Polls shift fuels uncertainty, reduces foreign inflows, say analysts

The postponement of the elections on Saturday by the Independent National Electoral Commission (INEC) will prolong the uncertainty in the polity with the attendant negative impact on the nation’s currency, the naira, analysts have said.

Attahiru Jega, INEC chairman, had at a news conference Saturday night, announced the postponement of the general elections earlier scheduled to commence on Saturday 14 by six weeks.

Jega said that the presidential and National Assembly elections slated for February 14 would now hold on March 28, while governorship and state Houses of Assembly fixed for February 28 had been shifted to April 11.

He explained that the postponement was predicated on advice by the nation’s security chiefs, who said that the military had a major operation against insurgency in the North East.

“Rather than do an inconclusive elections, we had better wait until there is adequate security,” Jega had said, and added that the decision to postpone the elections was reached after wide consultations with critical stakeholders.

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Consequently, offshore investors that have planned against the February date will have a rethink, thereby thinning the inflows, with more pressures on the foreign reserves, the analysts further argued.

However, some other analysts said that so long as the postponement provides opportunity for INEC to meet the yearnings of those that have not received their permanent voter cards (PVCs) and for the military to score victories over the insurgents, it will be a welcome development.

Razia Khan, managing director/head, Africa macro global research, Standard Chartered Bank, London, said, “The main impact is to prolong the uncertainty associated with the elections – which investors will not like. Markets dislike uncertainty, so the prolonged uncertainty as a result of a delay to the election date is likely to weigh on the naira when markets re-open on Monday (today). Many offshore investors had been waiting for the elections (a risk event) to pass before recommitting to Nigeria. The danger now is that inflows will remain thin, and there will be more pressure on FX reserves, resulting first in an increasing spread between the parallel and interbank market FX rates, and ultimately, more pressure on the official FX rate.”

Speaking further, Khan said, “The delay is also a significant complication for policy. The authorities had planned to revisit the USD65/bbl budget oil assumption after the elections. With that opportunity now looking as though it may be months away, it is unlikely that there will be any easy solutions. The risk is that we see a higher level of payment arrears in the near-term, and a general slowing of activity, adding to downside pressures on the economy. The delay to the elections lengthens uncertainty and delays any quick policy formulation – against a backdrop of weaker oil prices, it’s an additional negative.”

Babatunde Fashola, governor of Lagos State, said, “It is a wrong signal to the international business community and investors. I don’t know any serious democracy in recent times that has set date and then changes them, except perhaps the last one was when a British Prime Minister backed down from elections. I think that when a country sets in motion a process like this, it ought to know that there would be political and economic consequences and that is why investors watch what is going on in the global community.”

Kenneth Iwelumo, managing partner, CKX Partners Limited, said, “This is the first general election in which card readers will be deployed, making it difficult to stuff ballot boxes. Fraudulent candidates will resort to buying PVCs outright in areas with dominant parties. Six weeks is a relatively short time. As long as the military scores victories against Boko Haram, there will be little impact to the economy. APC is vocal against the postponement of the presidential elections. However, they also needed time for the estimated 7 million voters in Lagos and the West to collect their PVCs.”

The Nigerian Association of Petroleum Explorationists (NAPE) said that the postponement would not impact on any investment decision in the oil and gas industry as projects in the industry are based on long term period.

Chikwendu Edoziem, president of the association, said such decision would only have meaningful impact on the industry when it is prolonged more than necessary which could mean several months.

Emeka Ene, president, Petroleum Technology Association of Nigeria (PETAN), said that the oil and gas industry is more concerned about the passing of the Petroleum Industry Bill (PIB) and if shifting the election forward would enable the legislators consider the passage of the bill, the industry would appreciate it.

He said other than this the shifting has no meaningful impact on the industry.

JOHN OMACHONU,  OLUSOLA BELLO &  JOSHUA BASSEY