The growing anxiety over the 2019 general elections appears to be having serious effects on the economy. No doubt, whatever happens in the political arena is bound to affect the market positively or negatively. Politicians are therefore warned to desist from actions and utterances that could negatively impact the nation's fragile democracy and the even more fragile economy.
Feelers from the stock market show that investors have lost a whooping N729 billion to election anxiety in just three months of decline, obviously in response to the rising political intrigues ahead of the elections. The development is contrary to the general expectations of positive earnings in 2018 after the troubled economy apparently emerged from a recession at the end of 2017.
Indication is that the decline occurred between February and April, after a January rise triggered strong anticipations amid improving macro-economic indications in domestic and global economies.
Analysts, operators and investors alike have linked the decline to "extraneous factors" and "profit taking," because the subsisting market "fundamentals and upbeat economic data failed to support a much-expected healthy stock price recovery."
As it were, investors and traders who are mostly foreigners are concerned about the political risks associated with the 2019 elections. The fear of the unknown may have forced many of them to prefer to sit on the fence and watch as things unfold.
After the January and mid-February rally, surprisingly, the market reportedly recorded unprecedented reversal in performance contrary to predictions. This has been blamed, not incorrectly, on the tension that has plagued the political space in recent times.
Of particular note are the killings by the Fulani herdsmen and cases of political thuggery, which have aggravated apathy in investment. Investors are expectedly walking in fear of political risks, believing that violence in the country could trigger panic and lead to massive dumping of shares.
There are signs that the political situation is worsening as evidenced in the ward congresses of the ruling party held across the country the other day, which were marred by conflicts and recriminations leading to cancellations and rescheduling of polls in some states. Besides, the Ekiti and Osun state gubernatorial polls in the coming months this year are being mired in an atmosphere of tension.
Consequently, there is indifference in the market as foreign investors that play a dominant role have resorted to massive sell-off of shares. Indications are that the weak response to earnings is evidence of low liquidity, given, especially, that Nigeria's 2018 budget passed only last week is yet to be assented to by President Muhammadu Buhari, thereby, leaving the economy to run entirely on monetary stimulus.
One way out of a possible backlash on the economy is that government should adopt pragmatic strategies that would guarantee peaceful campaigns and stabilise the polity to ensure a sustainable market rebound.
Furthermore, it needs to be recognised that insecurity and social disorder are disincentives to investment. Government should rise to the challenge of tackling, with all seriousness, the unfortunate developments in order to restore investors' confidence.
The polity must be calm. Politicians need to be upright and play by the rule by following due process to ensure a peaceful atmosphere ahead of the elections.
Politicians need not overheat the polity. They need not come up with frivolities that would generate conflict and crises as these affect the capital market and the economy as a whole.
Besides, as the elections draw nearer, law enforcement officers should be more proactive. They should be able to identify flashpoints and ensure that a robust security arrangement is implemented to prevent the breakdown of law and order.
Faced with all the uncertainties, only the most daring of investors could come at this time of uncertainty and fear. Even local investors people are scared of investing.
Government should, of course, stop the growing spate of killings across the country since government alone has the capacity to stop it. There is no way a credible election could be held amid the bloodbath in many parts of the country.
Needless to say that the 2019 elections could make or mar the country depending on how politicians carry themselves. Would they allow patriotism and love for fatherland to dictate their actions and utterances or grant selfish interest to becloud their reasoning? Elections in Nigeria are often associated with gloom.
Certainly, Nigeria's fragile economy cannot absorb any politically motivated upheaval wisdom demands that elections are conducted in a rancour-free atmosphere and manner, so that democracy and of course, the economy do not go up in smoke.