Election Postponement : Expert Forsees Fiscal Deficit, Capital Flight

A financial expert, Prof. Uche Uwaleke, has said that postponement of the general elections could trigger capital flight from the nation’s bourse and as well widen fiscal deficit. Uwaleke, Head of Banking and Finance Department, Nasarawa State University Keffi, told the News Agency of Nigeria (NAN) in Lagos that opportunity cost of the polls postponement was enormous. NAN reports that INEC, hours earlier, announced the shift of the Feb. 16 Presidential and National Assembly elections to Feb. 23. The Governorship and State House of Assembly as well as FCT area council elections have also been shifted from March 2 to March 9. INEC chairman, Prof. Mahmood Yakubu, at a press conference, attributed the postponement of all the scheduled elections to logistic and operational problems. “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,” Uwaleke said. He decried the huge risk INEC had thrown the country into, noting that any attempt to borrow externally would be at a higher cost. Uwaleke said that the information-sensitive stock market would be at the receiving end, noting that the market would be 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 characterised by lower capital importation and slower Gross Domestic Product 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,” Uwaleke stated. He said that postponement of the general elections by the INEC had monumental adverse economic impact, not only on the government, but also on firms and individuals. Uwaleke noted that the cost was 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 organisations, especially educational institutions, had to shut down temporarily for the period of the elections,” he added. Uwaleke said that the associated costs of shifting the elections cannot be quantified, ranging from huge losses on individuals, businesses, companies, various political parties, airlines disruption as well as closure of land borders. “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,” he said. On the way forward, Uwaleke called for constitution amendment to provide for a single term of five or six years as against two terms of four years to save cost and national embarrassment. “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, it is now time we reconsider the frequency of elections in Nigeria by amending the constitution to provide for a single term of say five or six years as opposed to the two terms of four years,” he said. (NAN)