Merrill Lynch, a United States-owned brokerage and investment banking firm, recently published a report wherein it stated that Nigeria is not only a leading investment destination, but that in its array of indicators, Nigeria is the least risky of all the economies in the world today. Nigerian Guardian newspaper editorial examines Merrill Lynch’s declaration.

This is a superlative and audacious assertion to make in this season of peculiar and enormous developments in world economy and, in Nigeria itself. According to Merrill Lynch (ML), the world’s 10 least vulnerable economies are Nigeria, Mexico, Philippines, Colombia, Egypt, Oman, Indonesia, Peru, China and Russia. The report states also that Australia, Switzerland, Korea, Romania, Hungary, Sweden, Bulgaria, the European Union, United Kingdom and the United States of America, in that order are the highest risk economies in the world.

For the Nigerian reader, this is an entirely strange classification. Nonetheless it makes interesting reading that unlike the Annual Corruption Index Report or the Human Development Index and a few others, here is a rating where Nigeria is regarded as a positive leader across the world.

The ML ranking, is based on seven indicators – current account financing gap, foreign exchange reserves as a ratio of short-term external debt, private credit as a ratio of Gross Domestic Product (GDP), private credit growth, loans to deposits and banks capital-to-assets ratio. The report is also said to be the synthesis of all the requests in 62 indicators in 60 world economies.

According to the report, Nigeria has a population of over 140 million and is able to deliver a 7.3 per cent growth in GDP, with its Consumer Price Index about at 11.5 per cent. Nigeria’s current account balance, fiscal balance and public debt is stated as six per cent, 6.3 and 10.4 percentage respectively The country’s external debt position is put at 12.9 per cent of GDP, while external debt as a ratio of exports is put at a lowly nine per cent. Foreign reserves total over US$60billion. ML puts the percentage of Nigeria’s total external indebtedness at a negligible two per cent of the GDP. The ML report computes the percentage of Nigeria’s Current Account Balance plus net Foreign Direct Investment as 34 per cent of GDP, Foreign reserves is 41 per cent of short-term external debt-mainly a book keeping note about Nigeria’s notorious import binge, exports is 38 per cent of the GDP, Private credit is 43 per cent of GDP while bank capital amounts to 41 per cent total bank assets.

Further in the report are figures whose primary source we cannot vouch for. The irony is that while these are informative, they are hardly available elsewhere in official Nigeria economic bulletins. ML has been a leading light in its market niche for over 30 years. It is well regarded as a blue-blood and until recently, it was thought also to be solid in its financial strength and thereby enjoyed superlative ratings from peers and clients alike. It is the stock in trade of investment analysts and researchers to put out their views on virtually any subject especially on those products and opportunities where they hope to be intermediates for a good fee.

So what do we make of these rather surprising announcements? ML is entitled to its views especially where it is presented as the considered view of certain persons of expertise on its team. By the use of what can be termed exclusive financial parameters, ML has only conducted a comparison of absolutes – balance of payments, liquidity ratios and solvency for international payments, etc – that limitation speaks for itself.

The report makes no recommendations on Nigeria’s financial aggregates or economic indices. It is astonishing to notice that the worst ranked economies in the world are the opposite of the current social, political and economic environment in Nigeria, even in terms of government accountability to the electorate, taxation and public finance rules. Any listing where the 10 most vulnerable or worst risk countries are Australia, Switzerland, Korea, Romania, Hungary, Sweden, Bulgaria, Euro area, United Kingdom and the United States of America deserves a second look.

Lately, autonomous reports on Nigeria’s financials and economics published by international analysts have become regular fare. It is argued that some of these reports were inspirational to the conception of the Nigeria 2020 vision. Some extrapolations on these reports concerning the potential of BRICs countries (Brazil, Russia, India, China ) are very instructive for Nigeria as well as the inclusion of Nigeria in the N-11countries (Next eleven countries with similar potential to exceed the contemporary OECD countries by 2050).We therefore have use for this burgeoning literature as part of our comparative guide for private and public sector applications.

The ML report is not gratuitous or patronising. It is not a report that recommends to the world to move its private banking business to Nigeria. Neither does it take a view on the state of Law and Order or offer an opinion on the state of primary energy source or agriculture or on the rest of our infrastructure which is the first bedrock for attracting the competitive investor.

Suffice it to say that the ML report only traces parameters that mask our real country risk quotient. Most of the factors touted as making Nigeria “world champions” are volatile and require sustainability especially with the slump in the international price of crude oil – the dominant contributor to Nigeria’s GDP.

The ML report, stripped of all niceties, is a viewpoint by researchers and thereby a challenge for Nigeria to match and build upon the reputation of being subjectively ranked the least risk economy in our world today. The internalisation of the ML report should begin with the rebranding of this country as more than a nation or location with mere promise. The report ought to be a bombshell that beckons on Nigerians at all levels of leadership, especially public office persons, to search for the missing requirements to deliver the Nigerian potential.

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