Economic implications of INEC’s general elections postponement

The Independent National Electoral Commission (INEC) in the early hours of Saturday announced it was shifting the polls by one week despite its assurance of conducting a free, fair and credible election. Experts have been looking at the implication of the postponement on the economy.

The bombshell

The postponement of the general elections by the INEC has monumental adverse economic impact not only on the government but also on firms and individuals.

This cost is escalated by the fact that the announcement came on the very day the elections were to be held after a number of irreversible steps had been taken by various economic agents and actors.

Many people had traveled far distances just to exercise their franchise before the INEC decision while many organizations especially educational institutions had to shut down temporarily for the period of the elections.

‘Cost of doing business’

The associated costs of doing so cannot be quantified. Just how do you measure the huge losses on the part of individuals from cancelled wedding, burial and other ceremonies already scheduled for Feb 23 and March 9, the new dates picked for the elections?

How about production plans by business firms already made with the original elections dates in mind that will now be shattered? What about the disruptions in domestic and international flight arrangements?

One could go on and on. Because the announcement wasn’t made early enough, business activities will be very low on Feb 16. A number of markets and businesses will be shut for most part of the day.

The reopening of land borders eventually will be after the closure announced earlier had taken its toll on the economic activities of border communities.

Stakeholders affected too

The cost to the political parties and election observers can better be imagined. Some of the parties may not have the resources to foot the extra bill given that their agents had already been mobilized.

Ditto for election observers especially international observers, some of whom may have to return before March 9 due to unanticipated hotel and other bills.

This unfortunate development further confirms what is public knowledge that the huge cost of conducting elections in Nigeria is about the highest in the world even surpassing that of India, the world’s largest democracy with a population six times bigger than Nigeria.

Recall that the sum of N189 billion was approved for INEC for the 2019 election. This amount is more than the capital components of education and health budgets put together.

If you consider the total sum of N242 billion approved for INEC and five other agencies for the conduct of the 2019 general polls, it is money that could have gone a long way in fixing critical infrastructure in this country.

With elections now rescheduled, you can be sure that this cost will spike. Where will this extra sum be sourced if not from money already earmarked for capital projects? So the opportunity cost is quite high.

This development could widen the fiscal deficit and I hope it doesn’t amount to additional borrowing by the government. It also raises country risk for Nigeria. Any attempt to borrow externally will be at a higher cost.

The information-sensitive stock market will be at the receiving end as I expect a bearish trend in the days ahead following this development. There is no doubt that this will have the effect of weakening investors’ sentiments and may even trigger further capital flight.

I won’t be surprised if this first quarter of the year is characterized by lower capital importation and slower GDP growth. In the same vein, the Purchasing Managers Index reading for the month of February 2019 is bound to come in lower when compared to previous months.

Overall, the postponement of the elections due to ‘logistic reasons’ was avoidable and does not bode well for the nation’s economy.

Going forward

In view of the huge cost of conducting elections in Nigeria and considering that elections were postponed in 2011 and again in 2015 and then now, isn’t it time we reconsidered the frequency of elections in Nigeria by amending the constitution to provide for a single term of say 5 or 6 years as opposed to the two terms of 4 years? This is my take.

Uche Uwaleke, Nigeria’s first Professor  of Capital Market, President of Association of Capital Market Academics of Nigeria, is at the Nasarawa State University Keffi,

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