Country risk

Country risk in Nigeria is high. The OECD Country Risk Rating for Nigeria is 6, akin to a speculative grade sovereign rating from major private rating agencies. This indicates a relatively high probability of Nigeria being unable or unwilling to meet its external debt obligations.

Nigeria is ranked 114th out of 190 countries on the World Bank’s ease of doing business gauge. Nigeria has improved dealing with construction permits and starting a business in recent years. Although Nigeria lags the regional average on most measures, it is significantly easier to get credit, protect minority investors and enforce contracts in Nigeria.

The World Bank ranks Nigeria in the bottom quartile for all but one dimension of governance. Nigeria also falls behind the sub-Saharan average on all areas of governance. Nigeria is particularly prone to political instability and violence, including terrorism.

The risk of expropriation in Nigeria is high, despite having laws that protect against expropriation. A US-owned waste management company was expropriated in 2008. The judicial system is not always independent and is susceptible to pressure from the government. This would make it difficult for investors to seek recourse from the courts.

Political risk in Nigeria is high, characterised by a fractious political landscape, military groups and violence that undermines security. The presence of terrorist organisations remains a threat to the security situation.