• Thursday, March 28, 2024
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4-year election cycle as a drag on economic growth

election

Not a few Nigerians woke up on Saturday, February 16 2019, to the shocking news of the postponement of the general elections earlier scheduled to commence that day. The Chairman of the Independent National Electoral Commission (INEC), Prof Mahmoud Yakubu, had while announcing the shift in dates in the early hours of Saturday, blamed the situation on logistics and operational problems. This will not be the first election postponement in recent times. For different reasons, the general elections were shifted in 2011 and also in 2015. Expectedly, on each occasion, the shift in election date had taken a great toll on the nation’s economy.

If the previous experiences left a tear on the nation’s resources, this latest incident leaves a big hole. The magnitude of the loss, not only to the government but also to firms and individuals, is incalculable not least because of the timing of the announcement which was made within hours of the start of the elections after a number of irreversible steps had been taken by various economic actors. A lot of people had traveled far distances just to exercise their franchise while many organizations especially educational institutions had to shut down temporarily for the period of the elections. 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, funeral and other ceremonies already fixed for Feb 23 and March 9, the new dates picked for the rescheduled 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? Indeed, this sad development raises a number of questions.

Because the announcement was not made early enough, business activities were at low ebb on the day the polls could not hold in view of the earlier order by the government restricting movements in the country. A number of markets and businesses were closed for most part of the day. The land borders have been reopened but not before its earlier closure had taken a toll on the economic activities of border communities. Recent reports say, on account of the postponement, the National Assembly has also shifted its resumption initially scheduled for February 19 to Tuesday the 26th of February. This has implications for the timely passage of the 2019 budget. The cost to the political parties and election observers can better be imagined. Smaller political parties may not have the resources to foot the extra bill given that their agents had already been mobilized; ditto for national and international election observers who have committed enormous resources in deploying observers in the field.

With the general elections now rescheduled, the cost of conducting the polls will most likely spike. The sum of N189 billion was approved by the National Assembly for INEC to defray the cost of the 2019 elections. Any additional funds will probably be sourced from money already earmarked for capital projects. So, beyond the explicit costs, there is also the opportunity cost to contend with. The spinoff of the election postponement could widen the fiscal deficit and rubbish government’s efforts at fiscal consolidation. It also creates a bad image for Nigeria in the international community and raises country risk.

By implication, any external loans will most likely be contracted at a higher cost. The information-sensitive stock market will be at the receiving end witnessing a bearish trend in the days ahead. It is a no brainer that investors’ sentiment is bound to weaken which could trigger capital flight. The damage done to investors’ confidence could translate to lower capital importation and slower GDP growth in the first quarter of the year. 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. What is more, mental health Physicians submit that such unexpected and sudden negative news is capable of inducing some emotional, mental and physical health challenges for many citizens. This will certainly not be a welcome development in a country where productivity is relatively low and the cost of health care is beyond the reach of many.

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

This unfortunate development brings to the fore the concern in many quarters about the huge cost of conducting elections every four years in Nigeria which is among the highest in the world. This comprise the cost of voter registration and the compilation of a credible voters’ register, recruitment and training of electoral officials, provision of electoral logistics, civic and voter education, procurement of sensitive and non-sensitive materials, deployment of electoral technology, election security, undertaking regular engagement with stakeholders and handling of pre-election and post-election litigations. This cost has been on the rise with every election cycle. According to reports, for the conduct of the 2019 general polls, a total sum of N242 billion was approved for INEC and five other agencies namely the Office of the National Security Adviser, Department of State Security, Nigeria Security and Civil Defence Corps, Nigeria Police Force and the Nigeria Immigration Service.

This amount is more than the capital components of education and health budgets put together. It is also money that could have gone a long way in fixing critical infrastructure in the country. Moreover, associated with election periods are other intrinsic costs that may not be easily quantified. It is common to notice a slowdown in government activities because governance takes the back seat especially when key government officials are appointed members of the ruling party’s campaign committee. Following the indefinite suspension of the second reading of the 2019 Appropriation Bill by the House of Representatives, ostensibly on account of electioneering activities, the 2019 budget may not see the light of the day any time soon. This might slow down the tempo of infrastructural development.

Further, political uncertainty in an election year has negative consequences on economic activities. There is usually an upsurge in people leaving the country especially expatriates some of whom, by the nature of their insurance contracts, are not allowed to stay in a country during elections. Business firms tend to be cautious with lower risk appetite and so investments and employments slump. Generally, investors soft pedal ahead of elections due to elevated political risk.

Aside interest rate hike in the United States of America, there seems to be a consensus that the dismal performance of the stock market in 2018 has a lot to do with the political tension in the country. It is therefore safe to conclude that owing to uncertainty, general elections impact economic growth through the suppression of both consumer and business spending. Going forward, in view of the huge cost of conducting elections in the country every four years and the adverse effects on the economy of the incessant elections postponements, it would be worthwhile to revisit the frequency of elections in Nigeria and have the National Assembly amend the constitution to provide for a single term, of say six years, as opposed to the present two terms of four years. What has become obvious is that the four-year election cycle is a drag on economic growth and development. Clearly, a longer election cycle recommends itself.

 

UCHE UWALEKE

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