Election politics threatens to undo Nigeria’s hard-won reform gains
Date:
31 August 2026 5:00am WAT
• Institutions caught in dilemma as politics dictate regulations
• Nigeria risks massive FDI exit, Obadan warns
• Owoh: Separate economic management from partisan politics
• ‘Government doesn’t need more, but better spending to impress citizens’
• Osun election bad test case of excessive political influence in re
With the 2027 general electionsmoving from passive consultation to a tense campaign cycle, there are serious concerns that rising election tensions and excessive weaponisation of regulations could increase political risks for businesses, stall economic decisions and derail the course of reforms.
Overt political considerations in statecraft are a major challenge in Nigeria and many other African economies and they often constitute a major part of risk analysis in moving from expression of interest to final investment decision (FID).
But with campaigns for next year’s general elections actively ongoing, the risk of election is no longer benign but may emerge as a major single hurdle the economy would need to cross to sustain its recovery and give Nigerians a chance at a better life in the coming years.
This comes at a time the economy is struggling to shrug off short-term shocks from three years of tough reforms, transition into stable growth and crystallise the gains of a more liberal market.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, had promised the government was committed to translating the reforms to delivering results “where the rubber meets the roads”. He admitted that a fiscal reform that looks flawless on paper but fails to improve conditions for citizens “is a disguised bureaucracy”.
Rising political pressure, which many admit is approaching a crisis point, stands in the way of achieving the far-reaching pro-people results the minister promised. And there are fears that the crisis could deepen with campaigns in the coming months.
In recent times, the Federal Government has given directives that give the impression of playing to populist views or massaging the egos of politicians rather than laying a foundation for a more developed country.
An instance is the recent intervention of President Bola Tinubu in unfreezing Osun State’s account some days before the election. With the reversal of the decision of the Economic and Financial Crimes Commission (EFCC), the anti-graft agency, like many others, is caught between playing its role as an institutional watchdog and serving the interest of those in power.
The President’s decision raises questions about the sanctity or otherwise of institutional autonomy in discharging responsibilities which are essentially technical and require subject matter expertise rather than political expediency to deal with.
The election itself was a bad test case of how the Presidency intends to balance politics with the economy in res of police were deployed to the state to supervise hundreds of squads assigned to the state
Critics have described the oversized security deployment as an unnecessary waste of public rehineries for political interest ahead of the 2027 elections
For an economy that is still adjusting to pro-market reforms and tax restructuring, economists are worried that the 2027 election could make politically sensitive reforms harder to implement, increase politically induced off-budget expenditures and throw regulators under the bus.
Already, inconsistency between policy direction and public pronouncements by office holders keeps mutating, blurring clarity. For instance, whereas the Federal Government had earlier committed to ending electricity tariffs next year, the Minister of Power, Joseph Tegbe, recently told journalists that there are no immediate plans to increase electricity charges.
Whereas theInternational Monetary Fund (IMF) and others have warned against the consequences of a derailed subsidy rollback, the implementation of tax restructuring, the country’s flagship fiscal reform, may also be faltering. Over seven months into the implementation, there is no evidence of significant reduction in the burden of the multiple-taxation crisis, especially at the state level.
Earlier, The Guardian reported that the implementation, coming on the eve of election year, would come at a huge cost to the current administration and that many governors would find it difficult to dislodge the legacy revenue mobilisation systems that have been largely out
On paper, tax reform is on course. In practice, the government has achieved some breakthroughs in upstream harmonisation. But the most critical part of the chain – state levies and charges – continues to hobble businesses and logistics, feeding directly into the national inflation basket.
Two years after the Supreme Court ordered the Federal Government to pay allocations directly to local governments and barred state governments from controlling council funds, implementation also remains stalled.
In two years, from July 2024 to June 2026, local governments received N10.48 trillion from the Federation Account. Yet, most councils continue to depend on state governments for access to their funds.
Many reports have linked the delayed implementation to 2027 politics. Recently quoted (APC) attributed the Federal Government’s reluctance to enforce the judgment to the political importance of state governors to Tinubu’s re-election bid
The economic consequences of the delayed implementation are significant. Local governments are closest to communities and responsible for services and infrastructure that directly impact citizens. Delaying their financial independence means retation, primary healthcare operations and other grassroots needs are channelled into personal pockets
Perhaps, the 2026 budget is the biggest casualty of the rising tendency to prioritise politics. From false agencies to questionable allocations, the appropriation looks already more like a mere fulfilment of fiscal ritual than an economic development tool.
The IMF, in one of its latest assessments of Nigeria, said the approaching electoral cycle could slow the implementation of the country’s economic reforms, noting that the window for undertaking additional major reforms had effectively closed with the 2027 presidential election underway. It advised that attention should instead be directed towards implementing reforms already in motion and providing less-politically charged technical support.
A former member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Prof. Mike Obadan, admitted the challenge posed by the rising political risk and warned that the economy risks a massive outflow of foreign portfolio investment (FPI) in the coming months.
The economist warned that there was already a considerable spike in panic among local investors, who provide useful stimulus to foreigners. Unless the government takes urgent action to ease the tension, he noted, local investors may start pulling back – a decision could rob the country of the FPI and discourage the much-needed foreign direct investment (FDI) inflow.
For a technical assistant to Prof. Charles Soludo as governor of the Central Bank of Nigeria (CBN), Prof. Godwin Owoh, the problem is already visible in the way public re
He pointed to the allocation of about N1.08 trillion through the Cooperative College in Oji River, Enugu State, covering water projects, street lighting, empowerment, information technology, digital skills, erosion control and tree planting as an example.
Owoh questioned the institutional capacity and rationale for routing such a huge allocation through a college, arguing that politicians only used the institution to secure the appropriations.
The episode, he argued, reflected a broader problem in which political calculations take precedence over the strategic deployment of scarce public re
Members of the national economic team, as in previous elections, are directly or indirectly involved in the campaign of the President, investing their personnel and office re, raising questions about whether legal framework to regulate how incumbents deploy public officials and real interests
For instance, critics have raised concern about the appointment of the Nigeria Revenue Service (NRS) Executive Chairman, Zacch Adedeji, as Deputy Director of Fundraising for President Bola Ahmed Tinubu’s campaign organisation, alleging conflict of interest. The Neo Africana Centre (NAC) has called on Tinubu to overrule the appointment.
On the wholesale deployment of state machinery to campaign, Owoh said the answer lay in creating stronger institutional distinction between economic management and partisan politics.
He pointed to Kenya’s constitutional restrictions on the use of state rear safeguards to prevent public institutions and economic policy from becoming instruments of electoral competition
“Once you are a minister, you are not a minister of a political party. You are a minister to everybody,” he said.
Another economist, Prof. Chiwuike Uba, said Nigeria’s reform agenda risks stalling as the country heads into the 2027 election cycle.
He warned that politically costly measures, including the consolidation of fuel subsidy removal, exchange rate unification, electricity tariff rationalisation and tax reforms, are most likely to be slowed or diluted.
He noted that the credibility of the national budget is already under strain, with capital expenditure releases consistently falling short of appropriations, while capital spending is typically budgeted at 26–50 per cent of the total, while actual releases have often stayed below half of that.
Barely 15 to 20 per cent of total planned spending translates into real investment in many fiscal years, he said.
Uba pointed to Nigeria’s tight fiscal space as a major constraint on election-related spending.
As of March 2026, total public debt stood at $114.95 billion (about N159.35 trillion), with domestic debt alone accounting for 54.85 per cent.
Uba said debt servicing has been consuming 70 to 80 per cent of federally retained revenue — and as much as 90 per cent in some cases — leaving little room for additional discretionary spending without resorting to further borrowing or central bank financing, both of which carry inflationary and interest-rate risks.
He cautioned that any slippage in reform discipline would come at a measurable cost, projecting that policy reversals and weak budget execution could shave one to two percentage points off annual GDP growth and widen the fiscal deficit by more than three per cent of GDP.
With inflation already above 15.9 per cent as of June 2026 and food inflation exceeding 17.5 per cent, Uba argued that the sustainable path is not more spending but stronger execution. Improved capital budget implementation, stopping off-budget expenditure and boosting revenue mobilisation.
A professor at Olabisi Onabanjo University, Sheriffdeen Tella, explained that governments typically tilt economic policy toward the poor and vulnerable in the run-up to elections, prioritising health, education and support for small and medium-scale enterprises.
He pointed to schemes such as World Bank-backed cash transfers to traders and artisans as examples of government efforts to draw low-income earners into economic space even as the Federal Government keeps an eye on broader macroeconomic indicators like reserves, the balance of payments and industrial output.
Asked whether the 2026 budget and tax reforms could be affected by the election cycle, Tella said it was too early to assess outcomes since implementation of the tax reform is still in its first year. He noted that broader budget implementation has lagged as a recurring trend, with uncertainty still surrounding how much of the 2025 budget was actually executed, even as government continues rolling out support programmes for traders and artisans, which he described as a form of subsidy.
Tella warned that election-related spending is likely to add pressure, as money previously held back by politicians is released into the economy through cash handouts, “empowerment” schemes and, in some cases, outright vote-buying.
He said the likely liquidity surge, combined with weak productivity growth, could stoke inflation unless the Central Bank moved proactively to mop up excess money in the system. The government’s real focus, he argued, should be on boosting output and employment rather than expanding off-budget spending.
For an economy still trying to translate macroeconomic stability into lower costs, stronger businesses and better living standards, politicised state intervention could prove costly.
Manufacturers, retailers and service providers have spent the past three years adjusting to major changes in fuel pricing, the foreign exchange market, taxation and monetary policy. They now need predictable regulation, infrastructure spending and access to credit to plan investments and control costs.
