In the 1999 elections, the first in sixteen years, he decided to run for the presidency as the candidate of the People's Democratic Party. Obasanjo won with 62.6% of the vote, sweeping the strongly Christian Southeast and the predominantly Muslim north, but decisively lost his home region, the Southwest, to his fellow-Yoruba and Christian, Olu Falae, the only other candidate. His loss in the South West has been attributed to his being very unpopular amongst his kinsmen in the South-West.
This was because he over the time had come to represent policies and actions that tend to burden the majority of the people. The Yorubas, his kinsmen are known to deride oppressors. Apart from this, he was also against the Yorubas' rigorous quest to revalidate the election won by Chief MKO Abiola in 1993. These aggregates of issues made the Yorubas suspecious of him and they expressed this by massively voting against him in 1999. 29 May 1999, the day Obasanjo took office as the first elected and civilian head of state in Nigeria after 16 years of military rule, is now commemorated as Democracy Day, a public holiday in Nigeria.
Obasanjo spent most of his first term travelling abroad visiting mostly western countries. He claimed this was to polish the country image and re-establish the country to international scene after being battered and stained by the regime of Gen. Abacha.
He succeeded in winning at least some Western support for strengthening Nigeria's nascent democracy. Britain and the United States, in particular, were glad to have an African ally who was openly critical of abuses committed in Robert Mugabe's Zimbabwe at a time when many other African nations (including South Africa) were taking a softer stance. Obasanjo also won international praise for Nigeria's role in crucial regional peacekeeping missions in Sierra Leone and Liberia. The international community was guided in its approach to Obasanjo in part by Nigeria's status as one of the world's 10 biggest oil exporters as well as by fears that, as the continent's most populous nation, Nigerian internal divisions risked negatively affecting the entire continent.
At home, Obasanjo's first term was marked by widespread criticism over the Nigerian government's response to violent crises in the North—Kaduna and Kano chief among them—as well as in the central-eastern state of Benue and the southern oil-rich Niger Delta. International media reports cited figures of more than 10,000 people killed in violent outbursts during Obasanjo's first term. Nigeria's military was criticized for using tactics of mass suppression—notably burning down towns such as Zaki-Biam in Benue and Odi in the Niger Delta state of Bayelsa—which Obasanjo initially defended, before later expressing regret for the lives lost.
His party, PDP, was established without him, as when he was called to contest the presidency he was languishing in prison. Thus he was not able to control the party in the direction he wanted. The party became its own opposition with various infighting.
Although Obasanjo made fighting corruption the stated aim of his first term and managed to pass some anti-corruption laws, critics both at home and abroad accused him of doing too little to reign in the excesses, particularly among federal government ministers and state governors, many of which were widely publicized in the domestic and international press.
Some of the public officials like the National Assembly speaker and Senate president were involved in conflicts with the president, who had to battle many impeachment moves from both houses. Obasanjo managed to survive impeachment and got renomination.
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