Announcements Criteria

GCR publishes the Country Risk Score for Nigeria

Lagos, 9 February 2021: GCR Ratings (“GCR”) has published the Country Risk Score for Nigeria. The Country Risk Scores are available for download at https://gcrratings.com/risk-scores/.

The GCR Country Risk Assessment

The Country Risk assessment which is a key part of the operating environment score, interacts with GCR ratings in four ways. Firstly, the country risk scores create the foundation for the Anchor Credit Evaluator (the mapping table, see the Criteria for the GCR Ratings Framework and the interactive online map at https://GCRratings.com/criteria). Secondly, the country risk score/assessment acts as an anchor to the GCR Risk Score and therefore ultimately to the GCR issuer ratings. Thirdly, the country risk assessment acts as a hurdle (or more accurately as a series of hurdles, differing according to industry) that limits uplift away from an entity’s financial sector operating environment (the combination of the country risk score and the financial sector risk score). Fourthly, the country risk score provides a level from which government support can be applied for each industry. For more details on the above, please read the related criteria and research listed below.

GCR will periodically publish updated “Country Risk Scores”, which will supersede previous publications. The publication titled “GCR Country Risk Scores, 09 February 2021”, available at https://gcrratings.com/risk-scores/, supersedes the article published on 24 November 2020.

Country Risk Score

Nigeria, Country Risk Score 3.75*, Mapping Table 3.5 to 4.0

Nigeria’s country risk score of 3.75 balances its strong economic base, supported by significant natural resources and large population, against low wealth levels, moderately weak institutional scores and currently restrained economic growth. Nigeria is one of Africa’s three largest economies, with a population of approximately 190mln people and contributing around 19% of continental GDP. The size of the economy is bolstered by significant natural resources, most pertinently it is the largest oil exporter on the continent. However, like many of the continental peer group, wealth levels are low. Furthermore, commodity concentrations can cause significant economic, fiscal and currency volatility in Nigeria. This is due to both the government dependency on oil exports for revenues and the country’s high import dependency, both belying a too narrow economic base. In part due to low oil prices, but also due to restrained economic activity, GDP contracted by around 3% in 2020. We could see some rebound to positive growth in 2021, due to the base effect and some return to normality if global conditions improve.

The moderately weak institutional scores are constrained by voice and accountability, rule of law, corruption and control, deterioration in security (particularly the protracted fight with the Boko Haram insurgents) and the recent surge in banditry (particularly kidnaping for ransom) across the country.

Analytical contacts

Primary Analyst Funmilayo Abdulrahman Senior Analyst
Lagos, Nigeria Funmilayo@GCRratings.com +234 1 904 9462-3
Primary Analyst Matthew Pirnie Group Head of Ratings
Johannesburg, South Africa MatthewP@GCRratings.com +27 11 784 1771

Related criteria and research

Criteria for the GCR Ratings Framework, May 2019
GCR Country Risk Scores, February 2021
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