– Experts say the decision of INEC to postpone the presidential and National Assembly elections will cost Nigerian businesses huge financial loss
– The experts say the postponement will cost businesses in the country about $7.605 billion (N2.737 trillion)
– The amount is about two per cent of the country’s Gross Domestic Product (GDP), which is approximately $427 billion
Financial experts say the decision of the Independent National Electoral Commission (INEC) to postpone the presidential and National Assembly elections will cost Nigerian businesses huge financial loss.
The experts who spoke to ThisDay, say the postponement will cost businesses in the country about $7.605 billion (N2.737 trillion), amounting to about two per cent of Nigeria’s Gross Domestic Product (GDP), which is approximately $427 billion.
Some states had declared Friday, February 15 a work-free day, which the exerts say has clear economic implications.
In addition, many businesses and financial institutions also operated half-day on the same day because of the elections, just as the three tiers of government deployed their personnel to special assignments in relation to the elections.
More so, university lecturers as well as international observers had been deployed to states, lodged in hotels, ready for deployment to the polling centres. All these they say, have dire cost implications for the economy.
Chief Executive of the Financial Derivatives Company Limited, Mr. Bismarck Rewane, listed the costs associated with the postponement of the elections to include direct cost, disruption cost, opportunity cost, consequential cost, and reputational cost.
His words: “With Nigeria’s GDP at about $427 billion, divide that by 365 days, you will get the GDP per day of $1.170 billion.
“So, the fact that everybody stopped work today (Saturday), there is a direct cost of $1.170 billion. Then, there is the disruption cost.
“Disruption cost is that you multiply the daily cost by three. That is because if I had booked a wedding today and now I have to shift the date again. So, that is $1.170 billion multiplied by three.
“Then, there is what is called the opportunity cost. That is, the things people would have done today, which is about 50 per cent of the direct cost. Then, there is what is called the consequential cost, which is usually twice the direct cost. That is a total of almost $8 billion, which is about two per cent of Nigeria’s GDP.”
Furthermore, he identified reputational cost, which according to him, could not be quantified. This has to do with the damage the election postponement would have done to the country’s reputation considering, especially from the perspective of foreign investors and the foreign election observers.
“We have investors that have made their projections about this election and they never factored in this postponement,” he said.
He continued: “Normally, if you have a project, you ought to be reviewing it every day. So, the fact that they (INEC) knew and announced the postponement five hours to the election, shows total lack of preparedness and it is disappointing.
“But the hope is that what they haven’t achieved in four years, we can achieve in seven days. Our hope is that they would do something dramatic.
“Remember that in 2015, the outcome was more important than the process, but in 2019, the process is more important than the outcome. Therefore, if for any reason, what you have done is to jeopardise the process, it only makes the fact that there is going to be a contest by all aggrieved parties after the election.
“So, the costs are mounting and the clock is ticking and we hope the clock is not a time bomb.”
Similarly, major Nigerian airlines cancelled a total of 145 flights with a projected revenue loss of about N290, 000, 000 on Saturday, February 16, due to the sudden postponement of the elections.
The airlines decried the situation the announcement of the poll postponement had put them, saying it did not give them any chance to prepare to operate some flights later in the day.
Director General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, argued that the postponement had implications for confidence in the electoral process.
His words: “The trouble was that the notice of postponement came too late to allow economic players to make alternative use of their time.
“It was a major disruption to economic activities in the country. Borders were shut, schools were closed, ports were shut – all these have implications for operating costs.
“In the maritime sector, importers will bear additional demurrage cost because of the longer cargo dwell time at the ports.
“The cost to the nation’s treasury of the election rescheduling will be almost double as a large part of processes will be repeated in a week’s time.”
His counterpart at the Nigeria Employers Consultative Association (NECA), Mr. Tim Olawale, noted that the salient questions arising from this shift were numerous.
According to him, companies closed early or declared holiday last Friday, which also had its cost implication.
“Businesses are still grappling with the costing of the loss. There is also production exigency that demands staff working on Saturday on the assumption that there would be election.
“These had led to irreversible commitment by management to pay overtime and in some cases double the normal rate.
“And of course there is the massive disruption in logistic flows. Reservations in hospitality firms were cancelled with great loss and in some instances rescheduled for the days newly announced for the elections.
“This will necessitate fresh cancellations of bookings with attendant losses,” he explained.
Similarly, Majority of stock market stakeholders said the sudden postponement of the elections would impact negatively on the market and have dire consequences for investment decision.
Chairman of Association of Stockbroking Houses of Nigeria (ASHON), Partick Ezeagu, said uncertainty was the greatest phobia that afflicted any market and even more applicable to the capital that is very sensitive to uncertainty in the political fate of a sovereignty.
“For the capital market in Nigeria, the delay in the conduct of election and the fact that it happened less than six hours before the election was to commence. Investors will react negatively unless a very credible reason is adduced and effectively disseminated urgently,” Ezeagu said.
Meanwhile, the West Africa Network for Peacebuilding (WANEP) and its partners have expressed disappointment over the postponement of the 2019 general elections, saying the decision of INEC has socio-economic and political consequences for all stakeholders.
This was the position of the group at a press briefing on Saturday, February 16 in Abuja, even as it urged Nigerians not to be discouraged but to come out en masse on 23rd February and 9th March 2019 to exercise their civic rights.
WANEP also called on the international community, partners and domestic observers not to be deterred or lose faith in Nigeria’s electoral process, urging them to remain resolute in their support to ensure peaceful and credible elections.