Instability index puts Nigeria’s economy on ‘warning’ status

Nigeria’s economy is on “warning” status, according to a new index that assesses the political stability risks in 47 African countries.

The Africa Country Instability Risk Index (ACIRI), developed by SBM Intelligence, a leading research and risk consultancy firm in Nigeria, ranked Nigeria 60% in the “Economy” macro risk indicator category.

The ACIRI’s framework uses indices such as ethnic tensions, a country’s history of coups, dominant ethnic groups, economic concentration, ageing leaders, and the nature of their economies (mono-product, bi-product or multi-product), to develop a stability ranking for each country which is further divided into the ‘Red Watch, Warning, Critical, Vulnerable, Stable and Safe’ categories.

The report noted that Nigeria’s economic challenges include high poverty rates, currency volatility, and debt sustainability issues.

“The ACIRI is a timely tool that indicates a country’s vulnerability to political instability,” the report said. “Given that 2023 has been the year when the bite of longstanding state fragility has come to the fore – whether in African government takeovers or the renewal of hostilities in the Middle East, the ACIRI is a valuable resource for businesses and investors operating in Africa.”

The ACIRI’s macro risk indicators are grouped into four categories: Leadership and Governance (with a weighting of 40%), Economy (30%), Geopolitics (15%) and History (15%), with each indicator subdivided into several measures for an overall score of 100%. A higher score delineates a higher level of political risk to business.