The Nigerian Economic Summit Group (NESG) has warned that rising election- related expenditure ahead of the 2027 general elections could reignite inflationary pressures, weaken investor confidence, expand fiscal risks and delay critical economic reforms.
The Nigerian Economic Summit Group (NESG) projected real Gross Domestic Product (GDP) expansion of about 4.2 percent, but the anticipated surge in pre-election spending, it said, could derail the fragile macroeconomic gains if government fails to maintain fiscal discipline.
The warning comes against the backdrop of already elevated inflation and a record public debt stock.
Nigeria’s public debt stood at N159.4 trillion as of March 2026, while average headline inflation during the first half of the year was about 15.5 percent.
For the NESG, the immediate policy challenge is to ensure that the economy’s emerging recovery is not sacrificed to the political pressures associated with the election cycle.
The group is urging the government to move beyond short-term macroeconomic stabilisation and concentrate on broad-based, industrial and manufacturing- led growth capable of generating jobs, expanding productive capacity and attracting private investment.
The scale of the potential election spending is a major source of concern. Under the 2026 Electoral Act, presidential candidates are permitted to spend a maximum of N10 billion each on their campaigns, while governorship candidates are subject to a N3 billion spending limit.
With 19 presidential candidates and 127 governorship candidates, the statutory ceiling for the presidential and governorship elections alone could amount to approximately N571 billion.
On paper, that figure may appear relatively modest compared with the size of Nigeria’s economy and annual government expenditure.
However, NESG’s concern is that the statutory ceiling may bear little resemblance to actual political spending.
The gap between what candidates are legally allowed to spend and what may ultimately be deployed during the election cycle could become substantial as political parties, candidates, supporters and other interests mobilise resources across the country.
Recent claims about political expenditure have further heightened concerns.
Speaking on News Central TV after the recent election in Osun State, musician David Adeleke, popularly known as Davido, claimed that the All Progressives Congress (APC) spent N110 billion, equivalent to about $78.3 million, during the state election.
The claim, which has not been independently verified, nevertheless illustrates the potential scale of political spending in a single sub-national contest.
If expenditure of that magnitude were replicated across the 27 governorship contests, in addition to the presidential, National Assembly and state House of Assembly elections, the overall financial footprint of the 2027 electoral cycle could run into trillions of naira.
It is this wider spending ecosystem, rather than merely the statutory campaign limits, that has become the greater concern for economic managers.
Election-related spending can have a significant macroeconomic impact when large amounts of money enter circulation within a relatively short period.
In an economy where inflation remains above 15 percent, an abrupt increase in aggregate demand without a corresponding expansion in the supply of goods and services could intensify price pressures.
Government expenditure, political mobilisation, transfers and other election-related disbursements could increase liquidity, boost consumption and place additional pressure on already constrained domestic productive capacity.
For the Central Bank of Nigeria (CBN), this could complicate the delicate task of balancing growth with price stability.
The apex bank’s decision to impose a 70 percent Cash Reserve Requirement on non-Treasury Single Account (non-TSA) public- sector deposits underscores the monetary authorities’ sensitivity to the movement of government funds within the banking system.
The measure covers public- sector funds—including those belonging to federal Ministries, Departments and Agencies, parastatals, and state and local governments—that are held in commercial banks instead of being remitted into the central Treasury Single Account.
The policy highlights the importance the CBN attaches to managing public-sector liquidity and limiting the potential monetary impact of government funds circulating outside the central treasury framework.
This becomes particularly relevant as political activity intensifies.
A major risk is that election spending could weaken fiscal consolidation at a time when Nigeria has very limited fiscal space.
With public debt already at N159.4 trillion, the government has little room for significant additional borrowing or off-budget expenditure without increasing concerns over debt sustainability.
Any election-driven fiscal expansion financed through additional borrowing could raise debt-service obligations and further constrain government resources.
Higher borrowing requirements could also push up yields and increase the cost of capital for the private sector, potentially crowding out businesses and undermining investment.
The opportunity cost could be equally significant.
Money directed toward shortterm political patronage, mobilisation and election-related expenditure is money that could otherwise be invested in infrastructure, power, transport, education, healthcare and industrial development.
Such productive investment is critical if Nigeria is to turn the projected 4.2 percent GDP growth into sustained and inclusive economic expansion.
The risk is not limited to spending.
Election cycles often create incentives for governments to postpone or dilute politically sensitive reforms.
Measures involving taxation, energy pricing, foreign exchange reforms and other structural adjustments could become more difficult to implement as political parties seek to minimise public resistance ahead of the polls.
A slowdown in reforms could create uncertainty among investors and undermine the credibility of Nigeria’s economic policy direction.
This is particularly important because investors require policy consistency and predictability before committing long-term capital.
Foreign and domestic investors are likely to monitor government spending closely as the election approaches.
A combination of higher fiscal deficits, rising inflation, increased borrowing and policy uncertainty could weaken investor sentiment.
If concerns over macroeconomic discipline intensify, capital inflows could slow while some investors may seek to move funds into safer markets.
That could put additional pressure on the naira, potentially increasing the cost of imported goods and creating another source of inflation.
The danger, therefore, is that election spending could trigger a chain reaction: higher government expenditure could increase liquidity and demand; stronger demand could fuel inflation; rising inflation could pressure the naira and interest rates; higher borrowing costs could weaken private investment; and declining investor confidence could further undermine economic growth.
The NESG’s 4.2 percent growth projection demonstrates that Nigeria’s economy has developed stronger underlying momentum.
The oil sector is improving, while manufacturing, agriculture and services are contributing to broader economic activity.
But growth alone is not sufficient.
The quality, sustainability and inclusiveness of that growth will depend heavily on whether government can maintain macroeconomic discipline through the election cycle.
The NESG is therefore calling for a shift from stabilisation toward productive, industrial and manufacturing-led expansion.
That means creating an environment in which private capital can drive investment rather than relying excessively on government expenditure to stimulate activity.
It also means maintaining prudent debt management, strengthening fiscal institutions and ensuring that public resources are directed toward investments capable of expanding Nigeria’s productive capacity.
The 2027 elections will inevitably generate substantial economic activity, but the government must ensure that political spending does not overwhelm economic policy.
Strict adherence to fiscal responsibility frameworks, tighter monitoring of public-sector funds and stronger enforcement against diversion of public resources will be essential.
More importantly, the government must resist the temptation to sacrifice long-term economic reforms for short-term political gains.
Nigeria’s projected 4.2 per cent growth offers an opportunity to consolidate the progress already made. But that opportunity could quickly be lost if the election cycle becomes a trigger for renewed fiscal slippages, excessive liquidity and policy reversals.
The real test for economic managers, therefore, will not be whether Nigeria can grow in an election year.
It will be whether the country can grow without allowing election spending to reopen the macroeconomic wounds that recent reforms have sought to heal. [Independent.ng]
