October 23, (THEWILL) – SBM Intelligence, a leading research and risk consultancy firm in Nigeria, has stated that Nigeria’s economy is on ‘warning’ status as it ranked 60% in the “Economy” macro-risk indicator
The risk assessment consultancy firm revealed this in its Africa Country Instability Risk Index (ACIRI), which assesses the political stability risks in 47 African countries
The ACIRI’s framework uses indices such as ethnic tensions, a country’s history of coups, dominant ethnic groups, economic concentration, aging 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.”
The report noted that “the ACIRI is designed to serve a wide range of stakeholders. For governments, it serves as an invaluable tool for identifying and mitigating political instability risks. The framework for assessing the risk of coup aid in developing early warning systems and contingency plans, ultimately fostering informed conflict-resolution measures.
Non-governmental organisations, think tanks, and development agencies will find the ACIRI crucial in their efforts to promote political stability and economic development in West Africa. Considering that instability in one area can have ripple effects, influencing regional stability and potentially leading to wider conflicts or spillover effects, the ACIRI provides a comprehensive breakdown of each African region, offering insights into the unique challenges and opportunities present..
Transnational corporations can leverage the ACIRI to identify countries with high political instability risks and formulate contingency plans to safeguard their investments. This enables corporations to better comprehend the secondary influences at play and explore opportunities for partnerships with governments and other businesses.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
