How businesses can mitigate post-election scenarios and political risks

BY BOLARINWA  ONAOLAPO

Bolarinwa Onaolapo, an Environment Social and Governance (ESG) consultant and corporate advisor with FSA credential (SASB/IFRS), is the chief executive officer and principal consultant, HighEnd Strategies Limited, Lagos Nigeria. He can be reached via comment@businessamlive.com

Nigeria is in an electoral season which encompasses electioneering campaigns, election,  post-election and transition periods. The   uncertainty that characterises the season opens the door for predictions and projections by  political analysts, think thanks and mainstream media establishments. 

I was privileged  to be the keynote speaker at the GTPro “Conversation Series” that took place on the 2nd of February, 2023. GTPro is  Nigeria’s premier government relations and political risk management consultancy outfit with the objective of developing and implementing strategic and operational solutions for  the private sector in their effort to  navigate  the complexities of the public policy and regulatory landscape. The theme for discussion was “Post-Election Scenario Assessment and Possible Political Risks: How Businesses Can Mitigate It”. The  following insights and perspectives represent a summary of my submissions that formed the basis for the highly interactive session  among policy makers, regulators,  senior corporate executives on the day.

Scenarios are complex, dynamic, interactive stories told from a future perspective. Without a doubt, the uncertainty around future events such as the up-coming elections provides the baseline for exploratory scenario analysis, a tool for integrating changes and uncertainties in the external context into overall strategy. Today it ranks among the top ten management tools in the world in terms of usage. It involves the rigour of identifying a specific set of uncertainties regarding what might happen in the future while offering diverse possibilities. Scenario analysis stretches our imaginations, beyond the boundaries of history, and without the constraint of experience. It invites the “audience” to react to a plausible set of events, or to build the future events themselves, and then test these against a range of criteria. Scenario Analysis is intricately connected to Risk Assessment through the triplet definition of risks that involves possibilities of events, probabilities of occurrence, and severity or implication of occurrences on business, political or social objectives.

There are no debates on the fact that the Nigerian electoral season exposes the business community and investors in the Nigerian economy to political risks. This is because  political conditions, decisions, events such as elections have the ability to affect business objectives in the short or long term.

The channel of impact of these risks on businesses could be operational, which includes logistics impairment, supply chain disruptions, safety of staff, energy supply, or IT disruptions. They could also be visible  through impact on revenues and other indicators of financial performance  in the short or long term. In order to navigate through these potential adverse conditions, businesses are encouraged to proactively integrate resilience building systems and processes such as Business Continuity Management, Emergency Management Systems, Crisis Management Systems,  into their culture and operations.

Scenario development is the first step in resilience building. Diverse and alternative scenarios emerge from the face-off between driving political, social and economic forces that aim to alter or change an established order and institutional barriers and systems seeking to protect or reinforce it. 

Alternative scenarios likely to emerge from the above interactions were represented in my submission with the literary works of three renowned African writers – The Beautyful Ones Are Not Yet Born (by Ghanaian novelist Ayi Kwei Armah), The Gods Are Not to Blame (by Nigerian playwright Ola Rotimi), and Season of Anomy (by Nigeria’s Wole Soyinka).

“The beautiful ones are not yet born” is a scenario in which  the electorate is worn out by the brit-bats among politicians and the heightened tension in the political atmosphere. Voters do not see a significant difference between the candidates and are therefore more concerned with their immediate survival needs. Fuel scarcity persists till election day in most parts of the country and is further complicated by scarcity of the hardship in gaining access to the newly redesigned naira notes. A combination of these circumstances leads to lower-than-expected election day turn-out. Although the sentiments towards change influenced electoral decisions among those that turned out, it only led to a  swap of  one establishment party for another. Tendencies towards violence are easily rebuffed by the law enforcement agents as the institutional barriers and systems were not compromised by the interaction with driving political and social forces. However, post-election suspense is heightened by legal contests  which drags on until the electoral victory is sustained by the Supreme Court on legal technicalities.

In “The gods are not to blame”  scenario, the electorate is frustrated and angered by pre-existing adverse conditions. Although the fuel scarcity abates and access to new currency improves, the general public is yet to recover from the harrowing experience. Voters turn out in large numbers across the country with religion and feelings towards the outgoing administration in the South East  and North Central geopolitical zones serving as a catalyst.  However, votes  against the ruling party are divided by the opposition in key battleground states thereby paving the way for the ruling party to have a clear majority. The discontent about the outcome from the majority of the population, including the EndSARS constituency and SE-SS voters creates an overwhelming pressure on institution barriers and systems, including law enforcement. However, a moderating influence is the statesmanship of opposition figures and judicial process. Post-election suspense is heightened by legal contests until electoral victory is sustained on legal technicalities.

The last scenario is named the “Season of Anomy”. In this scenario, pre-existing conditions generate pressure on institutional barriers and systems. However, turn-out on election day is lower than expected in incumbent strongholds and higher in opposition strongholds. However, the relatively higher population in incumbent strongholds moderated the heavy margins suffered in opposition strongholds. Majority of the votes are against the ruling party with third party candidates challenging established parties in key battleground states while holding to its geopolitical and demographic base. The well-known establishment parties’ lose ground to third party candidates leading to inability of frontliners to attain constitutional requirements for victory. New alliances emerge across the political landscape, although with ethnic colorations. Rerun election produces victory for the establishment opposition, these tensions drag on post-election as results are challenged in court. The Supreme Court overturns the election in an unprecedented move in Nigeria. The agitation for secession resumes in the SE while some other agents subtly advocate for a coup d’etat or unrealistic constitutional amendments. The unbearable tension leads to disruptions to normal life. The international community and institutions with moral authority wade in and a new president is sworn in to preside over a badly fractured and fragile country.

Having explored the likely scenarios, it is important to open the discussion on options available to businesses to engender their resilience under the various  circumstances. Two of our scenarios (“The gods are not to blame” and ) exist within the “Elevated” and “High”  risk contexts in terms of  likelihood of disruptions and violence with potential impact on operations, profitability, people and assets. This creates the necessity for businesses to develop Business Continuity Plans that also integrate Emergency Management Systems. Many businesses operate the ISO 301 (2019 version) guidance and requirements to plan, establish, implement, operate, monitor, review, maintain and continually improve a documented management system to protect against, reduce the likelihood of occurrence, prepare for, respond to, and recover from disruptive incidents when they arise.

A business continuity management system is a management system that bundles interrelated methods, procedures and rules to ensure that critical business processes keep running in the event of damage or emergencies and continuously develops and improves them. It relies on a business impact analysis (BIA) to  identify the essential processes, critical activities and their dependencies. Subsequently, Maximum Tolerable Period  of Disruption (MTPD) is established and Recovery Time  Objectives  (RTOs) for critical activities and priorities are determined. Processes and Procedures that enable the achievement of RTOs are then documented. The creation of a continuity plan assures that company leaders can react quickly and efficiently to business interruption.

Emergency Management System is needed in all of the  scenarios discussed. It is linked to Business Continuity Plans (BCPs) and it also draws from scenario planning, risk assessment and business impact analysis. The emergency management programmes reflect company values and enable companies to comply with applicable government regulations and international standards on  labour relations and responsible business conduct. Each business unit is expected to interpret the corporate  emergency management policy into its operational context. Key aspects of Emergency management includes emergency preparedness, emergency response and emergency recovery.

The Emergency Preparedness Plan is a scenario-based tool for planning response to potential emergencies and to ensure that adequate arrangements are made in anticipation of a crisis. The goal of the Emergency Preparedness Planning  is to facilitate an appropriate, timely and effective response. Emergency plans should be  widely communicated within the organisation and to  local authorities. A common and recommended practice is the use of “Drills” to bring plans that have been developed to life. Experience from drills serves as input  into capacity building efforts for staff and management on emergency management.

The second component of Corporate is Emergency Response which is the immediate reaction  to an emergency situation focusing on ensuring life safety, minimising property damage and reducing the severity of an incident. The existence of an emergency preparedness  plan provides a framework for smooth take-off and operations of the Emergency Response Coordination Center.

The third component is Emergency Recovery. It  involves implementing prioritised actions that are required to return a process and its support functions to operational stability following an interruption.

In conclusion, surviving and thriving in the scenarios described above with respect to political risks associated with the upcoming elections is largely dependent on the culture being promoted by the leadership of business entities including the Board and Senior Management. Therefore, it is clear that Resilience Building efforts cannot be an afterthought, but  an integral component of  the organisation’s culture and way of work. This is even more  critical as business resilience strategy and actions are considered alongside other risk management efforts by inventors and lenders seeking to differentiate firms in capital allocation processes (ESG). The strong imperative for firms to undertake actions discussed in this engagement cannot be overstated.