By Lawal Nasir
The release of the 2027 elections timetable by the Independent National Electoral Commission (INEC) has excited many Nigerians, especially politicians planning to contest elective positions at the state or federal levels.
This is because the timetable, even though subject to changes due to the impending Electoral Act amendment, will offer stakeholders an opportunity for long-term planning and democratic preparation.
However, the Central Bank of Nigeria (CBN) has reasons to be concerned because its reforms, which have led to significant economic gains such as a dramatic rise in foreign reserves to $47.53 billion and a sharp reduction in headline inflation to 15.15% as of December, among others, could be threatened, if not reversed, by election-related spending.
Indeed, CBN Governor Yemi Cardoso drew attention to this threat at the recently concluded Second National Economic Council (NEC) Conference at the State House Conference Centre, Abuja, where President Bola Ahmed Tinubu praised the apex bank for restoring confidence in Nigeria’s monetary policy.
Cardoso later meticulously explained to the conference how election cycle spending could threaten the gains being recorded.
He categorically warned that the likelihood of excess liquidity in the country during the election cycle must be managed.
“The election cycle is another risk, as election periods typically involve increased liquidity injections. This must be carefully monitored to ensure it does not undermine the bold reforms that have restored stability. Global trade tensions also pose risks, and I know everyone here is well aware of recent global developments,” he stated.
Cardoso knows what he’s talking about. Nigerians also know that our politicians spend cash through both regulated campaign activities and informal, often illegal, patronage networks.
For instance, while our laws peg campaign spending at ₦10 billion for president, ₦3 billion for governors, ₦500 million for senators, ₦250 million for House of Representatives members, and ₦100 million for state assembly members, we often see candidates spending well beyond these limits, and enforcement remains a major challenge.
To make matters even worse, most of the spending by politicians on rallies, mobilisation, and other activities is done using physical cash. Many stash foreign and local currencies at home in preparation for elections.
They avoid the banking system for fear of being traced. Politicians then use cash to buy votes through direct handouts to voters at polling units. Funds are also often used to secure the services of political thugs to disrupt opponents or to bribe election officials to manipulate results. Even party primaries are frequently described as “cash and carry” affairs where aspirants distribute huge sums of money to win the support of delegates.
To safeguard our gains, especially macroeconomic stability, we must listen to Cardoso. The gains we are all now celebrating are attributed to the tight monetary policy of the CBN.
We must not allow the expansionary spending ahead of the 2027 general elections to threaten our hard-won economic stability. It’s not rocket science; even lay people on the street now know that flooding the system with cash makes inflation very difficult to control.
It can also weaken monetary policy by undermining the effectiveness of interest rate hikes and other tightening measures used to stabilize the economy. This may also lead to the depreciation of the naira, potentially creating volatile exchange rate pressures.
As the CBN noted, our economic recovery is “fragile and vulnerable to policy slippages.” Election-driven spending, because it is often non-productive, will always worsen structural drivers of inflation like food and energy costs.
To mitigate these risks, therefore, state governors, fiscal authorities, and other stakeholders must cooperate with the CBN by exercising fiscal prudence and maintaining disciplined liquidity control to protect the economy’s transition toward a $1 trillion target by 2030.
Let us all jealously guard our gains.Reversals of these gains can trigger a vicious circle of decline that is far harder to fix than it is to prevent.
Economic downturns, as we all know, lead to a loss of confidence among investors, causing capital flight and making future borrowing significantly more expensive. They also often push millions back into extreme poverty, undoing decades of progress in just a few years. We must always look before we leap.
Nasir writes from Abuja +2348033061447
+2348023722085