Why GDP Growth Rate Drops Every Election Year In Nigeria


Nairametrics| The Federal Government released its 2017 National Economic Recovery Growth Plan (a Medium-Term Plan for 2017 – 2020), which was developed for restoring economic growth to the Nigerian Economy.

The ERGP is a 145-page document filled with policy principles, objectives, actions and expectations.  One of the most notable expectations in the plan are Nigeria’s growth rate between now and 2020. However, one aspect of their projections caught our attention.

Look at the GDP projections on this table with focus on 2019.

The government explained why they projected a drop;

The slight dip in growth in 2019 is projected to result from the general election in that year with a quick recovery the following year. The strong growth during the Plan period will be driven by agriculture and industry, and in the later parts of the Plan period by the services sector as well.

Except for 2019, the government projects a steady growth rate all through the to 2020. The year, 2019 happens to be an election year and so we wondered if this was a familiar pattern. Here is what we found out. (Wait for the chart to load).

A look at the chart shows the years preceding an election year, the election year and the year after election. Election years have been 1983, 1999, 2003, 2007, 2011 and 2016 respectively. As the chart depicts, every election year has experienced a lower GDP growth rate compared to its preceding and subsequent year. The only year that bucked that trend was in 2007.

This increased my curiosity even more; why then does GDP growth rate drop every election year in Nigeria? One typical answer might be to look at inflation rates, considering that it is used to calculate real GDP growth rate. However, we did not observe any pattern here. Indeed, inflation rates threaded lower in some election years compared to others (considering the preceding years and year after election). A hypothetical reason could be that economic activities typically ground on election years, possibly due to uncertainty as most business become circumspect and cut down spending. Another could be that a new government tends to start slowly after being sworn in. However, you might want to argue that the only election year 2007, where we recorded a growth came with a transfer of power from one government to another. Also to add that Goodluck Jonathan was elected in 2011 after, serving two years as President.

Do you know why Nigeria records a slower GDP growth rate on election years? Send us an email

 

Ugo Obi-chukwu http://nairametrics.com

Ugo Obi-chukwu "Ugodre" is a chartered accountant with over 16 years experience in financial management, corporate finance and financial analysis. He is also a retail investor and a personal finance advocate with over a decade experience investing in the Nigerian stock market. Ugo is the founder of Nairametrics and blogs regularly on the website.

What others say about : Why GDP Growth Rate Drops Every Election Year In Nigeria..


anodebenze

Every Gun have a separate sound,and that depend on the manufacturer process and the size of the gun,so is election in Nigeria.all election since 1999 is to cleanup the process of. polity and social activities.if we have an active local govt area and state govt, with sound policies and if it prioritizes their citizens needs and meet their aspiration.election in Nigeria may not be a die for it politics,seconly we do not have a real freedom in Nigeria.e.g look at the excess of Father xmass dansuki,instead of using money to fight boko haram,he disbursed $2500 billion to political parties and politician.After 2023 elections.nigerians will start to hold their politicians accountable for their activities.
Meaning the nation will regain full freedom,so any politicians have no special right as a politician.power will be fully devolved to the people.we are still throwing out the hallmarks of military rule.most Nigerians then will view politician with suspicion and cynically

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