Economy
Report Unveils Top Five Business Risks for West Africa
By Modupe Gbadeyanka
As Nigeria exits the recession of 2017, investor sentiment across West Africa is likely to experience uplift in 2018.
Still, political uncertainty ahead of Nigeria’s 2019 presidential elections and on-going security concerns are among the key risks for businesses operating in the region, says specialist global risk consultancy Control Risks in their annual political and security risk forecast ‘RiskMap’.
Control Risks’ Senior Partner for West Africa Tom Griffin stated that, “2017 has been a tough and turbulent year for businesses in the region, however with Nigeria exiting recession, and foreign exchange shortages easing, we see a strong improvement in investor sentiment emerging.
Another major engine of growth will be Cote d’Ivoire, where economic expansion is projected at around 7% next year. There will be only a handful of elections in the region in 2018, meaning continuity will largely prevail with policy decisions having the biggest impact on the business environment.”
“In Nigeria however, although presidential elections are next slated for 2019, campaigning has already started. The uncertainty that generates, as well as the need for cash that an election brings, mean that political instability and regulators whose actions will be difficult to predict remain among our top risks for businesses in the year ahead.”
Control Risks has identified the following as the key risks facing businesses in West Africa in 2018:
Terrorism and militancy: Business assets and personnel in West Africa will remain vulnerable to attacks by transnational or domestic militant groups. In particular, al-Qaeda and its affiliates will continue to pose a threat to operators in the Sahel, while the oil and gas industry in Nigeria’s Niger Delta will remain exposed to attacks by domestic militant groups. Failure to resolve the underlying political and socio-economic grievances at the root of these movements will see the threat persist in 2018.
Irregular regulators: As countries in the region, notably commodity-dependent economies, face growing fiscal pressures, operators are likely to see regulatory bodies increasingly act as revenue-generating bodies, strengthening local content provisions, introducing stricter fiscal terms, reviewing contracts or erratically imposing fines in companies in the hope of boosting state finances. This will periodically give rise to commercial disputes, legal challenges, and the need for businesses to engage with government stakeholders.
Political instability: Protracted political and socio-economic grievances will continue to fuel popular discontent and a desire for regime change in parts of the region. Cameroonian President Paul Biya’s re-election bid amid a continued crisis in the Anglophone regions will exacerbate tensions, while Togolese citizens will continue to protest for the end of the 50-year Gnassingbé dynasty. Protests will pose security threats to businesses, while regime changes would prompt major institutional changes and complicate engagements for operators.
New sectors, new risks: From Senegal’s offshore potential to Nigeria’s embryonic mining sector, some countries in West Africa will be making forays into previously-undeveloped sectors in 2018. Prospective investors need to monitor closely how government’s ability to oversee these sectors evolves and what the associated risks around these projects become.
On-going operational risks: Many of the major risks and challenges businesses face in West Africa are the on-going practical impediments to day-to-day operations. Shortages of or difficulties in sourcing fuel, foreign currency, equipment and skilled labour; the infrastructure deficits that persist in the vast majority of the region, such as in electricity and transport, will continue to mean higher costs, higher demands on management resources a tougher capital-raising environment, and greater uncertainty for businesses than in other regions.
Many countries in Africa, Nigeria and Cameroon among them, face the prospect of what could become a sovereign debt crisis, a decade after they followed Ghana’s lead in entering the international bond market. The problem is driven by high levels of external debt, persistent uncertainty over the recovery of commodity prices to fund repayments, and borrowing to fund recurrent expenditure. Countries dependent on oil revenues are particularly vulnerable to ballooning debt in 2018.
In Nigeria and Ghana, plans to borrow heavily to finance long-term infrastructure projects will not generate sufficient revenues in the coming year to finance debt repayments. Amid rising inflation and muted oil prices, Nigeria’s debt servicing payments – which in 2016 doubled to 66% of total revenues – are likely to rise further, placing extreme strain on an already stretched budget. With the government of President Muhammadu Buhari well over halfway through its term, yet to fulfil many of the promises that brought it to power and already entering campaign mode, businesses in Nigeria will remain acutely sensitive to political and operational instability in 2018.
The RiskMap 2018 website will be live from Monday, December 18, 2017.
By Dipo Olowookere
The domestic stock market crashed by 0.37 per cent on Thursday as a result of the decline in the price of shares of McNichols, Eterna, Aradel Holdings, and others.
Business Post reports that investor sentiment remained weak after the Nigerian Exchange (NGX) Limited ended the session with 25 price gainers and 31 price losers, indicating a negative market breadth index.
McNichols lost 10.00 per cent to trade at N7.74, ABC Transport slipped by 9.88 per cent to N6.20, Eterna shrank by 9.85 per cent to N29.75, Aradel Holdings depreciated by 9.51 per cent to N1,749.90, and NPF Microfinance Bank contracted by 8.45 per cent to N5.20.
On the flip side, International Energy Insurance gained 10.00 per cent to close at N6.60, Omatek improved by 9.73 per cent to N2.03, Abbey Mortgage Bank surged by 9.68 per cent to N8.50, Cutix expanded by 9.66 per cent to N3.18, and John Holt grew by 7.79 per cent to N14.90.
As for the sectorial performance, the industrial goods and banking indices chalked up 0.54 per cent and 0.31 per cent, respectively. But the energy sector depleted by 4.90 per cent, the insurance counter tumbled by 0.58 per cent, and the consumer goods index slumped by 0.03 per cent.
As a result, the All-Share Index (ASI) dipped by 905.30 points to 242,227.31 points from 243,132.61 points, and the market capitalisation stumbled by N581 billion to N155.359 trillion from N155.940 trillion.
During the session, investors traded 588.5 million equities valued at N27.9 billion in 57,352 deals compared with the 923.0 million equities worth N42.3 billion transacted in 69,332 deals on Wednesday, showing a drop in the trading volume, value, and number of deals by 36.24 per cent, 34.04 per cent, and 17.28 per cent, respectively.
The most active equity yesterday was Access Holdings with 109.7 million units sold for N2.6 billion, FCMB traded 35.6 million units valued at N384.2 million, NGX Group transacted 28.1 million units worth N3.9 billion, Zenith Bank exchanged 26.9 million units for N3.3 billion, and Sterling Holdings recorded a turnover of 22.5 million units worth N176.1 million.
By Adedapo Adesanya
A 0.1 per cent or N1,49 loss was recorded by the Nigerian Naira against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Thursday, June 4, closing at N1,358.75/$1 compared with the previous day’s N1,347.26/$1.
In the same vein, the Naira depreciated against the Pound Sterling in the official FX market during the session by N5.39 to trade at N1,828.06/£1 versus Wednesday’s closing rate of N1,822.67/£1, but gained N6.75 against the Euro to sell at N1,574.83/€1 versus the preceding session’s N1,584.39/€1.
At the black market and GTBank FX desk, the local currency traded flat against the Dollar during the session at N1,375/$1 and N1,372/$1, respectively.
Data from the Central Bank of Nigeria (CBN) showed that NFEM interbank FX turnover contracted to $128.117 million in 121 deals on Thursday from $133.731 million the previous day.
On the positive side, Nigeria’s external reserves moved closer to a 2009 high of $50 billion, enhancing analysts’ confidence about the local currency outlook in the second half of 2026.
This improvement has been helped by heightened global uncertainty, which has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices extended steep weekly losses as the broader artificial-intelligence trade that has driven global risk assets since 2026 faltered.
The sell-off was led by equity and currency markets, with semiconductor stocks, Asian indexes and several regional currencies sliding in a broad risk-off shift.
Persistent outflows from US spot Bitcoin ETFs and a rare BTC sale by Strategy have removed a key source of support, leaving markets focused on Friday’s US jobs report for clues on Federal Reserve policy and the fate of the AI trade. The most valued coin slipped 3.6 per cent to $61,914.58.
Cardano (ADA) plunged by 17.6 per cent to $0.1630, Solana (SOL) declined by 7.0 per cent to $65.69, Ethereum (ETH) slipped by 6.9 per cent to $1,666.13, Dogecoin (DOGE) went down by 6.5 per cent to $0.8445, and Ripple (XRP) crashed by 6.5 per cent to $1.11.
Further, Binance Coin (BNB) slumped by 4.3 per cent to $581.45, and TRON (TRX) dropped 1.9 per cent to sell at $0.3261, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) gained 0.01 per cent each to sell at $0.9990 and $0.9998, respectively.
By Adedapo Adesanya
The price of the crude oil benchmarks moderated by about 3 per cent on Thursday on investor hopes for an end to the United States-Israeli war with Iran that could reopen the Strait of Hormuz, following a ceasefire deal between Israel and Lebanon.
Brent futures lost $2.78 or 2.84 per cent to trade at $95.03 per barrel, while the US West Texas Intermediate (WTI) crude declined by $2.98 or 3.1 per cent to close at $93.04 per barrel.
Israel and Lebanon said they have agreed to implement a ceasefire on Wednesday, raising hopes for a deal between the US and Iran. Iran has made any agreement conditional in part on an end to fighting between Israel and Hezbollah, an Iran-aligned group in Lebanon. However, Israeli strikes in southern Lebanon continued on Thursday.
Iran signalled that there has been “no tangible progress” in the talks with the Americans on a potential deal, while the Israel-Lebanon ceasefire announced by the United States overnight appears shaky.
“No tangible progress has been achieved in the negotiation process,” Iran’s Foreign Minister Abbas Araghchi was quoted as saying by the semi-official Iranian news agency Tasnim.
The US and Iran have been exchanging messages on a framework proposal for a potential agreement for weeks. The oil market has reacted to each signal or hint of a breakthrough with sell-offs that sent Brent Crude prices to below $100 per barrel last week.
Despite the market hopes, the positions of the two sides appear to remain very distant, and a re-opening of the Strait of Hormuz is not imminent.
Earlier this week, Iran targeted civilian infrastructure in Kuwait and Bahrain, and alarms were raised at US military bases in Saudi Arabia, as Iran responded to the Israeli offensive in Lebanon.
The Republican-led US House of Representatives approved a resolution to block President Donald Trump from continuing the war against Iran. To take effect, the resolution would need Senate approval and a two-thirds majority in both chambers to override an almost certain Trump veto.
The Organisation of the Petroleum Exporting Countries (OPEC) expects robust oil demand growth and is not changing its estimate, according to its Secretary General, Haitham Al Ghais, on Thursday.
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