Five immediate risks facing Nigeria’s economy – WEF

The World Economic Forum (WEF) has released a new report that puts on stark display the tough job ahead for Nigeria’s next president.

Based on responses from 1,200 private-sector risk managers, public policy-makers, academics and industry leaders across the world, the WEF’s 2023 report highlights terrorist attacks, debt crises, cost of living, severe commodity supply crises, rapid or sustained inflation, and employment or livelihood crises as the most immediate risks facing Nigeria’s economy.

“The resulting pressure on fiscal balances may exacerbate debt sustainability concerns, leaving emerging and developing countries with far less fiscal room to protect their populations in the future,” WEF said on Wednesday.

WEF said a combination of extreme weather events and constrained supply could lead the current cost-of-living crisis into a catastrophic scenario of hunger and distress for millions in Nigeria and other import-dependent countries.

The pandemic and the ongoing Russia-Ukraine war have brought energy, inflation, food and security crises back to the fore, according to the report.

It said risks that will dominate the next two years include the risk of recession, growing debt distress, a continued cost of living crisis, polarised societies enabled by disinformation and misinformation, natural disasters, extreme events, and zero-sum geo-economic warfare.

“The short-term risk landscape is dominated by energy, food, debt and disasters. Those that are already the most vulnerable are suffering and in the face of multiple crises, those who qualify as vulnerable are rapidly expanding, in rich and poor countries alike,” Saadia Zahidi, managing director at WEF, said on the findings of the report.

“In this already toxic mix of known and rising global risks, a new shock event, from a new military conflict to a new virus, could become unmanageable.”

She said climate change and human development should be at the heart of concerns of world leaders to boost resilience against future shocks.

The report also called on world leaders to “act collectively and decisively, balancing short and long-term views,” recommending “joint efforts between countries as well as public-private cooperation to strengthen financial stability, technology governance, economic development and investment in research, science, education and health.”

“If we speed up action, there is still an opportunity by the end of the decade to achieve a 1.5 C trajectory and address the nature emergency. Recent progress in the deployment of renewable energy technologies and electric vehicles gives us good reasons to be optimistic,” Scott said.

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The goal of limiting global warming by 1.5 C by the end of the century was agreed in the 2015 Paris Agreement, but the world is on track to go well beyond this threshold as the efforts are not sufficient to achieve necessary emissions cuts.

Carolina Klint, risk management leader covering Continental Europe at Marsh, said this year is set to be marked by increased risks related to food, energy, raw materials, and cyber security, causing further disruption to global supply chains and affecting investment decisions.

“No country is immune to these crises,” she said. “At a time when countries and organisations should be stepping up resilience efforts, economic headwinds will constrain their ability to do so,” she said. “Faced with the most difficult geo-economic conditions in a generation, companies should focus not just on navigating near-term concerns but also on developing strategies that will position them well for longer-term risks and structural change.”

The conclusions of the report, prepared ahead of the annual WEF talks in the Swiss resort of Davos due next week, come after a year in which many commitments to act on climate change have been set aside in the energy crunch following the Ukraine war.