Nigerian Instability Delivers Stark Warning to Investors

Risk levels analysed in new Country Risk Report from The World Risk Review.

A bungling of Nigeria's oil subsidy policy, combined with an increase in Islamic terrorism threatens to destabilise the country and undermine its potential for inward investment.

That's one of the warnings from the latest Country Risk Report on the African nation, published by World Risk Review this week.

With the recent attacks that left 200 dead in Kano coming swiftly on the back of civil strikes at the removal of oil subsidies, World Risk Review has raised Nigeria's ratings against Strikes, Riots & Civil Commotion, and Terrorism.

Against the backdrop of an already weak financial infrastructure and spiralling Islamic insurgency, investors, says the report, should be aware of the political implications of further public backlash at the government's lack of action on economic reform and institutional corruption.

A key concern, says Elizabeth Stephens, Head of Credit and Political Risk Analysis for JLT, managers of The World Risk Review, is President Goodluck Jonathan's ability and commitment to achieving control over the escalating tensions.

The swift and full withdrawal of an oil subsidy, which effectively doubled the price of petrol, led to politically and economically debilitating protests in early January. Though Jonathan has taken steps over recent weeks to reinstate a degree of control, including the partial reinstatement of the subsidy, the sacking of his head of police and an investigation into corruption within the oil sector, the full extent and real impact of his apparent determination remains to be seen.

She said: "Whether Jonathan has the ability and will to harness the pro-reform momentum generated by the recent protests to implement the desired changes is uncertain. It is too early to tell whether initiatives aimed at tackling corruption reflect a genuine government commitment to tackling vested interests and revitalising the oil sector, or if they're merely a device to ease current pressure.

"But if history's a guide to the present, the prospects for reform are grim. Jonathan lacks a broad base of political support and the rising tide of terrorism from Boko Haram and other fundamentalist organisations will undermine his ability to position himself as the legitimate leader of the country."

Support from an already disenfranchised and mobilised population will be difficult to achieve, she concludes, and there's a chance that unless the planned reforms provide tangible benefits quickly, Jonathan may find himself swept away on a tide of civil unrest.

An online strategic decision making tool for the assessment of country risk, The World Risk Review provides up-to-date analysis of country risks or ‘perils' under 9 distinct perils under the broad categories of political violence, trading and investment environment. Offering instant access to individual risk ratings of 197 separate countries alongside a series of analytical country reports and sector insights, The World Risk Review is available at www.worldriskreview.com

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Editor's Notes:

The World Risk Review is an information service provided by JLT Specialty Limited to help corporations, banks and other organisations involved in international trade. It provides short to medium term assessment of the level of risk associated with a range of political and economic perils that could cause financial loss and is the most comprehensive risk assessment tool of its type.

By monitoring 53 international sources of independent, verifiable data and expert advice from a distinguished advisory board we rate up to 197 countries and territories across nine perils under the broad categories of Political Violence, Trading Environment and Investment Environment.

The World Risk Review site offers access to key country insights and risk reports as well as current and historic risk ratings. Users also have the option to personalise their dashboard with the countries that interest them most, compare different countries and download relevant data and charts

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