There is a strong correlation between holding credible elections in Africa and positive economic outcomes. This is part of the analysis discussed at this month’s LBS Breakfast Club by the FDC Think Tank.
The timing of the findings is auspicious as it coincides with the February 16 presidential election. Research shows that where credible and transparent elections are held in a country, it is usually followed by positive GDP growth, decline in inflation, a rise in Gross Fixed Investment and a bounce in the stock market. This hypothesis is partially validated by the last elections in Ghana, Senegal and Nigeria in 2015.
However, where elections are stolen or rigged and rancorous the reverse is the case. Negative economic performance and violence usually follows as noticed in Zimbabwe, DRC etc. and far away Venezuela.
Empirical evidence also seems to suggest that when the misery index in a country increases in 3 consecutive quarters preceding an election, the incumbent mostly suffers. In the last few days, economic indicators have shown some strange trends- the naira appreciated to N360/$ before falling back to N361/$ and economists at FDC are forecasting a decline in inflation in January to 11.35%.
The NBS is set to release Q4 GDP numbers on February 12th. Good economic news at this time is incumbent supportive whilst if the GDP numbers are weak and inflation rises it could be helpful to the opponent. However, no matter the electoral outcome, the need for an increase in growth and investments in Nigeria has become an urgent necessity.
The attached slides are a synopsis of the state of the economy and the post-election outlook as presented by Bismarck Rewane at the LBS Breakfast Session.