Assistant Politics Editor, DANIEL KANU, writes on the impact of the six-week extension of the 2015 general election on the economy.
The postponement of the 2015 elections, penultimate Saturday, by the Independent National Electoral Commission (INEC) has continued to raise serious concern on its effect on the nation’s economy.
The election was earlier slated to hold on February 14 and 28 before its present date of March 28 and April 11, after security chiefs said they could not safeguard the polls and require at least six weeks to launch a regional military campaign to reclaim territories from Islamist extremists, Boko Haram, particularly in the troubled North East zone.
Also, the issue of allowing eligible voters to collect their permanent voter cards (PVCs), to enable them exercise their franchise, was another excuse that was given, although the opposition is suspicious.
Looking at the cost, some critics claim that the rescheduled elections will hit the economy hard. That is seen as INEC Chairman, Attahiru jega told reporters he does not see another cost on his office.
TheNiche investigation reveals that most businesses have been waiting for the outcome of the election to enable them take vital business decisions.
Most Nigerians, it was gathered, have relocated to their geo-political zones for fear of possible attacks if the election goes awry, particularly where their preferred candidate fails to win.
Okechukwu Onyebuchi, a Kaduna State-based trader, who relocated to Aba with the family (he intends to remain there until after the election) told TheNiche that there is much tension in the North which he would not want to risk.
He said small-scale businesses would suffer, as most traders relocate out of their ethnic zones.
“There is so much tension in the North, not only in Kaduna where I reside. It would be stupid for anyone who is not a Northerner to stay there during this period. Majority of us (Ndigbo) have left the place and I think it would be suicidal for any Igbo to stay there. What happened during the war is still fresh in my memory; so I don’t want any other regrets.
“You know the North, particularly their Muslims, are too fanatical and when you are of the opposition party to their own, you are putting your life and that of your family at great risk. We need to be prayerful in this election or we will plunge this nation into chaos.
“If you are sensitive to movements, you will observe that just as people are leaving the Northern zone, the Hausa (outside their geo-political zone) are also moving back to their zones. Of course, our businesses will suffer; but you need to be alive to do the business,” he stressed.
Onyebuchi said a big blow would be dealt on the economy because of the development, just as he explained that “Nigeria will lose billions of naira in business”.
Top finance and economic experts have raised anxiety over the economic implications of the postponement, explaining that the deferment has worsened existing tension in the business environment and will keep the economy in coma for the first half of 2015.
Head of Africa Research at Standard Chartered Bank, Razia Khan, observed that many foreign investors, still attracted by Nigerian bond yields, had been waiting for the uncertainty of the election period to pass before recommitting themselves to Nigerian markets.
But “with prolonged election-related uncertainties, the risk is that these foreign exchange (FX) inflows are delayed,” she lamented.
Similarly, with oil prices still languishing at low levels, resulting in little addition to the FX reserves, “we expect the reserves to come under further pressure,” the economist noted.
In her observation, the postponement of the elections would also potentially delay the formulation of policies aimed at helping Nigeria to cope with lower oil prices, and that state government finances are especially pressured, pointing to more frequent supplier arrears.
Deputy president of the Nigeria British Chamber of Commerce and council member of the Lagos Chamber of Commerce and Industry (LCCI), Dapo Adelegan, said a lot of businesses and investors had taken position before the announcement, and now had to readjust not only their budgets but also their strategic business decisions.
“There is a lot of uncertainty because business decisions and activities would be delayed further. Already, the 2015 financial year has been affected,” he stated.
The first half of this year, he observed, would be docile in terms of business growth because after the elections, things may drag on till the third quarter of the year.
“To me, quarter three of 2015 may actually be the beginning of real business in the country. That is in terms of projections, budgets, sales and other businesses that may have been affected in the first two quarters of the year. In terms of growth, we are going to have a stagnant growth in the first half of the year,” Adelegan stated.
Also, he observed that as long as a number of entire government apparatus at the federal and state levels are committed to the elections, no significant activity in terms of budgeted public expenditures would be recorded. Hence, a lot of projects and businesses would be in a state of coma until June 2015.
But Adelegan did not generalise the expected lull in business to affect all sectors, as he equally observed exceptional commercial venture that would strive as long as the election campaign lingers.
He noted, for instance, that businesses that support the election, like advertising agencies, printers of posters, logistics suppliers, among others might possibly be the only beneficiaries of the postponement.
Some experts say the rescheduled election is a pointer to political unpredictability and unnecessary uncertainties in the country, such that it is only businesses that were not affected by changes in the fiscal policies that would continue, while others would remain stagnant.
It is obvious that a lot of foreign direct investments (FDIs) are stagnant. This is because investors who usually put their money in highly regulated sectors like the banking sector and the oil and gas would hold on to observe the trend, to avoid being hurt by political changes.
If the political tension became protracted, economic watchers are of the view that a lot of local and foreign investors would begin to divest and relocate their investments.