geopolitical risk ratings firm

Nigeria Country Forecast

18-Month: PDP Majority 55% (45%)
Five-Year: PDP Majority 40%

Financial Transfer Direct Investment Export Market
18-Month: Very High C+ C+ C (C-)
Five-Year: Very High C (C-) C C
( ) Indicates change in rating. *  Indicates forecast of a new regime.


Real GDP Growth %  
Inflation %
Current Account ($bn)
2006-2010(AVG) 6.7 10.1 25.79
2011(F) 5.8 12.7 34.00
2012-2016(F) 6.4 9.9 22.90

Convincing Victory Cause for Optimism

Administrative obstacles forced the postponement of presidential and legislative elections that were to have been held in early April, and under the revised (and staggered) schedule for holding the vote, the presidential contest took place on April 16. The incumbent president, Goodluck Jonathan, who succeeded to the office following the death of President Umar Yar’Adua in May 2010, and stood as the candidate of the governing PDP, won a full term in his own right by a decisive margin.
Jonathan’s bid has been a source of controversy, as he is a southern Christian, and members of The PDP’s predominantly Muslim northern faction had insisted that it was their turn to choose the nominee under a “gentlemen’s agreement” to rotate control of the presidency between the regions. Significant gains for the opposition at parliamentary elections held on April 9 stirred fears that Jonathan might lose, or win by a margin so narrow as to cast doubt on the legitimacy of his mandate, either of which might have triggered a post-election split in the PDP. However, it appears that the PDP will continue to play its crucial role as a unifying force in a country where ethnic, religious, and cultural divisions run deep.
That said, the PDP’s shrunken majority increases the likelihood that policy disagreements among the governing party’s factions will pose an obstacle to winning approval of key pieces of legislation. The urgency attached to ensuring approval of important bills before the new National Assembly was seated highlights the president’s recognition of that danger. Against that backdrop, the probability that the government will be able to command a reliable majority in the legislature is only slightly better than even in the near term, and will fall significantly as Jonathan’s would-be successors begin to jockey for position ahead of the 2015 elections.
Political Weakness Will Impede Reform
Economic growth and rapid development depend on boosting inflows of FDI, but despite a positive regulatory environment Nigeria’s appeal to foreign investors outside of the energy sector has been limited by concerns over such things as political instability and rampant corruption.
Jonathan will have to accommodate the interests of his disparate allies and bring at least some members of the opposition on board if he is to push key reform proposals through the new, less compliant National Assembly. In that regard, winning approval of the Petroleum Industry Bill will top the agenda. The delay in adopting the new rules for the oil sector has already delayed up to $120 billion of investment in the oil and gas industry.
In any case, the government is likely to maintain a tight grip on the benefits it receives from its stake in the oil sector, which provides virtually all government income.
As long as general political stability is maintained and another steep drop in oil prices is avoided, the performance of the oil sector and the diversion of substantial resources from debt service to development will underpin growth averaging 6.4% annually through 2016.
However, even that rate of growth will be insufficient to significantly ease the profound socioeconomic problems that contribute to chronic unrest. In addition to social disturbances, other factors deterring investment and economic expansion include widespread corruption and a lack of will at the top to face down opposition to economic reforms from vested interests in the political structure and the population at large.
Inflation will fluctuate over the forecast period according to the performance of the agriculture sector, which will directly influence movements in food prices, but the stabilization of the currency and the resumption of fiscal discipline as rising oil prices boost government income will facilitate a gradual reduction of inflation, and consumer prices are forecast to increase by an average of 9.9% per year through 2016.

Economic Forecasts for the Three Alternative Regimes

PDP Majority Military Divided Government
2011 5.8 12.7 34.00 4.8 14.3 25.90 3.5 15.6 19.30
2012-2016 6.4 9.9 22.90 2.4 17.7 5.40 3.8 12.9 13.70


Moving beyond current opinions, a seasoned look into the most pressing issues affecting geopolitical risk today.


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