NIGERIA

RISK RATING
High
Default High Risk Score 7.00
Normal Average 6.05
Weighted Average 5.30
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Nigeria’s high population density, weak healthcare indicators, already elevated political and security risk scores, and the country’s perilous economic over-dependence on oil exports, do not bode well for its capability to manage the coronavirus. The ruling party in Nigeria is already in a power struggle over political succession, while the Islamist insurgency in the northeast of the country risks escalating as government resources are preoccupied to contain the COVID-19 outbreak. Each Nigerian state is dealing with the coronavirus outbreak in a different manner, reflecting the complexity of combating the virus in the continent’s most populous country. On a federal level, the central bank has already devalued the naira currency to buffer fast-depleting foreign exchange reserves. The crash in oil prices, which is due in large part to a coronavirus-induced demand collapse, has seriously battered Nigeria’s finances. Even before the pandemic, the country had imposed increasingly restrictive movement measures that will impact trade and many industries’ supply chains. While it is too early to assess the Nigerian federal and state governments’ efforts to fight the virus, there are serious concerns that the ongoing crisis will distract from several other situations in the country, most notably political and security issues in northern states.

  • The contest over succession of President Buhari in three years‚Äô time has already kicked off and is likely to spur a divisive battle over resources in the country, including control over lucrative procurement contracts. As Nigeria prepares to contain the coronavirus, its government is mostly unprepared, and the country‚Äôs political patronage structures are preoccupied with funding campaign war chests for 2023. This again bodes ominously for the battle against COVID-19. Buhari allies, who are battling to succeed him as president, include Lagos political ‚Äėgodfather‚Äô Bola Tinubu and ruling party chairman Adams Oshiomhole.
  • An intensifying insurgency in the northeast has created a ‚Äėwar economy‚Äô that is focussed on combating Islamist militant groups such as the various offshoots of Boko Haram, including Jama‚Äôatu Ahlus Sunna Lidda‚Äôawati wal Jihad, and Islamic State West Africa Province. These groups stage frequent and often more complex attacks on civilian, government, and humanitarian targets in Borno State. In the Niger Delta, the collapse of the oil industry and reduced federal payments to former militants indicates a resurgence of attacks on oil installations will become more likely.
  • The Central Bank of Nigeria has devalued the official currency rate in a move to converge a multiple exchange rate regime which it has used to manage pressure on the naira. Further devaluations of the naira are likely as the CBN seeks to converge the official currency exchange rate with the black-market rate. Further devaluation would lead to increased importation costs for raw materials and other soft and hard commodities that must be paid for using foreign exchange. Recently, low interest rates in advanced economies have allowed Nigeria‚Äôs central bank to ease rates locally, but if oil prices continue to come under pressure, putting further pressure on the naira, there will be pressure to hike rates.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
4.5
Expropriation, Nationalisation, Confiscation & Deprivation
4.0
Contract Frustration & Breach
6.5
Taxation
5.5
Bribery & Corruption
7.0
Regulatory Burden
6.5
Strikes, Riots & Civil Commotion
6.0
Security
7.0
Sovereign Default
6.5
Economic Volatiliy
7.0

Risk Rating Scale (small)

Severe
High
Elevated
Moderate
Low

Risk Score BTN

SECURITY MONITOR

ACLED DASHBOARD

MEDIA MONITOR

View Media Monitor BTN

RELATED ARTICLES