Nigeria Country Risk Report

Published 27 May 2015 | Quarterly

  • 54 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Nigeria Country Risk Report

Core Views

  • The clear-cut victory for Muhammadu Buhari in Nigeria's presidential election represents a significant maturing of the country's democratic political system.

  • With a strong mandate and an ambitious reform agenda, President-elect Muhammadu Buhari and his All Progressives Congress (APC) are well poised to make early progress on some of the major structural challenges facing Nigeria. Whether or not this momentum will be sustained over a multi-year horizon is far less certain.

  • Despite the smooth passing of the election, we expect economic growth to slow in 2015 and 2016 as the economy adjusts to the harsh reality of lower oil prices. Private consumption and public expenditure will be particularly hard hit.

  • The new era of lower oil prices raises serious questions over Nigeria's fiscal sustainability. Substantive and politically-difficult spending cuts will be needed if the country is to prevent a fiscal crisis unfolding over the next few years.

Major Forecast Changes

  • We have made substantive changes to our macroeconomic forecasts for Nigeria in the wake of falling oil prices.

Key Risks To Outlook

  • While we believe that security risks will eventually be contained, if the situation significantly deteriorates, this would potentially affect investment, exports, and growth.

  • Power sector reforms are crucial for long-term productivity gains. If these are slowed or stalled, this would lead to lower long-term trend growth than we currently expect.

...
Macroeconomic Forecasts (Nigeria 2013-2016)
Indicator 2013e 2014e 2015f 2016f
National Sources/BMI
Real GDP growth, % y-o-y 5.4 6.3 3.9 4.0
Nominal GDP, USDbn 508.7 550.1 449.7 459.2
Consumer price inflation, % y-o-y, eop 7.9 8.0 12.0 7.5
Exchange rate NGN/USD, eop 160.30 183.45 230.00 255.00
Budget balance, % of GDP -1.4 -1.3 -1.9 -1.7
Current account balance, % of GDP 4.0 1.1 -3.0 -1.2
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Buhari Victory Highlights Maturing Political System
8
Long-Term Political Outlook
9
Inequality, Corruption And Militancy Pose Long-Term Challenges
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Growth To Slump As Oil Price Reality Bites
14
Table : Economic Activity
14
Fiscal Policy
16
Buhari Well Placed To Address Fiscal Challenges
16
Table : Fiscal Policy
16
Regional Banking
18
Kenyan Banks The Regional Outperformers
18
Regional Commodities
20
After The Commodity Boom: The New Growth Path
20
table : Structural Economic Weaknesses
21
table : 10 Outperforming Economies - Real GDP Growth, %
22
Chapter 3: 10-Year Forecast
25
The Nigerian Economy To 2024
25
Power Sector Key For Long-Term Productivity
25
Table : Long -Term Macr oec onomic Forecasts
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
Table : Operational Risk
30
Legal Environment
31
Table : Sub -Saharan Africa - Legal Risks
32
Costs Of Labour
35
Table : Sub -Saharan Africa - Lab our Costs Risk
36
Chapter 5: Key Sectors
39
Power
39
Table : Electricity Generating Capacity Data And Forecasts
40
Table : Electricity Generating Capacity Data And Forecasts
41
Other Key Sectors
47
table : Oil and Gas Sector Key Indicators
47
table : Pharma Sector Key Indicators
47
table : Food and Drink Sector Key Indicators
47
table : Telecoms Sector Key Indicators
48
table : Infrastructure Sector Key Indicators
48
Table : Shipping Sector Key Indicators
48
Table : Freight Key Indicators
48
Chapter 6: BMI Global Macro Outlook
49
Global Outlook
49
EMs Still Slowing
49
Table : Global Assumptions
49
Table : Developed States , Real GDP Growth , %
50
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table : Emerging Markets , Real GDP Growt h, %
51

The Nigeria Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Nigeria. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Nigeria's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Nigeria's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Nigeria's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Nigeria, including currency volatility, the commodity price boom and protectionist policies.

The Nigeria Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Nigeria' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Nigeria through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Nigeria Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Nigeria and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Nigeria, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Nigeria over the next 5-years?

BMI's Nigeria country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Nigeria Market - Political Strengths, Weaknesses, Opportunities and Threats facing Nigeria.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Nigeria's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Nigeria’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Nigeria's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Nigeria?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Nigeria against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Nigeria’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Nigeria will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Nigeria's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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