By Mathew Chima

The Centre for the Promotion of Private Enterprise (CPPE) says rising political and electioneering activities ahead of the 2027 general election could undermine Nigeria’s economic recovery by fuelling inflation, increasing foreign exchange (FX) demand and slowing reforms.

CPPE warned in its half-year economic outlook released on Sunday and signed by Muda Yusuf, its CEO.

“The second half of the year [also] presents an important downside risk arising from the increasing intensity of political and electioneering activities ahead of the 2027 elections,” the report reads.

The CPPE said election spending could increase liquidity in the economy, with implications for inflation, foreign exchange demand and macroeconomic management.

“Election-related spending could inject additional liquidity into the economy, with possible implications for inflationary pressures, foreign exchange demand and macroeconomic management,” the report said.

“There is also a risk that growing political activity could distract policymakers from economic governance, reform implementation and the execution of critical fiscal and structural policy initiatives.”

Despite the risks, the CPPE said Nigeria’s economy is expected to remain on a gradual recovery path in the second half of the year, supported by financial services, telecommunications, construction, trade, oil refining and other service-sector activities.

The think tank also projected that inflation would remain substantially below 2025 levels, while exchange-rate stability should be sustained by stronger foreign exchange inflows, healthier external reserves and improved market confidence.

‘MACROECONOMIC GAINS YET TO REACH BUSINESSES’

The report said the stronger macroeconomic environment has yet to produce meaningful improvements in business performance and household welfare.

“Macroeconomic stabilisation has not yet led to significant, broad-based improvements in productivity, competitiveness, employment and household welfare. Businesses continue to grapple with elevated production costs and structural bottlenecks,” CPPE said.

The think tank attributed the disconnect to high interest rates, elevated energy costs, inadequate electricity supply, logistics inefficiencies, weak transport infrastructure and persistent insecurity, all of which continue to undermine productivity and investment.

The report also said procurement delays, funding constraints and debt-service pressures have slowed capital expenditure implementation, limiting the growth impact of fiscal policy.

“The next phase of reform should focus on lowering production costs, improving productivity and strengthening the competitiveness of Nigerian enterprises,” CPPE said.

The enterprise said improvement in macroeconomic indicators provides an important foundation for sustainable growth.

“But it is not sufficient on its own. The next phase of reform should focus on lowering production costs, improving productivity and strengthening the competitiveness of Nigerian enterprises,” the report reads.

CPPE urged the government to improve electricity supply, transport infrastructure, logistics and port operations, strengthen security in farming communities, expand access to affordable long-term finance and accelerate budget implementation.

The enterprise also said government revenue should come from efficiency-enhancing reforms rather than additional tax burdens, while policy consistency should be maintained despite mounting political activities.

Source: TheCable