Nigeria’s stability has deteriorated sharply, with the nation now categorized as “vulnerable” on the Africa Country Instability Risk Index (ACIRI), according to a recent analysis by SBM Intelligence.
The index, which assesses 48 sub-Saharan countries, highlighted Nigeria as one of the “biggest losers” in 2024, with its ranking slipping from 39th to 45th in just a year.
“Unfavorable policies have weakened the naira and driven out major investors, worsening Nigeria’s economic and political risks,” the report noted. Multinational firms like Procter & Gamble, GlaxoSmithKline, and Equinor have exited the country, citing foreign exchange shortages, soaring energy costs, and shrinking consumer purchasing power as key challenges.
The study categorizes nations into six stability levels, from “Red Watch” to “Safe.” Nigeria’s current score of 43 places it firmly in the “vulnerable” group, signaling heightened risks for businesses. “A lower score reflects greater stability, while higher scores indicate worsening conditions,” the think tank explained.
While Southern Africa remained the most stable region for the second consecutive year, Central Africa emerged as the least stable, with a score decline of 6.78. “South Africa’s modest economic recovery of 0.4% in Q2 2024 offset some regional instability,” SBM noted. In contrast, West Africa’s struggles with Islamist insurgencies and coup attempts contributed to its poor performance.
Nigeria’s instability mirrors challenges faced by neighbouring countries. Botswana, Zimbabwe, and Namibia joined Nigeria as top losers, while Angola, Burundi, and Chad emerged as the biggest gainers. Angola, for instance, improved its GDP growth by reducing governance costs, while Madagascar’s economy grew by 4.4%, up from 4.3% in 2022.
Underlying Factors
SBM Intelligence attributed instability across sub-Saharan Africa to a complex interplay of factors, including ethnic tensions, poverty, food insecurity, and weak governance. Nigeria’s case was further compounded by inflation, debt unsustainability, and declining economic diversity.
“These issues aren’t unique to Nigeria,” the report emphasized. “Central Africa’s poor showing, coupled with conflicts like the Rwanda-backed M-23 insurgency in Congo, highlight broader regional instability.”
Southern Africa’s comparative stability, however, offers a glimmer of hope. “Regions like Southern Africa demonstrate that economic reforms can mitigate political risks,” SBM said, pointing to examples like Eswatini and South Africa.
Key Takeaways for Businesses
The report serves as a stark reminder for investors to assess political and economic risks carefully. “A higher score directly translates to higher political risk for businesses,” the study warned, urging multinational companies to adopt robust risk mitigation strategies when operating in vulnerable markets.
