SBM Intelligence, a leading research and risk consultancy firm in Nigeria, has announced the release of its “Africa Country Instability Risk Index” (ACIRI), a risk index that assesses the political, economic, and social factors contributing to political instability in 47 African countries.
The report delves into the historical context of each country, shedding light on the reasons behind their current levels of political stability and also highlights the economic impact of political instability, underlining its repercussions for investors and governments alike.
The ACIRI’s framework uses indices such as ethnic tensions, a country’s history of coups, dominant ethnic groups, economic concentration, ageing leaders, and the nature of their economies (mono-product, bi-product or multi-product), to develop a stability ranking for each country which is further divided into the ‘Red Watch, Warning, Critical, Vulnerable, Stable and Safe’ categories.
The macro risk indicators are grouped into four categories: Leadership and Governance (with a weighting of 40%), Economy (30%), Geopolitics (15%) and History (15%), with each indicator subdivided into several measures for an overall score of 100%. A higher score delineates a higher level of political risk to business.
Particularly, Nigeria ranked 30% in the “Leadership & Governance” macro risk indicator category, indicative of a stable leadership. Sub-indicators in the “Leadership & Governance” category include democracy/autocracy, ethnic dominance index, ethnic composition of key sectors, succession stability, conflict and vulnerability, military spending to GDP ratio, among others.
The ACIRI is designed to serve a wide range of stakeholders. For governments, it can be an invaluable tool for identifying and mitigating political instability risks. The framework for assessing the risk of coups can aid in developing early warning systems and contingency plans, ultimately fostering informed conflict-resolution measures.
Transnational corporations can leverage the ACIRI to identify countries with high political instability risk and formulate contingency plans to safeguard their investments. This enables corporations to better comprehend the secondary influences at play and explore opportunities for partnerships with governments and other businesses.
Non-governmental organisations, think tanks and development agencies will find the ACIRI crucial in their efforts to promote political stability and economic development in West Africa. Considering that instability in one area can have ripple effects, influencing regional stability and potentially leading to wider conflicts or spillover effects, the ACIRI provides a comprehensive breakdown of each African region, offering insights into the unique challenges and opportunities present.
The ACIRI unveils West Africa’s diversity as a region that offers opportunities in agriculture, mining and tourism but is faced with challenges such as political instability, security threats, economic inequality and climate change impacts.
Similarly, the ACIRI spotlights Central Africa’s turbulent history marked by coups and civil wars while also highlighting its unique security threats which include terrorism and armed conflicts that hinder development. The fact that three of the countries in this region – the Democratic Republic of Congo, Central African Republic and Chad are among the top five riskiest countries in the continent drives home the point.
Furthermore, the ACIRI highlights East Africa’s strategic location for trade, its fast-growing economies as well as the ethnic and religious tensions it faces. It also discusses the economic inequality, political instability and abundant natural resources available in Southern Africa.
In addition to its rich insights borne out of rigorous research and analysis, the ACIRI is presented in a clear and accessible style, thus making it a valuable resource to guide the actions and decisions of multiple stakeholders in Sub-Saharan Africa.