Nigeria Country Risk Report

Published 26 August 2015 | Quarterly

Quarterly report providing comprehensive data and in-depth analysis of political, financial and economic risk in.

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

Why you should buy this report

  • 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
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Core Views

  • Nigeria will continue to struggle with its readjustment to low oil prices, and some policies being pursued by the president and the Central Bank will further constrain growth in the near term. We forecast a real GDP expansion of 3.8% in 2016.

  • The CBN will maintain the key policy rate at 13.00% at the next Monetary Policy Committee meeting in December, as concerns over weak real GDP growth will come to the fore. We believe that the bank's more unorthodox policies must also be relaxed if growth is to be maintained.

  • Nigeria's current account balance will remain in deficit in 2016, as exports will fail to recover from the 2014 oil price collapse. The deficit will narrow from 2015, however, as an inevitable naira devaluation will limit imports.

  • Five months into the Buhari Presidency, it has become clear that Muhammadu Buhariis committed to oil sector reform and the fight against corruption. Overall, his Cabinet nominations are market-friendly. However, the overall investment climate has deteriorated on unorthodox economic policies, reduced central bank independence and Boko Haram resilience.

  • A repeat of the 2009 Nigerian banking crisis with government bailout is unlikely. Still, low oil prices will weigh on banks' loan growth, as 25-30% of loans go to the oil and gas sector and prospects for the non-oil sector are also dim.

Key Risks

  • 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 2013 2014e 2015f 2016f
e/f = BMI estimate/forecast. Source: National Sources/BMI
Nominal GDP, USDbn 508.7 545.7 446.1 478.2
Real GDP growth, % y-o-y

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Executive Summary
Core Views
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Reform Agenda Set For A Rocky Road
Long-Term Political Outlook
Inequality, Corruption And Militancy Pose Long-Term Challenges
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Growth Weighted Down By The Limits Of An Oil-Driven Model
table : Economic Ac tivity
Balance Of Payments
Falling Imports Insufficient To Prevent Current Account Deficit
table: Current Account
Fiscal Policy
Growing Deficit To Lead To Debt And Devaluation
table : Fisc al Polic y
Monetary Policy
Naira Weakness To Spur 50bps Rate Hike
table : Mone tary Polic y
Chapter 3: 10-Year Forecast
The Nigerian Economy To 2024
Power Sector Key For Long-Term Productivity
table : Long -Term Macr oec onomic Forec asts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
table: Operational Risk
Market Size And Utilities
table : Sub -Saharan Afric a - Market Size And Utili ties Avail abili ty
International Security Risk
table : Sub -Saharan Afric a Inters tate Securi ty Ris ks
Chapter 5: Key Sectors
Pharmaceuticals & Healthcare
table : Pharm aceu tic al Sales , His toric al Data And Forec asts
table: Healthcare Expenditure Trends, Historical Data And Forecasts
table : Telecoms Sec tor - Historic al Data & Forecasts
Other Key Sectors
table : Oil and Gas Sector Key Indicators
table : Infrastructure Sec tor Key Indicators
table : Food and Drink Sector Key Indicators
table : Freight Key Indicators
Chapter 6: BMI Global Macro Outlook
Global Outlook
Assessing The Aftermath Of Three Key Events
Table : Global Assumptions
Table : Developed States , Real GDP Growt, %
Table : Emerging Markets, Real GDP Growth, %

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:


  • 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.