TOP finance and economic experts have raised concern over the economic implications of Nigeria’s rescheduled elections and turn of political events, saying the postponement has worsened existing tension in the business environment and will keep economy in coma for the first half of 2015.
An economist and Managing Director, Head – Africa Macro Global 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,” Khan said.
She is further concerned that the postponement of Nigeria’s 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.
Khan, in an email conversation, stressed further that extension of the election period creates additional uncertainty that may affect economic outcomes in Nigeria.
According to the Deputy President of the Nigeria British Chamber of Commerce and council member of the Lagos Chamber of Commerce and Industry (LCCI), Prince Dapo Adelegan, 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.
They have been waiting for the outcome of this election to enable them to take appropriate steps.
“There is a lot of uncertainty because business decisions and activities would be delayed further. Already, 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 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.
However, Adelegan, in a television programme monitored in Lagos, noted 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.
A United Arab Emirates-based business expert and Chief Executive Officer (CEO), Robinni, Mr Elija Ezendu, said the rescheduled election showed there were a lot of political instability and unnecessary uncertainties in Nigeria such that, it is only businesses that were not affected by changes in the fiscal policies that would continue, while others would remain stagnant.
According to him, a lot of foreign direct investments are stagnant. He said the world was watching what was going on and investors who usually put their money in highly regulated sectors like the banking sector and the oil and gas would hold on to avoid being hurt by political changes.
More especially, if the political tension became protracted, a lot of local and foreign investors would begin to divest and relocate their investments.
Nigeria’s presidential and parliamentary elections, originally scheduled for 14 February, have been postponed until 28 March. Gubernatorial elections will be delayed to 11 April. This comes after Nigerian security agencies informed the Independent National Electoral Commission (INEC) that they would be unable to provide adequate security for elections on 14 February. The army will instead be redeployed in a counter-offensive against Boko Haram insurgents, together with troops from Chad, Cameroon and Niger.