Nigeria Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Nigeria Country Risk Report
Product Price
$1,195.00

Core Views

  • Nigeria will endure an economic contraction in 2016 as external and domestic challenges, exacerbated by a series of controversial monetary and fiscal policy developments, have led to a fall in manufacturing activity, declining oil production, a delayed implementation of an expansionary budget and reduced inflows of investment. We believe that the economy bottomed out in the second quarter of the year. However, despite some limited improvement ahead, any positive growth over the next two quarters will not be sufficient to offset the poor H1, and we forecast a 0.8% real contraction this year as a result.

  • In 2016, Nigeria's current account deficit will be the widest recorded since 1998 according to our forecasts, as the country struggles with a slump in global oil prices exacerbated by plunging oil output. Continued pipeline attacks by the Niger Delta Avengers have led our Oil & Gas team to sharply reduce its oil production forecasts, such that they now anticipate output of 1.70mn barrels per day (b/d) in 2016, down from our original target of 2.30mn b/d.

  • The Central Bank of Nigeria will enact a further 200 basis points of hikes over the next six months in a bid to encourage a return ininternational investment. High structurally driven inflation will keep real interest rates negative, but the tighter monetary policy will be a strong signal to investors.

  • The next Nigerian presidential elections are not due for another three years, but we already find it increasingly unlikely that incumbent president Muhammadu Buhari will serve a second term. Whether he runs and is defeated by the candidate for a re-invigorated People's Democratic Party (PDP), is pushed out of the running by other members of his All Progressives Progress (APC) over concerns over his viability as a presidential candidate, or, as rumours are already suggesting, will simply choose to not contend for the presidency once more, we do not expect that Buhari will remain president following the 2019 elections. His popularity has faded rapidly since coming to power, with an April poll putting his approval rating at just 31.7%, down from over 60% when the poll began in December 2015.

Key Risks

  • While we believe that security risks Nigeria faces on a number of fronts will eventually be contained, if the situation significantly deteriorates into a more intense level of conflict, 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 2014-2017)
Indicator 2014e 2015e 2016f 2017f
e/f = BMI estimate/forecast. Source: National Sources
Real GDP growth, % y-o-y 5.9 2.8 -0.8 4.7
Nominal GDP, USDbn 545.8 481.2 356.5 368.3
Consumer price inflation, % y-o-y, eop 8.0 9.6 18.5 13.0
Exchange rate NGN/USD, eop 183.48 199.30 295.00 310.00
Budget balance, % of GDP -1.1 -1.5 -2.8 -2.2
Current account balance, % of GDP 0.2 -3.2 -4.3 -3.2
Executive Summary
5
Core Views
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Naira Peg Will Exacerbate Low Oil Impact On Growth
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
China Deal Not A Silver Bullet For Macro Woes
11
Structural Fiscal Position
13
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
13
External Trade And Investment Outlook
14
Flailing Economy, Not Exports Boost, Will Reduce Current Account Deficit
14
Outlook On External Position
15
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
16
TABLE: TOP 5 GOODS EXPORTS IN 2014
16
TABLE: TOP 5 GOODS IMPORTS IN 2014
16
Monetary Policy
17
Policy Reversal Insufficient As Peg Still Stands
17
Monetary Policy Framework
19
Chapter 2: 10-Year Forecast
21
The Nigerian Economy To 2025
21
Power Sector
Power Sector
Key For Long-Term Productivity
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
27
SWOT Analysis
27
BMI Political Risk Index
27
Domestic Politics
28
Controversial Buhari Policies Will Weigh On Growth
28
TABLE: POLITICAL OVERVIEW
28
Long-Term Political Outlook
29
Inequality, Corruption And Militancy Pose Long-Term Challenges
29
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: OPERATIONAL RISK
34
Economic Openness
35
TABLE: TOP FIVE IMPORT PRODUCTS & IMPORT PARTNERS, 2010-2014, USDMN
37
TABLE: FREE TRADE AGREEMENTS
38
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
39
Availability Of Labour
40
TABLE: SUB-SAHARAN AFRICA - AVAILABILITY OF LABOUR RISK
41
TABLE: TOP 10 SOURCE COUNTRIES FOR MIGRANT WORKERS
43
Chapter 5: BMI Global Macro Outlook
45
Global Macro Outlook
45
Tentative Stability, But New Risks Emerging
45
TABLE: GLOBAL ASSUMPTIONS
45
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
46
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
47
TABLE: MACROECONOMIC DATA & FORECASTS
49

Assess your risk exposure in Nigeria with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Nigeria with confidence.

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