Election spending can affect macro-economic projection

By Victor Emejuiwe  Very recently, the news headlines have been reporting humongous amounts of money released by public servants for the purchase of political parties’ nomination forms and parting gifts to delegates given upcoming political party primaries. The probability of high-level political spending, if not curtailed, affecting the macro-economic projections of government is high. The […]

By Victor Emejuiwe 

Very recently, the news headlines have been reporting humongous amounts of money released by public servants for the purchase of political parties’ nomination forms and parting gifts to delegates given upcoming political party primaries. The probability of high-level political spending, if not curtailed, affecting the macro-economic projections of government is high. The economy cannot grow at a sustainable level, when resources that should be applied to productive sectors with the capacity to generate profits, are distributed hugely amongst a few segments of the society. 

This article identifies the economic risks associated with the number and category of high-level public servants interested in the 2023 presidency. Amongst those who recently purchased the APC’s nomination form which was sold for N100 million are some current ministers, serving, and past governors. On the other hand, the PDP sold its presidential nomination form for N50 million with some current and past governors as contenders. It is worthy to note that election expenses run into billions of naira. The purchase of the nomination form is the first step to candidate election expenses, the candidates are also expected to woo delegates with substantial resources. Most of the candidates cater for the logistics and accommodation of delegates at the venue of primaries, they also drop parting gifts, which are usually monetized in dollars. The selected candidate would then proceed to the campaign field to woo voters. Such campaign expenses, according to the Electoral Act, should not exceed N5 billion for the presidency. Therefore, it is safe to conclude that amongst those who have indicated interest to run for the presidency, they should have a minimum of N5 billion to part with. It will suffice to say that such amassment of funds is a pre-planned action, which cannot be realized from the salaries of the public servants alone, irrespective of the period they have occupied office. 

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The 2022 Medium Term Expenditure Framework (MTEF) did not factor in the political environment during the preparation, and this is already affecting the macro-economic projection for the year. Section 11 of the Fiscal Responsibility Act provides that the MTEF shall contain:

 (a). A macro-economic framework setting out the macroeconomic projections, for the next three financial years, the underlying assumptions for those projections, and an evaluation and analysis of the macroeconomic projections for the preceding three financial years;  

(b) A fiscal strategy paper setting out: I. The federal government’s medium-term financial objectives, ii. The policies of the federal government for the medium term relate to taxation, recurrent (non-debt) expenditure, debt expenditure, capital expenditure, borrowings, and other liabilities, lending, and investment, iii. the strategic economic, social, and developmental priorities of the federal government for the next three financial years, VI. An explanation of how the financial objectives, strategic, economic, social, and developmental priorities, and fiscal measures are set out under sub-paragraphs (i), (ii), and (iii) of the paragraph relating to the economic objectives set out in section 16 of the constitution.  

For instance, there are official scarcities of the dollar in the banks; the exchange rate was projected to N410.15 to $1 but currently, the dollar exchanges in the parallel market for N600 to $1. It is assumed that politicians are responsible for the dollar rise.  

The projections on inflation have also been overshot. The Inflation rate which was projected to be double-digit in the medium-term given structural issues impacting the cost of doing business, including high food distribution costs, and also projected to drop at 13% in 2022 and 10% by 2024 is no longer the case. The recent report released by the CBN on Nigeria’s inflation shows that food inflation has increased from 15.1% to 19.1% between January to May 2022. Also, the probability that money largely deployed outside the productive sector is responsible for the current increase in inflation cannot be wished away.   

On deficit budget, the 2022 budget is to be funded with a deficit of N6.9trn, according to the DMO; this would shoot Nigeria’s total debt stock from N39.5trn as of December 2021 to 45trn. The risk factor behind such acquisition of debt in an election year is high. If it is not tied to strict accountability and enforcement mechanism, it can be prone to diversion for political activities.  

It is also necessary to bear in mind that, the debt is to be incurred during the last lap of the current regime. Therefore, projects attached to the debts require a continuity and management plan, otherwise, they would not be sustained.  

Because of the above, the federal government should comply with Section 48, 49, and 50 of the Fiscal Responsibility Act, 2007 by publishing its audited account for the 2021 financial year latest by June 2022. The Budget Office should also ensure quarterly publication of budget performance on its website. The Fiscal Responsibility Commission needs to be given more power to compel any person or government institution to disclose information relating to public revenues and expenditure, and cause an investigation into whether any person has violated any provisions of this Act.   

Victor Emejuiwe writes from Abuja