SBM Intelligence Report: Nigeria, 17 Others Considered Safe, Stable for Multinationals’ Investments

Dike Onwuamaeze

Nigeria and 17 other African countries where ranked as safe and stable investment destinations for multinationals in terms of political risk for business.

This was contained in a recent report published by SBM Intelligence, titled “Africa Country Instability Risk Index (ACIRI).

The countries that were ranked safe were Botswana, Mauritius, South Africa, Seychelles, Cape Verde, Lesotho, Namibia and Tanzania. The report also considered the following countries: Ghana, Zambia, Liberia, Malawi, Kenya, Senegal, Republic of Benin, Gambia, Nigeria and the Sao Tome and Principe as stable for investment.

It, however, ranked Guinea Bissua, Mozambique, Camoros, Ivory Coast, Madagascar, Sierra Leone, Zimbabwe and Eswatini as countries that are vulnerable to political risk.

Nigeria was deemed a stable multi-party democracy in the report with an overall score of 39 per cent.

Its “key risk items include naira depreciation, multidimensional poverty, security challenges, and political uncertainty.”

But Botswana, which was characterised as a multi-party democracy with high succession stability, was ranked the safest African country for investment with an overall score of 18 per cent.

However, the Democratic Republic of Congo got the worst ranking with 81 per cent. The country, according to the report, was characterised by “electoral violence and low succession stability” and had witnessed, “conflict outbreaks in the last two years and economic instability due to insecurity and external shocks” as well as “escalatory rhetoric with one or more neighbours.”

The SBM stated in the report that, “Africa remains a continent full of opportunities, but it is currently grappling with many political, socio-economic, environmental and security challenges.

“This multifaceted resource seeks to empower to navigate the challenges posed by coups and social unrest.

“This report serves as a risk assessment framework for multinational companies operating within Africa’s western, central, eastern and southern regions.

“Its output is a predictive analysis – using each country’s unique factors – that will provide valuable insights to our clients for informed decision-making.”

But the report hung a warning signal on Equatorial Guinea, Ethiopia, Toga, Uganda and D’jobiti.

Furthermore, Gabon, Rwanda, Cameroun, Congo Brazzaville, Angola, Eretria, Mali, Niger Republic, Somalia, Burundi and South Sudan were ranked as countries who political stability posed critical risk to investments.

However, Burkina Faso, Chad, Sudan, Central Africa Republic and Congo Democratic Republic got the worst ranking, which is red watch, as countries with the highest political risk.

According to the SBM, 47 countries in west, central, east and southern Africa were covered in the report, which were grouped by region as delineated by the African Development Bank (AfDB).

However, North Africa was exempted because of the sub-Saharan focus of the study. A paucity of data, geopolitical considerations and a cultural and economic affinity with North Africa also led to the exemption of Mauritania and Western Sahara from the report.

Four categories of macro risk indicators were used in measuring the countries that featured in the report. These categories are leadership and governance (with a weighting of 40 per cent); economy (30 per cent); geopolitics (15 per cent) and History (15 per cent). A higher score delineates a higher level of political risk to business.

The report stated that the Democratic Republic of the Congo, Central African Republic, Chad, and Sudan presented the highest risk for regime change on the continent.

Also, countries that have recently seen coups, including Burkina Faso, Gabon, Guinea and Niger, also stand at the low end of the rankings.

On the contrast, “a raft of longstanding democracies, including Botswana, Mauritius, South Africa, Seychelles and Cape Verde, presented the lowest political risk for both regime change and risk-side challenges for economic actors and entrepreneurs.”