Nigeria’s economy is on ‘warning’ status, indicating an unprecedented challenges for the nation’s economy, SBM Intelligence, a leading research and risk consultancy firm in Nigeria has said.
The research firm, in its Africa Country Instability Risk Index (ACIRI), which evaluates political stability risks across 47 African nations, said Nigeria scored 60% in the “Economy” macro risk indicator.
One of the report’s key features is the innovative framework for assessing the risk of coups d’état. Given that 2023 has been the year when the bite of longstanding state fragility has come to the fore – whether in African government takeovers or the renewal of hostilities in the Middle East, the ACIRI is a timely tool that indicates a country’s vulnerability to political instability.
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The ACIRI’s framework uses indices such as ethnic tensions, a country’s history of coups, dominant ethnic groups, economic concentration, ageing leaders, and the nature of their economies (mono-product, bi-product or multi-product), to develop a stability ranking for each country which is further divided into the ‘Red Watch, Warning, Critical, Vulnerable, Stable and Safe’ categories.
“The macro risk indicators are grouped into four categories: Leadership and Governance (with a weighting of 40%), Economy (30%), Geopolitics (15%) and History (15%), with each indicator subdivided into several measures for an overall score of 100%. A higher score delineates a higher level of political risk to business.
Particularly, Nigeria ranked 60% in the “Economy” macro risk indicator category, indicative of the country’s economic challenges. Sub-indicators in the “Economy” category include GDP growth, product/sector dominance, regulatory maturity, food security, poverty rate, debt sustainability, and currency volatility.”