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Top 5 Business Risks for West Africa in 2018
Control Risks pinpoints economic recovery as Nigeria exits recession
Politics, regulations, and even terrorism are included among Control Risks’ countdown of the region’s most pressing
economic challenges moving into 2018
As Nigeria exits the recession of 2017, investor sentiment across West Africa is likely to experience uplift in 2018 according to specialist global risk consultancy, Control Risks. Still, political uncertainty ahead of Nigeria’s 2019 presidential elections and ongoing security concerns are among the key risks for businesses operating in the region, the consultancy adds in its annual political and security risk forecast RiskMap.
“2017 has been a tough and turbulent year for businesses in the region, however with Nigeria exiting recession, and foreign exchange shortages easing, we see a strong improvement in investor sentiment emerging,” comments Control Risks’ Senior Partner for West Africa, Tom Griffin. “Another major engine of growth will be Cote d’Ivoire, where economic expansion is projected at around seven percent next year. There will be only a handful of elections in the region in 2018, meaning continuity will largely prevail with policy decisions having the biggest impact on the business environment.
“In Nigeria however, although presidential elections are next slated for 2019, campaigning has already started. The uncertainty that generates, as well as the need for cash that an election brings, means that political instability and regulators whose actions will be difficult to predict remain among our top risks for businesses in the year ahead.”
Control Risks and has identified the following as the key risks facing businesses in West Africa in 2018.
Many countries such as Africa, Nigeria and Cameroon, face the prospect of what could become a sovereign debt crisis, a decade after they followed Ghana’s lead in entering the international bond market. The problem is driven by high levels of external debt, persistent uncertainty over the recovery of commodity prices to fund repayments, and borrowing to fund recurrent expenditure. Countries dependent on oil revenues are particularly vulnerable to ballooning debt in 2018.
In Nigeria and Ghana, plans to borrow heavily to finance longterm infrastructure projects will not generate sufficient revenues in the coming year to finance debt repayments. Amid rising inflation and muted oil prices, Nigeria’s debt servicing payments - which in 2016 doubled to 66 percent of total revenues - are likely to rise further, placing extreme strain on an already stretched budget. With the government of President Muhammadu Buhari well over halfway through its term, yet to fulfil many of the promises that brought it to power and already entering campaign mode, businesses in Nigeria will remain acutely sensitive to political and operational instability in 2018.