Do you know that we need to thumb-up our State for the peaceful conduct of the Presidential and National Assembly elections in the State of Osun on 23 February, 2019? Do you know that we have all made our Governor happy by our ‘Omoluabi‘ conduct? Are you aware of the “Economist Intelligence Unit (EIU)” (2010) reports that noted that “elections have become a normal occurrence” in Africa but that only five countries in the entire continent were judged to have free and fair elections? Do you know that Nigeria is missing on the list? The award-winning countries in Africa judged by their compliance to free and fair elections are: Cape Verde, Botswana, Ghana, Mauritius and South Africa.
Do you know that our country has had a long history of electoral violence? Do you know that the 1964/65 general elections were marred with violence? Do you know that the 1983 elections were riddled with violence? Have you forgotten that violence greeted the annulment of the June 12 election? Do you know that the 2007 election in Osun made hell to be on rampage? Have you forgotten the mayhem that characterized the 2011 elections? Do you know that the acts of violence that had been going on since 2015 in various theatre of war in the country are enough bad news to our economy? We must continue to appreciate our Governor, Mr Adegboyega Oyetolafor remaining his natural self, a promoter of peace per excellence to counter the declaration of Camara Laye in his book ‘Guardian of the Word”. He interludes: “African politicians make politics a bloody massacre and they make non-Africans to laugh at the immaturity of Africa,”
Yes! The Presidential and National Assembly elections had come and gone with 72 Presidential candidates and 6584 National Assembly candidates contesting elections under the aegis of 91 political parties. According to the figures recently released by INEC, there were currently 84,004,084 registered voters compared to 67,422,005 in the 2015 elections and about 72 million voters’ cards were collected. We must cash in on the trajectory of more inclusiveness in political participation as evinced in the upward review of the voters registration. It must however be noted, possibly to avoid mischief, that for the first time in our election history, a section of the press, alleged possibility of hacking the election. We must let our people know that the likelihood of that preference to the popular ballots is very remote. We must preach peace whatever the outcomes of the elections. The words of Nelson Mandela cut in:
“The world will never respect Africa until Nigeria earns that respect. The black people of the world are looking up to Nigeria to be a source of pride and confidence. Every Nigerian citizen should be made to understand this truth.”
Do you know that it is a win-win situation that Governor Gboyega Oyetola has re-directed us back to study History as a compulsory subject in our Schools? History makes us to travel. Aldous Huxley in his book ‘Yesterday’s Spy’ warns: “To travel is to discover that everything is wrong”. You know why? Come please.
Do you know that an election is the formal process of selecting a person for public office or rejecting a political proposition by voting? Do you know that an election can fulfil the form and yet miss the substance? Do you know that the right to vote ensures legitimacy in governance? Do you know the freedom of choice leads to an open society? Do you know that an ideal electoral process is meant to achieve accountable rulers, open society, social justice and an enthusiastically participating citizenry? Do you know that we had a lot of elections in this country fulfilling the requirements for forms and missing in crystal substance? Yes! Come along, please.
Do you know that we had Referendums in 1959 1961? Do you know that Nigeria has been having parliamentary elections since 1923? Do you know that so far Nigeria had the following elections into the House in 1923, 1928, 1933, 1938, 1943, 1947, 1954, 1959, 1964, 1979, 1983, 1992, 1998, 1999, 2003, 2007, 2011, 2015, and 2019? Are you aware that we had regional elections in 1951, 1953, 1954, 1956−57, 1960−61, 1964 British Cameroons: 1959 1961? Are you aware that we had Senate elections in 1979, 1983, 1992, 1998, 1999, 2003, 2007, 2011, 2015 and 2019? Do you know that our country has had Presidential electionsin 1979, 1983, 1993, 1999, 2003, 2007, 2011, 2015 and 2019? Do you know that we had very nostalgic elections in the Local Councils in 1950 and 1953? Do you know that all these elections impact on our economy? Do you know what we call opportunistic political business cycle? You care to know more about this? Come along, please.
Do you know what we call monetary policy? Are you aware that it involves all the measures employed by governments to influence economic activity, specifically by manipulating the supplies of money and credit and by altering rates of interest? Do you know that the targets of monetarypolicy are to maintain full employment to achieve a high rate of economic growth and stability? Do you know that the Central Bank is genuinely connected as it is charged with regulating the size of a nation’s money supply, the availability and cost of credit, and the foreign-exchange value of its currency? Do you know that the Central Bank must be seen to be accountable every time? What is accountability in this perspective? Come along, please.
Accountability is the degree to which a person or institution is responsible for a set of duties and can be required to give an account of their fulfilment to an authority that is in a position to issue rewards or punishment. The universal political problem that is currently rearing its ugly head is that politicians in democracies have little reason to value future (post-election) consumption. Do you know that though private investors can sacrifice short-term consumption to make long-term investments but public investors (politicians) have difficulty doing so? Do you know that is the reason we see macroeconomic austerity towards the beginning of a politician’s term, then lots of spending at the end (to get ready for the election or re-election? Come along.
Are you aware that there were frequent crises in Europe and America in the 19th and first half of the 20th century, specifically the period 1815–1939? Do you know that the trajectory started from the end of the Napoleonic wars in 1815, which was immediately followed by the Post-Napoleonic depression in the United Kingdom (1815–30), and culminated in the Great Depression of 1929–39, which led into World War II? Do you know that economists had always predicted with exactitude that economic depressions would always follow great wars? Do you know some of the social indicators of depression? These social indicators include mental health, crimes and suicides loss of jobs? What are the consequences for governments? There is often political pressure for governments to mitigate recessions. Do you know that Sisimondi has come up with the bad effects of peace? You care to know? Come along, please.
The business cycle is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend. These fluctuations involve shifts over time between periods of relatively rapid economic growth and periods of recessions. Do you know that the first exposition of economic crises was the 1819 Nouveaux Principes d’économie politiqueby Jean Charles Léonard de Sismondi? Do you know that the economic crises of 1825 in peace time made economists to discover that peace can still alter economy negatively through elections? Are you aware that these periodic crises in capitalism formed the basis of the theory of Karl Marx, who further claimed that these crises were increasing in severity and, on the basis of which, he predicted a communist revolution? Do you know that he made a passing remark on it in Das Kapital(1867)? Are you aware that they were extensively discussed in Marx’s posthumously published books, particularly in Theories of Surplus Value? Do you know that there are various models of business cycle theory? Do you know that politically-based business cycle theory is one of them? You care for it? Come along, please.
The term political business cycle is used mainly to describe the stimulation of the economy just prior to an election in order to improve prospects of the incumbent government getting re-elected. Expansionary monetary and fiscal policies have politically popular consequences in the short run, such as falling unemployment, economic growth, and benefits from government spending on public services. However, the same policies, especially if pursued to excess, are found to have unpleasant consequences in the long term, such as accelerating inflation and damaging the foreign trade balance. Thus, they can harm the long-term growth potential of the economy.
Politicians are thought to be rational actors. They rush to pursue short-term horizons of calculation, popular expansionary monetary and fiscal policies immediately before an election. However, being aware of adverse effects of expansionary policies, they will not intend to keep those measures after they get elected. Thus, after the election is over, politicians will often reverse course, which may include cutting spending, slowing the growth of money supply, and allowing interest rates to rise. As a result, the regular holding of elections will produce cyclical fluctuation of economic activity because of recurring patterns of government stimulus and restraint in order to induce an artificial boom in the election time. Politicians’ rational preference of short-term political concerns over macroeconomic calculation in economic policy making can also affect general monetary and fiscal policy. The consequences are simple: inflation, high interest rates and eventual unemployment.
Do you know that there are two contending theories on political business cycle? Yes! We have the ‘partisan’ theory which stresses the difference of fiscal and monetary preferences among parties contesting an election. The leftist parties are assumed to boost real economic activity like promising to generate employment, increase wages and social protection programmes while the rightist parties will promote theirmanifestoes by focusing to fighting inflation. The second theory is that all politicians seeking reelection have an in-built mechanism to manipulate policy instruments and weak institutions to achieve a nefarious goal detrimental to the welfare of the public.
Political business cycle theories rely on some assumptions. To start with, it is believed that there is a short-term trade-off between the level of utilization and employment in the economy and the rate of inflation. Equally, it is assumed that politicians are rational actors, prioritizing their short-term political objectives. In the run-up to elections, they will trade inflation for lower levels of unemployment. Third, it is assumed generally there is a single best policy solution in a given situation that is in the general interest. According to theorists of political business cycle, political competition systematically affects fiscal and monetary policies in a way that is adverse to the general economic well-being. Governments have policy preferences that are inconsistent with the needs of the economy, and, therefore, they cannot be trusted to deliver appropriate monetary and fiscal policy. Do you know that certain policy prescriptions are to be maintained by all of us? You care for them? Come along, please.
Do you know that the first policy prescription to get us out of the woods of economic volatility is to depoliticise our Monetary Policy? Are you aware that if policy credibility is to be achieved, public authorities need to be able to make a monetary and fiscal pre-commitment that is independent of political competition? Do you know that we have to change institutions so that political calculations are removed from monetary policy making? Do you know that before we can do that, our Central Bank has to be independent and constitutionally empowered to deliver a specific inflation target? Do you know the secrets of the developed economies? Simple! They are able to increase the autonomy of the central bank and depoliticisemonetary policy. Sikena! The trend of depoliticising monetary policy by making central banks independent of political struggle raises serious concerns about public accountability of respective policy makers. Some people think that moving monetary policy out of the hands of publicly accountable politicians poses a threat to democracy, as it limits the scope of policy that can be pursued by those politicians. Whereas, this is not the case. It is a move to strengthen economic institutions. Justice FataiWilliams said, while retiring from the Supreme Court of Nigeria in 1983: “ No man is wise enough or good enough to be trusted with unlimited power. The arrogance of power is the worst form of arrogance known to man.”
The political business cycle is an alternative theory stating that when an administration of any persuasion is elected, it initially adopts an economic contraction policy to reduce inflation just to gain attention and a reputation for economic competence. It goes further to adopt an expansionary policy in the garb of ‘stomach infrastructure’ or the real infrastructure colour with social protection tendencies, fighting to lower inflation and mass unemployment in the lead up to the next election. All to win and win. While trying to be more popular, politicians may increase wages.
Michał Kalecki once discussed “the reluctance of the ‘captains of industry’ to accept government intervention in the matter of employment.” It is believed by economists that in a developing economy, there cannot be persistent full employment. It is believed that certain labour must be unpaid and that wages should not be raised to erase profitability. In recent years, proponents of the “electoral business cycle” theory have continued to argue that incumbent politicians encourage prosperity before elections in order to ensure re-election – and make the citizens pay for it with recessions afterwards.
In summary, politically based business cycle as a partisan business cycle suggests that cycles result from the successive elections of administrations with different policy regimes. Regime A adopts expansionary policies, resulting in growth and inflation, but is voted out of office when inflation becomes unacceptably high. Regime replacements lead to policy somersault. In the Marxist view, all that the government can do is to change the timing of economic crises. The crisis could also show up in a different form as severe inflation or a steadily increasing government deficit, all causing pains for the working class. It is noted that there is a political cycle found in welfare regimes, too. Accordingly, the state officials will tend to make the welfare system more generous in the pre-election period and to restore restraint and incentives to work afterward. Simply put, political business cycle is the opportunistic manipulations of fiscal or monetary policies. What are the ways out? Come along with us.
Do you know that Section 22 of the 1999 Constitution of Nigeria envisages this lacuna when it places certain duties on some agencies? Some of the possible solutions include: educating the citizens about long-term economic needs: increase our terms to 6-year single term to facilitate long-term planning, delegate to an autonomous agency, monetary policy and fiscal policy, reduce the trade-off between unemployment and inflation by assisting those hurt by inflation or implementing an “income policy,” like wage and price controls to lower the slope on the Philips economic curve. There is the need to broaden the base of participation in planning the economy by the people.
Do you know that election years have thrown up different perspectives in the economies of many of the developing nations? During election year, evidence showed that Indian economy slowed down even when the government intervention turned opportunistic. Are you aware that increased government spending fueled inflation rather than stimulating growth? Yeah! In the run-p to the last general elections, in Pakistan, economic woes worsened. In Nepal, economic indices showed that there is a slowdown in economic activity in the election years. But situations in Phillipine presented a different scenario. The situation in the Philippines is somewhat different. During election seasons, some of the money stashed away abroad is brought back to fund election campaigns, thus making election spending usually boosts GDP growth by two to three percentage points.
From the general survey, the election campaign funding was believed to be substantially higher than the legal limit. Though, there were no reliable estimates of the fund spent by the parties or candidates in election campaigns. It is believed that huge funds, mostly unaccounted for, go to campaign processes. The funds injected is estimated at 0.35 percent to GDP. This has led to speeding inflation because of the election-related private spending and expansionary fiscal policy. Despite a rebound in exports and remittances, the external balance remains under immense pressures because of a sharp rise in imports and lack of flexibility in exchange rate management. It is hard to prove if the capital flight did not take place ahead of the elections. However, the recent surge in imports points out the possibility of capital flights through trade mis-invoicing.
Are you aware that the reports of the Global Financial Integrity showed substantial illegal capital flights through trade mis-invoicing prior to our general elections? Are you aware that some people were alleged to have brought back some laundered money to fund election campaigns? Do you know that because of the on-going general elections, our government has delayed some vital reforms? Do you know that the delayed reforms include: implementing the new VAT, raising interest rates on saving certificates, restructuring the banking sector and revising the energy prices? Do you know that in the run-up to the elections, the government intensified approving a large number of development projects to compensate the sluggish private investment? Are you aware that some projects were commissioned in a hurry to serve as political capital during campaigns? Do you know that the World Bank has projected a seven percent GDP growth in 2019 compared with 7.9 percent in 2018? Do you know that the predicted post-election bounce in business confidence and domestic demand, the GDP growth in 2019 is just going to be 7.5 percent? Do you know that the anxiety over the 2019 general elections appears to have serious telling effects on the economy? No wonder that politicians were cautioned from actions and utterances that could negatively impact the nation’s fragile democracy and economy? Yet, continuity is the best option for us.
Are you aware that information from the stock market showed that investors 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? This is anti-climax to the positive rebound of earnings in 2018 after we exited from economic recession at the end of 2017? Do you know 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? Are you aware that some analysts 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”? Do you know that the serial killings by the Fulani herdsmen and cases of political thuggery sent wrong signals to the foreign investing community which led to panic withdrawal and massive dumping of shares? Do you know that the myriads of confusing court judgements against INEC on the 2019 elections led to the postponement of the election, a postponement that led to the loss of more than one trillion Naira in terms? Do you know that the seeming uncertainty of the time led to massive sell-off of shares by foreign investors? Are you aware that the 2018 budget did not run a full course and that 2019 budget is already unpredictable because of this election year? Yes! Insecurity and social disorder are disincentives to investment in any country. 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 as we are in election period. Law enforcement officers should be more proactive to prevent the breakdown of law and order or any trace of post-election violence. Only the most daring of investors could withstand the time of uncertainty and fear. The rate of kidnapping, assassinations and associated election violence should be arrested in the coming elections. We should stop making our election year a year of gloom. Elections in Nigeria are often associated with gloom. Definitely, our fragile economy cannot absorb any politically motivated upheaval again. We should record boom by preventing our economy from going up in flames.
As part of the run-up for the 2023 elections, we must strengthen our institutions. We must resolve the issue of death penalty given by our courts, including Sharia Courts and the non-implementation of the judgments in all jurisdiction in Nigeria. We must resolve the issue of the State police to beef up security. We must resolve the issue of the minimum wage which is on the exclusive list in our Constitution. We must resolve the issue of remunerations of professional journalists in public and private sectors in view of their responsibilities contained in Section 22 of the 1999 Constitution as amended. We must resolve the issues of salaries of workers in our tertiary institutions, We must put the issue of literacy and out of school children on the table. We must put the issue of unemployment and poverty on the table. The issue of independent candidates should be resolved. The fight against corruption should continue to be institution-denominated and not personality-based.
Do you know that we have to fix the problem of voting on-line? Do you know that we have to resolve the issue of diaspora voting, particularly for those sending remittances and initiating foreign direct investments and taxes into our country? Do you know that we must reduce the cost of elections? Do you know that we need to merge our Voters’ cards with our ATM cards and National Identity cards to safe cost? Resolving these issues with the independence of the Central Bank and INEC would make our politics less acrimonious. These should be parts of the partisan debates in the coming campaigns for 2023. The present APC-led government has impacted positively in the lives of all Nigerians, making all States huge construction sites. Its social protection schemes are moving us nearer to civilization. Our vital statistics as a nation is looking up. A sustained peace will do more magic. We must anticipate political and economic progress from here. Obstacles are everywhere for our country. We must not pass under these obstacles. We must jump over them. We must learn new lessons in democracy. Peace must work for us.