Political and economic analysts have been active at work trying to analyse how the looming 2019 elections will play out for the country’s fledgling economy, especially between now and the elections and their aftermath.
It is acknowledged that the stability in the country’s macro-economic environment in the last nine months, is largely brought about by
the positive developments in oil prices and relative stability in the country’s foreign exchange (FX) market.
But there are still some downside risk factors in the broader political and economic sphere, which could throw spanners into the wheel of the recent momentum gathered by the economy.
In particular, economic analysts raise the possibility of capital reversals by Foreign Portfolio Investors as part of their reaction to political risk factors ahead of the 2019 general elections.
This, they said, accounted for why market capitalisation of the Nigerian Stock Exchange lost N416 billion in five trading days recently, just as the All Share Index exits the 40,000 mark to settle at 39,323.62 basis points, by the close
of equities trading on Friday, May 25, this year. Market analysts said the loss followed the withdrawal of some foreign investors from
the market.
Indeed, the elections will be watched by both local and foreign investors as the incumbent president goes for a second term in office in spite of complaints that an improvement in the economy has not trickled town to the pockets of the ordinary Nigerians since last year.
Also, the Nigerian economy is government-driven. It is the largest spender in the economy and that informs why top entrepreneurs and businesses look up to approval of the Federal Government’s budget to enable them plan and implement their
budgets.
So, the delay in the passage of the 2018 budget was viewed negatively by businesses and investors in the economy as the budget is required by public and private sector stakeholders to plan and manage their economic activities.
The 2018 budget which was put at N8.612 trillion and presented to the National Assembly by President Muhammadu Buhari on Nov. 7, 2017, but the absence of a budget calendar and lack of coordination between the executive and legislature have been the major causes of the delay. While the issues surrounding the budget delay is being gradually sorted out any delay would send signals of instability and uncertainty to prospective local and offshore investors.
Then, there is the socio-political climate of the country which has been beset by several conflicts in recent times. Prominent amongst these negative vibes to the socio-economic climate include the recent Shiite protests in Abuja and Kaduna. The large numbers of supporters of El-Zakzarky Shiite Leader were protesting government continued detention of
their leader.
Also, attacks by the Boko-Haram insurgents in North-East Nigeria have not abated. The insurgency has caused anguish among members of the international community and has prevented people living in that part of the country from contributing meaningfully to national development. The Boko Haram insurgency and the pro-Shiite Zakzarky protests are serious signs of insecurity, which could affect investment in Nigeria at this point in time.
Political and economic analysts also point to the continued killings by rampaging herdsmen across most of the Middle Belt of the country, particularly in Benue, Nassarawa, Taraba, Plateau and some southern states in the
country.
The seemingly intractable killings by Fulani herdsmen across most of the Middle Belt and southern states, has ignited angry reactions across the country against the government. It is one of the most controversial issues facing the current administration and has drawn a lot of criticisms from both local and foreign governments, politicians and human rights activists. Indeed, of most concern to every watcher of the government is its seeming inability to find a lasting solution to the herdsmen
menace.
Political and economic analysts fear that this lack of decisive action by the Federal Government may result in increased tensions as members of the affected communities too may be forced to defend themselves from any future attacks.
There is also the downside risk of electioneering spending and the likely implementation of the impending new minimum wage which could push up inflation from the third quarter of the year and also pose problems for the CBN in its efforts to
bring inflation in the country which is now hovering around 12 per cent, on the way downwards to a single
digit.
