Country Risk Report on Nigeria Harvard Case Solution & Analysis

Introduction

             This report has been prepared to perform risk analysis on Nigeria. Nigeria is one of the biggest economies of Africa and the country is basically located in West Africa on the coast of Atlantic Ocean and Gulf of Guinea. The most nearest countries in the surrounding neighbor of Nigeria are Niger, Chad, Cameroon and Benin. The complete geography of the country is formed of semi deserts in the north, grass lands, wood lands and tropical forests along with coastal swamps. The economic system of Nigeria is basically a mixed economic system which includes government regulation, centralized economic planning along with complete freedom. Nigeria is basically the member of the African Economic Community and African Union.

General Information

            The most general information about Nigeria is as follows:

Gross Domestic Product: The GDP of the economy is $262.61 billion. The ranking of the company according to the World Bank report 2012 is on number 38.

Population: The population of economy is 168.8 million. The ranking of the company according to the World Bank’s 2012 report is on number 7 in terms of the world ranking.

Form of State: The form of state of Nigeria is federal republic

Head of government: The head of the government is Goodluck Jonathan.

Elections: The next elections of the country would be held in 2015 including both the legislative and presidential elections.

Economic Overview

Largest Economy of Africa Strong Growth

            Over the past 10 years period till the end of the year 2013, the average growth in the GDP of the country has been around 7.1% on average. Among the whole of the sub-Saharan African region this growth rate was the highest of all. The major part in the growth of the economy was contributed by the oil and gas sector of Nigeria. This growth was experienced despite the fact that the country had experienced losses in the revenues and the output due to actions of the industrial gangs and many disputes among the industries.

Furthermore, there have been many uncertainties regarding the amount of the foreign investment in the oil sector due to major disputes between the state authorities and the federal authorities. Despite such high growth rates that have been seen by the country, the performance of the company is not equal to its actual potential.

The overall growth in the economy has been contributed majorly by the oil and gas sector but there are also many other sectors that have contributed to the growth of Nigeria including the agriculture, telecommunications and construction. According to EH the growth rate for the coming years 2015 and 2016 is estimated to be around 7% and 7.4% respectively.

Country Risk Report on Nigeria Case Solution

Oil and Gas Economy

            About the total of the GDP around 33% of the total GDP is contributed by the oil and gas sector of the country. This has led to significant economic development of the country. The export earnings and the revenues earned by the government comprise of about 90% and 80% respectively. However, the economic diversification policy has been adopted by the government of Nigeria and the government of the country has been taking steps to invest in other non-hydrocarbon sectors such as the manufacturing, financial services, agriculture and mining.

            A negative feature has also been indicated by the Petroleum Industry Bill which was enacted by the protracted legislative process. As a result of this change, there have been a lot of uncertainties surrounding the implementation, direction and formation of the policy. Due to this, the tasks of the country have increased from the point of view of the investors and they all have formed a view of lack of security regarding their assets in the country and also the personnel in the country.

Current Account Surpluses

            The current account surpluses comprise of about 7%, 6% and 5% of the total GDP of the country for the years 2013, 2014 and 2015. All of this has been achieved as a result of the significant revenues that have been derived by the government of the country from the export revenues of oil and gas which have led to excess crude account and a sovereign wealth fund. The export revenues from the oil and gas sector would have been even much higher if the country did not have experienced the significant losses as a result of the criminal gangs and pipeline distortions..................

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