Bimbola Oyesola, Louis Ibah, Uche Usim and Adewale Sanyaolu
The Nigerian business community Monday continued taking stock of losses it incurred after the Independent National Electoral Commission (INEC) unilaterally postponed thePresidential and National Assembly poll earlier scheduled for February 16 to February 23, 2019.
Already, the development which was blamed on INEC’s inability to firm up logistics deliveries to some states has already triggered a 6-month decline in the country’s stock market, while putting pressure on the nation’s bonds and currency markets.
Analysts and investment experts are now estimating that the economy would have lost an estimated N300billion in revenues by the time INEC concludes the reschedule elections on February 23, 2019.
The stakeholders who spoke to Daily Sun factored in the costs of partially or fully suspending economic activities in key sectors like the maritime, manufacturing, aviation, trading, as well as the closure of land borders against imports and exports for three Saturdays that the elections would hold, instead of the initial two intended by the electoral umpire.
For instance, according to the Chief Executive Officer of the Financial Derivatives Company Limited, Mr. Bismarck Rewane, the postponed election of last Saturday had already led to the decline of the stock market by about 1.6 percent by Monday (February 18).
Rewane, also listed the following as associated costs or losses borne by the Nigerian economy for having to suspend economic activities for two Saturdays instead of one with the postponement of the elections: disruption cost, direct cost, opportunity cost, consequential cost, and reputational cost.
“With Nigeria’s GDP at about $427 billion, divide that by 365 days, you will get the GDP per day of $1.170 billion,” said Rewane.
“So, the fact that everybody stopped work (for even one Saturday), implies that there is a direct cost of $1.170 billion. And then, there is the disruption cost too. 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,” Rewane added.
Rewane who attributed the inability of INEC to hold the election on its original scheduled date to project management failure, said investors confidence which is affected must now be earned. He said he country must accept the decline to last for awhile, even as he expressed optimism that it will later pick up.
For his part, Partner, Bloomfield Law Practice, Mr. Ayodele Oni, decried the unquantifiable loss in man-hours, particularly by thousands of Nigerians who usually have to abandon their businesses to travel by road, sea and air from one part of the country to another in order to cast their votes.
“A lot of people have travelled last Saturday (Feb. 16) and would have to repeat this journey through the same route again at an extra cost, coupled with the attendant risks on the road,” said Oni.
“Businesses have lost the opportunity to generate revenue and government has equally lost income from taxes because it is from profit that businesses pay taxes. So, if you look at it from a per hour billing point of view, several billable hours that businesses would have billed their clients have all gone down the drain,” Oni lamented.
Sources told Daily Sun that in the aviation sector, the domestic airlines industry is reported to have lost about N200million by partially suspending some operations. The industry is estimated to lose about N600million by the time the elections are held on three Saturdays with suspended flight operations.
Meanwhile, a former Director General of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. John Isemede, has noted that the economy did not just start incurring losses only with last Saturday’s postponed elections. Isemede, who presently consults for the United Nations on Trade Matters, noted that the nation’s economy had been at retardation for the past six months with the flagoff of electioneering campaigns by the various political parties. According to him, the flow of foreign direct investment appears to have stalled following the air of uncertainty blowing through the country on who will emerge winner at the Presidential election and what will define his economic policies for investors.
“There has been huge losses, not only due to the postponement, but from the time the politicking by parties commenced,” Isemede said.
“Once the campaigns started, the economy was left to suffer ; we saw a situation where the economy and politics were running in opposite direction.
“So for now, we cannot get the actual figure, even if we say over a billion in a day or ten in a week. They are all approximations. The loss is enormous.
“Nigeria should borrow leaf from neigbouring Ghana and United States of America, who will never shut their borders as a result of election,” he added.
For his part, the Executive Secretary, Depot and Petroleum Products Association of Nigeria (DAPPMAN), Mr. Olufemi Adewole, expressed worries that the postponement of the election by INEC was a disservice to Nigerians and businesses who may have had to shut down operations. He stated that the postponement could have been done some days to the election in order to mitigate the losses on the part of business owners.
Also reacting, Prof Uche Uwaleke, said the postponement of the general elections by the INEC has monumental adverse economic impact not only on the government but also on firms and individuals.