Nigeria may face macroeconomic challenges, including low commodity prices, due to Chinese slowdown and the tightening of US monetary policy.
The economy may also suffer from inflation, weak domestic demand and socio-political tensions, Chief Executive Officer (CEO), Allianz Global Corporate & Specialty (AGCS) Africa, Delphine Maïdou has said.
She made this known at a press conference organised by the body in Lagos.
She said these were the key findings of the Sixth Allianz Risk Barometer, where corporate risks were analysed globally, as well as by region, country, industry and size of business.
She explained that the report was based on a survey conducted among 1,237 risk experts from 55 countries noting that in Nigeria, AGCS Africa worked with the Association of Enterprise Risk Management Professionals Nigeria (ERM), Risk Managers Society of Nigeria (RIMSON) and Risk Managers Association of Nigeria (RIMAN).
According to her, the country’s growth is held back by weaker macroeconomic environment, the struggling financial sector, underdeveloped infrastructure, insufficient health and education.
She stated that Nigerian risk managers sighted tough macroeconomic conditions and market volatility as their top two risks.
To mitigate volatility risks and anticipate any sudden changes of rules that could impact markets, companies in Nigeria will need to invest more resources into better monitoring politics and policy-making around the world in 2017.
She said companies operating in Nigeria increasingly worry about the struggling economy, corruption, volatility and political risks and violence with other growing concerns like digital dilemmas arising from new technologies and cyber risks, as well as government policies which do not enable businesses to thrive.
Quoting trade credit insurer, Euler Hermes, a subsidiary of Allianz SE, since 2014, Maïdou said there have been 600 to 700 new trade barriers introduced globally every year.
She said: “Corruption was ranked fourth indicating that it is still a concern in the country. Corruption in Nigeria could cost up to 37 per cent of GDP by 2030 if it’s not dealt with immediately. This cost is estimated to be nearly $2,000 per person by 2030. Corruption is ranked second as one of the most problematic factors for doing business in Nigeria in the Global Competitiveness Report. A significant reduction in corruption will boost current per capita income and improve the lives of many in Nigeria.
“Political risks and violence is still a major challenge largely due to terrorism and kidnap for ransom (KNR). The overall risk for Nigeria in 2017 is high on crime, terrorism, conflict, political violence and kidnap. The resurgence of violence in the Niger Delta is expected to continue into 2017. Militant groups are likely to continue high-profile attacks on oil and gas infrastructure to press the federal government into meeting its demands, which include greater autonomy for the region and a greater share of the oil wealth, which may be untenable considering Nigeria’s current fiscal woes. Greater military action risks increasing anti-government sentiment.
“Kidnapping, primarily for the purposes of financial gain, will remain a complex and multifaceted security threat in Nigeria in 2017. The country was one of the world’s top five worst kidnapping-affected countries and the region’s kidnapping capital. However, ongoing state military offensives over the past 18 months have led to the relative containment of Islamic State (IS) affiliate, Boko Haram, in north eastern Nigeria. According to available information, Boko Haram conducted no successful abductions of foreign nationals within the country in 2016. However the group is extending its operations into Chad and Cameroon and this could lead to an increase in KRE activity.”
RIMSON President, Jacob Odeonsun, said the Allianz Risk Barometer 2017 is a worthy compass, telescope and guide which risk managers, investors, professionals, governments, policy makers and corporate entities should not ignore in strategic decisions in the year.
