending on government policy, unemployment.

There are no fewer than 23 countries in Africa with elections this year, and of those 12 are for president. Here in West Africa, the big ones are Nigeria and Senegal, with Mauritania and Guinea Bissau also in election mode.

Whether the election goes well or badly, it is a fact that foreign investors stay away for several months after the vote, to assess the effect on the polity and on the economy. So the negative impact on the hotel industry continues, especially for those hotels that rely on foreign visitors (rather than domestic travellers). 2018 was a great year for the Lagos hotel industry, with demand up 8% on the previous year (when the economy grew just 2%), continuing the upward trend since the nadir of 2016. But it looks like Q1 2019 will be a bit of a wash-out, with four weekends ‘cancelled’, and investor confidence taking a double hit, first from nervousness regarding the elections, and now because of the delays.

Democracy has its dividends, but also its costs. We look to the long-term, and hope for a return to growth.

www.w-hospitalitygroup.com