Muhammadu Buhari's victory in the presidential elections, confirmed officially in the early hours of this morning, goes down as a milestone in the democratic history of Nigeria.

While many African nations claim to function as multi-party democracies, Nigeria is one of only a handful (including Ghana, Zambia, and Senegal) where the incumbent party (and president) has been unseated in an election considered fair.

Following the examples of Mauritius (December 2014) and Sri Lanka (January 2015), Nigeria could become the third frontier market in six months to manage a peaceful, orderly transition. A track record of democracy is being established in frontier markets.

We believe new technology and social media had a strong - if not decisive - impact on the campaign. New voter cards limited the scope for fraud (the number of registered voters fell from 73.5m to 67.4m); widespread smartphone use enabled observers to monitor and report incidents (estimated 3G subscriptions, a good proxy for smartphone use, have increased from 6mn to 24mn in the last four years); and social media platforms allowed results to be disseminated more efficiently.

On this last point, it is significant that the official announcement was pre-empted by local and international media working from their own tabulations of the state-level numbers. This seems to have reinforced (rather than undermined) the democratic process, reducing the ability of the losing party to challenge the outcome. Much to his credit, incumbent Goodluck Jonathan also placed a congratulatory call to Buhari in advance of the official results.

Religious, ethnic and monetary motives appear to be losing influence among voters. Historically, voter loyalty in Nigeria has been cultivated through a combination of ethnic identity, religious affiliation, and access to patronage.

In the current election, however, this formula appears not to have worked. The supposedly all-important issue of 'zoning' was barely mentioned, campaign largesse in many northern states run by PDP governors did not translate into votes, and turnout in Jonathan's traditional heartland, the South-South, was comparatively weak at 58%.

So strong was the desire for 'change' - a message engineered with the assistance of David Axelrod's consulting firm, AKPD - that voters were willing to cross ethnic and religious lines in support of substantive issues. On a directly related note, the APC's manifesto calls for an end to the policies that tie Nigerians to their Local Government Area (LGA) of origin, giving them the freedom to live and work where they choose.

For all the worthy policies outlined in the APC's manifesto, the immediate priority will be adjusting to deteriorating external conditions, in our view.

As we have written in our recent research (see 19 March 2015, Nigeria: A policy minefield), we believe this adjustment will take the form of a further FX rate devaluation and a contraction of government spending once the 2015 budget is approved.

In order to cope with lower oil prices, we also expect the government to implement revenue-enhancing reforms. Most investors - as well as the IMF - see an increase in the VAT rate (currently 5%) as a foregone conclusion at this point, but this is unlikely to be sufficient, at least on its own (the VAT pool, of which the federal government is entitled to 15%, generated the equivalent of 1% of GDP, or US$2.0bn, in H1 2014).

In conjunction with a VAT increase, the government may consider increasing customs and excise duties (on alcohol, some fear), though we think the lower hanging fruit may be in reviewing how it allocates Pioneer Tax Status to oil operators.

Economic management is not one of Buhari's perceived strengths, but we believe an APC administration will drive reform in at least two critical areas. As a former army general, and with national security issues at the heart of the electoral campaign, we think Buhari will make combating Boko Haram a top priority. On this front, we believe there is scope to achieve better results with fewer resources: for the better part of the past four years, defence and related functions have absorbed over 10% of the federal government budget, with very little to show in return.

The sudden turnaround of the past several weeks suggests that (i) resources were being allocated much more efficiently, or (ii) regional cooperation has made a difference. In the event, we expect Buhari to make improvements on both these fronts. As a former Federal Commissioner of Oil and Natural Resources, we think Buhari will look to make significant changes in how the NNPC is run.

Beyond the explicit measures outlined in the APC manifesto, we think he will introduce more transparency to the NNPC's operations, reducing the scope for leakages. The publication of PWC's forensic audit, which Buhari challenged the PDP to do during the campaign, would be an initial sign of the APC's intentions in this area.

At the ministerial level, an APC administration is likely to usher in significant (if not wholesale) changes, in our view.

In keeping with the reforms to the oil sector described above, we think that a new Minister of Petroleum Resources would be a pre-requisite - given his loyalty to the APC and his important contribution to their campaign, former Rivers State Governor Rotimi Amaechi is one possible candidate, in our view.

The Federal Ministry of Power, another flagship area of reform that has stalled, is also likely to see turnover. Elsewhere, we think the APC will see the merit of retaining Minister of Agriculture Akin Adesina, or at least ensuring the continuity of his policies aimed at reducing important dependence.

The same argument applies to the Federal Minister of Industry, Trade and Investment Olusegun Aganga, whose ministry has been pushing economic diversification via the Nigeria Industrial Revolution Plan (NIRP). It remains to be seen whether there will be any changes at the Ministry of Finance or the Central Bank of Nigeria, though the APC's manifesto explicitly mentions central bank independence as a top priority.

From an economic perspective, the effectiveness of the Buhari administration will depend largely on the outcome of gubernatorial elections in 28 of the 36 states on 11th April, in our view. The Nigeria Governors' Forum has exerted considerable influence on policy at the national level, particularly in matters relating to public spending.

The cooperation of state governors will therefore be critical in the coming fiscal adjustment as they pursue policies to reduce their reliance on (falling) statutory revenues from the centre and disbursements from the Excess Crude Account.

Among other things, we think they will look to cover the shortfall with income taxes, road taxes, and stamp duty, all of which are handled at the state level and represent important sources of internally generated revenue. They could also raise money through asset sales, with land being one of the most important state assets.

Of the 28 governorship elections taking place, 18 have vacant seats; the value of incumbency may be even more undermined, likely favouring the APC, all before considering the potential for defections (similar to those which have taken place in Sri Lanka following the presidential election in January 2015).