‘Fiscal, sovereign risks to persist in 2017’

PRESIDENT Buhari’s rising unpopularity will place the ruling All Progressives Congress (APC) under increasing pressure in 2017 according to the group, Control Risks, a global consultancy with regional offices in Nigeria, South Africa and Kenya.

In its Risk Map 2017 titles “West Africa: No smooth sailing I the New normal”, the group observed “and without a bounce in the oil price, fiscal and sovereign risks will persist.

“Nigerian prospects will continue to be weighed down by the economic challenges of low commodity prices. Militancy in the Niger delta is expected to continue at the same pace as 2016.”

African nations vying to emerge as the commercial gateway for foreign direct investment, offer opportunities but also unknown threats for business

Macroeconomic factors: low oil price and global economic sentiment will be the primary driver of instability across the continent.

Internal political uncertainty across a number of key nations will pose a much greater risk to businesses on the continent than the effect of international geopolitics

African businesses will remain vulnerable from failing to accord cyber security risk the same value as more established security or political threats

Businesses will respond as Arks (defensive focus on core markets), Sharks (targeting new opportunities) or Whales (becoming too big to fail)

Better governance has improved the business environment but plain sailing is not assured

Macro-economic instability fuelled by low oil prices and global economic sentiment will continue to be the main driver of business risks across West Africa in 2017.

Governance improvements and the embedding of certain democratic practices and norms will limit the scope of potential for deterioration, but challenges will still persist.

Cyber-attacks are advancing in nature. Businesses will become increasingly vulnerable until the impact of cyber risks on their operations and reputation is as well understood as the effects of political and security risk.

These are some of the key themes from the annual political and business risk forecast.

Tom Griffin, Senior Partner for Control Risks West Africa, comments: “Macro-economic and domestic political changes are driving African nations to re-invent themselves in the hope of becoming Dubai or Singapore style commercial hubs. This will present lucrative new opportunities for business, but equally engender unknown risks and require a deeper understanding of the local political and regulatory environment.

Companies will pursue different strategies to protect value and seize opportunity in 2017. Many organisations will be defined as Arks, Sharks or Whales by their response.