FACTBOX-Key political risks to watch in Nigeria
LAGOS, April 1
LAGOS, April 1 (Reuters) - Elections in April could hand Nigerian President Goodluck Jonathan a stronger mandate for reform but, even if he wins, the make-up of the new government and parliament will be key to his ability to effect change.
Jonathan is the front-runner in the April 9 presidential vote but the ruling party will face a tougher battle maintaining its strong majority in parliamentary elections on April 2 and its regional dominance in state governorship polls on April 16. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on elections: link.reuters.com/xet78r For more stories, background and analysis: [nLDE68H051] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Key pieces of legislation, including oil sector reforms and the creation of a sovereign wealth fund, are sitting before parliament and if they fail to pass before the current term finishes at the end of May, they could be delayed for months.
Government spending has risen ahead of the elections, putting pressure on foreign reserves and weighing against efforts to drag inflation into single digits. [nLDE72S213]
The finance ministry and parliament are at odds over a 2011 budget which keeps spending at last year's record levels.
The banking sector is emerging from crisis, with state "bad bank" AMCON having soaked up all non-performing loans, but capital markets reforms could be slowed down if a less reform-minded government follows the elections. [nLDE72M0ZA]
Preparations for the polls themselves give grounds for cautious optimism that they could be more credible than the deeply flawed elections of the past, although there has been election-related violence around the country.
Jonathan's victory at the primaries makes him the favourite to win the April 9 presidential election. The ruling People's Democratic Party (PDP) has won every poll since military rule ended in 1999. [nLDE70J14V]
His main opposition challenger is Muhammadu Buhari, running on the Congress for Progressive Change (CPC) platform, a former military ruler who is hoping to capitalise on opposition to Jonathan from the Muslim north.
Former anti-corruption chief Nuhu Ribadu, whose Action Congress of Nigeria (ACN) party has a strong following in parts of the southwest, and Ibrahim Shekarau, governor of the northern state of Kano, are also vying for the presidency.
Jonathan must win an overall majority and at least 25 percent of the vote in two thirds of the country's 36 states to secure a first round victory. The opposition candidates are hoping their regional strengths can combine to force a run-off.
The Independent National Electoral Commission (INEC) says it has registered more than 70 million voters in a process which, although marred by some technical difficulties, has generally been judged by observers to bode well for polling itself.
What to watch:
-- Any signs of an opposition alliance to challenge the PDP
-- Any challenges to the credibility of the new voter lists
NATIONAL SECURITY Parliamentary elections and state governorship polls are due to be held a week either side of the presidential vote and are more likely to cause localised instability. [nLDE6AM2BY]
Five of Nigeria's powerful PDP state governors won a court ruling in February which could prevent them having to stand for re-election. The five argued that their states should be exempted from governorship votes because they had not yet completed full four-year terms. [nLDE71M20A]
INEC has said the ruling stands unless overturned in the courts, but opposition candidates have continued to campaign in the hope that the votes will go ahead.
Flashpoints include the state of Akwa Ibom on the fringe of the oil-producing Niger Delta, where rioting killed at least four people in March and the opposition governorship candidate has been arrested. [nLDE72U25H]
In Bayelsa state in the Niger Delta, a bitter rivalry between state governorship candidates Timi Alaibe, a former presidential adviser, and incumbent Timipre Sylva has already triggered violence. [nLDE70C1TM]
Several hundred have died in ethnic and religious clashes in Plateau state in the central Middle Belt since December, violence likely to be exacerbated by the polls. [nLDE71G0J3]
And in the remote northeast, a wave of killings of police and local leaders by militant Islamist sect Boko Haram has increasingly targeted politicians. One of Borno state's main governorship candidates was gunned down. [nLDE70R1VY]
What to watch:
-- Parliamentary polls will be a litmus test for how well INEC and the security forces will handle the elections
-- Challenge to the court ruling stopping governorship elections in some states
POLICY AND SPENDING The political uncertainty also means major pieces of policy -- and the multi-billion dollar investment decisions that hinge on them -- are likely to be on hold until after the elections.
Arguably the biggest is the Petroleum Industry Bill, which will re-write Nigeria's decades-old relationship with foreign oil firms and redefine the fiscal and legal framework governing investment, including in its key offshore fields, expected to yield most of its future production growth. [nLDE71L1SW]
The government has vowed the bill will pass before the end of the current administration at the end of May. Should it fail to do so, a new parliament could set the process back once again, particularly if the ruling party has a slimmer majority.
Potential investors in the planned privatisation of the domestic power sector, one of the cornerstones of President Jonathan's campaign, are also unlikely to go beyond statements of interest until the elections are over. [nLDE70H1SX]
Government spending has been rising in the run-up to elections. Government borrowing had increased around 50 percent by late 2010, dwarfing private sector credit growth of just 3 percent in the year. [nLDE6AM1P0]
Foreign exchange reserves have started to stabilise but remain nearly a quarter below year-ago levels, although oil prices and production are rising.
Parliament approved a 4.972 trillion naira ($32 billion) budget in March, increasing planned spending by close to 20 percent from President Jonathan's initial proposal in December and taking it almost up to last year's record level.
Finance Minister Olusegun Aganga has called the plans "unimplementable" and pledged to talk with legislators.
There has been heavy pressure on the naira currency NGN=D1 in the run-up to the elections, but the central bank has said it is determined to maintain exchange rate stability and has introduced forex forwards to try to smoothen demand.
What to watch:
-- Passage, or not, of oil reforms before end of May
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