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• Stock market gains under threat
By Babajide Komolafe, Peter Egwuatu, Godfrey Bivbere, Godwin Oritse, Nkiru Nnorom and Naomi Uzor
Yesterday, at noon, the colossal loss for the nation's economy, due to the postponement of the general election a few hours before the beginning of the exercises, was evident.
According to badysts, the country could lose about $ 10 billion because of the slowdown in business activity caused by the postponement of a week.
But according to the General Manager of the Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, the economy could have lost around 1.5 billion dollars.
The sources in the ports estimate the losses in the only sector to a minimum of 600 million nairas.
The country's ports were closed on Friday before Saturday's elections.
According to the experts, one of the major consequences of the change in general elections has been an immediate threat to investor confidence, which has increased speculatively in financial markets over the past two weeks.
In addition to the maritime sector, aviation, banking, gas and oil, and road transport are not affected by elections.
Analysts say the postponement would heighten uncertainty in the economy, undermine investor confidence in the Nigerian economy, and could eventually lead to higher fixed income yields and increased pressure on external reserves.
Commenting on the impact of development on the economy, Mr. Bismarck Rewane, Managing Director / CEO of the Financial Derivatives Company, said: "The total cost, including the opportunity cost, the direct cost, the cost of doing it, the cost of the disruption and what we call the cost of reputation, if you put it together, everything will bring you back about 2 to 2.5% of gross domestic product (GDP), which represents about 9 to 10 billion dollars.
Ayo Akinwunmi, head of research at FSDH Merchant Bank, said the postponement would result in a reduction in the nation's GDP. He said, "This will slow down business because it's like two weekends are paralyzed. Many people have traveled, many stores have closed today and they are still closed because people who have left the country have made other plans.
"And many businesses have enjoyed the half day of yesterday, so much business activity was reduced yesterday (Friday) because of elections today. (Saturday). So next week, Friday and Saturday, we will see the same thing, people will stay at home. And whether we believe it or not, many people wake up and live off their daily incomes. And all of this adds up to what the economy and businesses are ultimately reporting.
"When you have a long period of uncertainty, people can not make a decision. It could actually slow down GDP. And if you look at the GDP, it is the accumulation of what has happened every day, throughout the 365 days.
"So if we allow people to stay at home, businesses will not work. Their profits will decrease, taxes will decrease, the government will not have enough money and the government will have to borrow more.
Mr. Kunle Ezun, Senior Research Analyst at Ecobank Nigeria, also said, "The cost to the economy is going to be huge. Even if it is a weekend, the daily daily turnover of people who went out on business, all this was confiscated.
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"So, in terms of losses for individuals and small businesses, it will be pretty huge.
"Even yesterday (Friday), most states declared a holiday; so that you can start to consider the impact on the GDP of these states. "
Speaking about the consequences of this postponement on investor confidence in the Nigerian economy and financial markets, Rewane said: "The most important cost is the cost of reputation. Investors will now say that the election process has been compromised and that this country has become more prone to conflict. Investor confidence will erode.
"Democracy is the consensus. In 2015, we had no problem because the owner accepted the defeat. He also did not go to court or order people to riot in the streets. Today, because of so many things, including this postponement, it seems unlikely that anyone will agree to concede or go away gracefully. As an investor, I will have to take this into account and the higher the risk, the higher the expected returns. In other words, if we borrow money or raise money, people who come to invest will ask for more. "
Akinwunmi added: "This postponement could affect confidence in the market. If trust is eroded, there could be an overreaction of the market, there could be a mbadive selloff.
"There is a fear, a fear that leads to improved risk, which will cause people to ask for more premiums on fixed income, which could mean a sale. And the sale will increase the yield
"On the exchange scene, when people are at high risk, foreign investors can say," men, we have to go out, "and when they come out, the demand for foreign exchange will increase and, if so, the dollar value depreciate. . The CBN can say, "Well, guys, we need to step up our efforts to make sure we respond to that request. And that means that there would be a lot of pressure on the external reserve. So, in a little bit to not let this depreciation happen, the CBN will have to spend more money on foreign reserves. "
Speaking about the defeats facing Sunday Vanguard, LCCI General Manager Yusuf said, "The cost of postponing the election for the economy is huge. The day before, the economy was partly cut off and completely closed Saturday for elections that did not take place.
"The cost to the economy is estimated at $ 1.5 billion. The postponement has implications for confidence in the electoral process.
"The problem was that the postponement notice had arrived too late to allow economic actors to make alternative use of their time. This was a major disruption of economic activities in the country.
"The borders have been closed, the schools have been closed, the ports have been closed. All of this has consequences for operating costs.
"In the marine sector, importers will incur additional demolition costs because of the longer residence time of cargo in the ports.
"Rescheduling the elections will cost the national treasury almost twice as much of the process will be repeated in a week."
To pay for extra day
Sunday Vanguard's results showed that the postponed elections could cost the nation more than 600 million naira in charges, rents and taxes on shipowners, importers and exporters for a day, just in the maritime sector.
Sunday Vanguard realized that the amount lost by failed elections could be much more than that, especially since the area was closed for two days.
A statement from the country's largest container terminal, APM Terminal, revealed Friday that it had processed a total of 1,257 boxes on the aforementioned date.
The statement read in part as follows: "In the past 24 hours, 549 trucks have been serviced in the terminal, for a total of 1257 transactions."
Lucky Amiwero, NCMDLCA, chairman of the National Council of Directors General of Licensed Customs Agents, told Sunday Vanguard that customs brokers, more commonly known as customs clearance agents, pay as much as $ 20,000 in container storage fees to terminal operators on behalf of their principle.
The multiplication of 1,257 containers handled by storage costs of 20,000 N represents a total of 25.14 million N for APM terminals only.
It is estimated that other terminals operating in Lagos handled 1,743 containers, bringing the estimated total volume of containers delivered alone to Lagos port to 3,000.
The multiplication of 3,000 containers per 20,000 nairas gives a total of 60,000 nairas.
Amiwero said the elections had a huge economic cost for the country. He explained that it is the importers and exporters who are supposed to bear the consequences.
According to him, they are obliged to pay charges, taxes and unhealthy rates by the shipping companies as well as by the terminal operators. He pointed out that the NPA (Nigerian Ports Authority), the Nigerian Ports Authority, was not left out, as it covered the berthing costs.
He said that Nigerian ports have one of the highest port taxes in the world and that it is mainly unregulated.
The National Advertising Secretary of the Association of Authorized Customs Agents of Nigeria (ANLCA), Joe Sanni, agreed with Amiwero but added that, in addition to the storage fees, terminal operators receive also "container deposit fees", between 7,000 and 10,000 NF 20 feet and 15,000 to 20,000 nairas for containers of 40 feet they hardly pay back.
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Sanni also noted that the truckers would lose funds that they would have obtained yesterday.
He added that for the Nigerian Customs Service (NCS), there would be only delays in collecting public revenue.
President of the Shipowners' Association of Nigeria, SOAN, Greg Ogbeifun, said the shipping industry was not losing much, as the ships at sea simply continued their operations.
Ogbeifun noted, however, that ships docked at the port at election time will have to pay for an extra day.
Similarly, Thomas Kewerigha, former president of the Association of Merchant Navy and Water Transport Officers of Nigeria, said the shipowners had to pay an extra day of berthing as they were forced to stay at home. even after the unloading of their cargo has been completed.
Kewerigha explained that with the elections, ships at sea can not enter the country while those who have completed their discharge are stored at the port, resulting in additional costs for the shipping companies.
The chairman of the Lagos Maritime Security Zone of the forum, Mr. Ignatius Uche, said the cost of the postponement was not quantifiable, adding that funds had been spent by various terminals and port facilities to secure the premises for the period under consideration. this election.
"What happens to these measures and security provisions, who will bear the cost of a new provision?" Asked Uche rhetorically.
He explained that, aside from the security implications that the postponement will have on the port industry, the development also has many implications in terms of costs.
"The postponement of the election by the INEC has a political cost, an environmental cost and facility management overhead, and of course, a national cost.
"If you know how much the ports would have generated today in terms of income and waste, do you know that the implementation of contingency plans for human resources has cost many tasks to many directions?
"Men have already been deployed, armed men have been deployed because their logistics and other arrangements have been taken care of and their duration has also been taken care of.
"This has cost implications for both port authorities, terminal operators, transport companies and the national economy.
"For us, security professionals, we are always opposed to this kind of embarrbadment because we will remain alert and will remain in our custody at all times.
"We told our men to remain vigilant whether the elections take place or not.
In the same vein, the Vice President of the Association of Nigerian Customs Licensed Agents, ANLCA, MR. Kayode Farinto said he would sue INEC for the postponement that had skewed and disrupted his business for the day.
Farinto also said that over 100 million N of revenue for the government and its agencies had been lost.
Uncertainty
Analysts pointed to the immediate threat to investor confidence, which had increased dramatically in the financial markets in the last two weeks after the postponement of the vote yesterday.
The bond market has been bullish, with foreign investors pledging more than $ 1.7 billion in the past two weeks, while the Nigerian Stock Exchange has rebounded, with positive confidence in the elections.
However, some stock traders yesterday told Vanguard that confidence was undermined by postponement of the elections, a development that they believe could affect stock prices when opening the market tomorrow.
According to the capital market operators, who described the postponement as unhappy and sad, this would create uncertainty in the market and could lead to a reversal of the positive sentiment observed over the last two weeks, investors being undecided in any decision # 39; investment.
Emeka Madubuike, Managing Director / CEO of Compbad Securities, said: "In general, the postponement has the effect of creating huge uncertainty and it is one of the things that the market does not have. do not like. Once something like this happens, the market starts to flicker.
"As soon as there is uncertainty, it affects the market. People can not make decisions in a climate of uncertainty and investment is a matter of decision. So, if no decision is made, there will be no demand and that means that if there is no demand, the market will probably fall.
"It's unfortunate that we have all these uncertainties, it's inexplicable. This is very unfortunate because no one can plan in this type of environment. "
He said that the entire economy would be negatively affected as people would be forced to cancel businesses and other commitments on Saturday, February 23, while elections were to be held . He lamented that billions of nairas were lost as a result of this postponement.
His words: "We are talking about the stock market, what about people who have plans for next Saturday, they will be forced to postpone it. What about day-paid workers: people who make a living on a daily basis? All day, all the small traders will go bankrupt. So you can imagine what our economy would have lost today (yesterday). All sectors are still standing today and the same thing will happen again next Saturday, to know if the elections will be held Saturday, because, listening to the president of the INEC, it is n & # 39; 39 was not accurate.
"So the dimension is not good for the market".
In the same vein, Mr. Jimmy Omoregie, Managing Director / CEO of Fidelity Finance Company, said the postponement would delay the market but the market would find a respite in the financial reports expected by the end. of the year.
He said: "This has created uncertainty: market activities will be slow for a while, but they will certainly increase because the publication of the 2018 financial results is close to most companies and once the political terrain is over. is clear, the market is moving. on because it's just this uncertainty that needs to be lifted in this one week.
"But as it is, people will not really be willing to commit their money to the market."
Patrick Ajudua, president of the New Dimension Shareholders Association of NDSA, said: "The positive trend in stock prices over the past few days is mainly due to investors taking a stand as a result of the expected financial result of the companies. . Therefore, the postponement of the election will have little or no effect on investor sentiment.
"However, investors would have been happier if the election was concluded on time, as it would determine the way forward for economic direction and government policies."
Divergent views
However, other capital market players presented divergent views.
Chief Patrick Ezeagu, president of the Association of Securities Dealers of Nigeria, said: "Let's wait and see. The attitude of investors will spread to the market over the coming week until the INEC holds free, transparent and credible elections as planned. "
Mallam Garba Kurfi, CEO of APT Securities & Fund Limited, also responded: "I do not think the postponement of the elections will have a significant impact on the market. The market has already rebounded from last month's negative performance and the February performance to date, which is reflected in the volume and value of our transaction, is expected to continue as most of our shares are trading at lower prices. very low, which attracts foreign investors, institutional investors and investors. High Net Worth Index and couple with Corporate Action's expectations on dividends and bonuses that have also attracted short-term speculators.
"As we see in less than two weeks, Dangote Flour, TRANSCORP has won more than 50% and others are expecting the same thing with the postponement of the election. But it cost the economy.
In his own comment, Mr. Moses Igbrude, spokesman for the Independent Shareholders Association of Nigeria (ISAN), said: "The postponement of the presidential election by the ECNE at five o'clock of the election is regrettable, unacceptable and must be condemned in its entirety. This inconsiderate action by INEC has created uncertainty and doubts about the ability of the president and his team to conduct free and fair polls. Imagine the economic wastage for voters who have gone to various places where they have to exercise their civil liability, as well as for state governments and other private companies that have granted leave to their workers. Cost as observers of local and foreign elections, what about those who have moved one or the other commitment today or who solved the problem on Saturday? next? This action will surely frustrate and discourage voters from voting. Next week is full of uncertainties and will certainly have a negative impact on the market. I sincerely call the INEC and President Buhari not to plunge Nigeria into chaos or to cause problems. They should make sure to organize free and fair elections for all. They should badure us of their reliability and also call on the voters to remain calm and avoid the conditions likely to encourage the INEC and those who hide behind this opportunity to perpetuate their evil activities. "
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