#NigeriaDecides2019 Postponement – Estimating the impact of Election Postponement on GDP

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INEC announced the postponement of the Presidential, Senate and House of Representatives elections a few hours to the commencement of voting on Saturday, 16 February, moving it a week to Saturday, 23 February. The electoral body simultaneously announced a similar one week move for state-level election.

The electoral umpire cited logistical problems as the key driver of this move. While this is not the first time in Nigeria’s history that elections will be moved, the manner and timing of this postponement leave many stakeholders in the lurch, as all have committed financial resources to play their roles as political parties, citizen voters, electoral observers and media. SBM has also committed resources to the elections. INEC itself has committed financial resources to the conduct of the postponed elections and further funds will be used to withdraw sensitive materials already deployed to the field as well as to redistribute them in the week the elections are now scheduled to hold.

SBM Intelligence has carried out a high-level analysis using publicly available data to provide a view of the possible financial losses in terms of actual funds spent as well as the opportunity cost forgone for the now postponed elections. We take three headers, which is by no means exhaustive, merely indicative in order to focus the parties, both government and INEC on this matter in order to engender greater responsibility to the stakeholders going forward.

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The headers are:

  • Cost to Political Parties
  • Cost to INEC
  • Forgone GDP.

COST TO POLITICAL PARTIES.

There are 119,974 Polling Units across 8,809 Wards in 774 Local Government Areas of Nigeria. For political parties contesting, polling agents must be mobilised as follows:

  • At least one Polling Agent per Polling Unit per party. There were three elections meant to hold today, and in some situations, especially where there is no love lost between the contestants within the same party, rather than have one PA per PU, each candidate sponsors their own PA per PU, hence potentially having up to three PAs in such PUs. For the purposes of our analysis, however, we have assumed that all is well in the parties and they have one PA per PU
  • One Senior Agent in each ward per party to monitor the collation of PU results at ward level. The PU PAs usually hang around and need to be fed and taken care of.
  • 1 LGA level Agent in each LGA to monitor the final collation at the LG level
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For each of these agents, below are the usual average associated costs, which are paid prior to election day.

Below is a breakdown of Polling Units by Geopolitical Zone.

Based on the above, we estimated the number of polling agents per state, taking into cognisance political parties active in each state, and making an allowance for a few fringe parties fielding agents in some PUs.

Cost To INEC
In calculating the cost to INEC, we have identified the budget components which will be impacted as follows:

  • Incurred and spent for the conduct of the postponed elections
  • Will be incurred in order to manage the fallout of postponed elections.

Below is a breakdown of key budget provisions in INEC’s budget, the highlight of the potential impact based on the above and our assumptions for accruing the impact sums. Budget areas impacted are coloured red.

GDP Forgone

Estimating the impact of the postponement on GDP requires a lot of assumptions and is quite subjective.

Some of the clear effects include:

  • Disruption of business activities – activities are disrupted across the supply chain, such as manufacturing, construction and food-related industries and ancillary services (e.g. transportation), which are constrained by tight schedules to fulfil orders and shipments
  • Disruption of social activities – recreation and events related activities have their big days during the weekends and revenue loss can be substantial
  • Increased wage cost – regardless of having the day off and not being productive, salary earners have to be paid and this increases the wage to revenues ratios of organisations
  • Inconvenience to daily life and reduced consumer spending – restriction of movement means consumers are home all day, restricted from running certain errands and will spend less money overall
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Another consequence is that many firms shut down early on the Friday preceding election day, while educational institutions took early mid-term/ semester breaks.

SBM Intel estimates Nigeria’s GDP at $420 billion as at the end of 2018 and we have estimated the foregone GDP for the various economic sectors (contribution to GDP in line with National Bureau of Statistics data).

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