Nigeria’s economy will soon be awash with liquidity as the political landscape is gradually heating up ahead of the 2023 general elections, according to a report by Afrinvest West Africa.
The expected liquidity would flow through election campaigns as political parties and interested candidates intensify strategies ahead of parties’ primary elections in 2022.
Consequently, businesses that deal in consumables, branded outfits, print, and digital services, and investment assets are expected to benefit from the increased liquidity.
“We anticipated that the equities market could also benefit from the expected increase in liquidity, given that positive real yield (nominal yield less inflation rate) – a major factor that lured investors away from equities in pre-election years of 2014 and 2018 – is likely to be neutralised by high inflation in 2022,” analysts at Afrinvest said.
Up for grab at the party’s primaries include one presidential ticket, one gubernatorial ticket each in 30 states, 469 federal lawmaker tickets each across the 36 states, and the FCT (Senate: 109, Representative: 360), and over 650 states House of Representatives tickets in 30 states.
“We believe popularity, financial muscle, value proposition, and perceived party loyalty would be key success factors for the aspirants that would clinch parties’ primary tickets,” the analysts said.
The report anticipated that the build-up toward parties’ primaries in 2022 would have a mixed impact on the general economy, albeit, positively skewed.
On the positive side, it expects to see a myriad small-scale empowerment programme spring up at the grassroots level, as candidates begin to strengthen their support base for the election.
“Also, we expect to see current political office holders kick-start new and abandoned projects in strategic locations. Hence, we believe this would also drive-up system liquidity, and by extension, increase aggregate demand for consumables, branded outfits, print and digital services, and investment assets,” according to the report.
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On the other hand, the report expects a material surge in public debt (especially, federal and state) on the back of election politicking and party financing.
In addition, “we do not rule out the relaxation of the enforcement of laws on sanitation and public space usage, especially to certain groups considered important in the political equation. Furthermore, we expect to see a resumption of party cross-carpeting by out-of-favoured politicians, the report states.
On her part, Ola Oladele, vice president, global market, Parthian Partners, Africa’s premier inter-dealer broker, said towards the election, the government always tries to bring out transactions that will benefit or boost a particular sector of the economy. One of the sectors that the government has come out to support is the healthcare system and agriculture.
So, in terms of liquidity coming and who is going to benefit, we think that health care, infrastructure, and agriculture are going to benefit from this because the politicians have to tell the story about the roads they have constructed and all that.
