Nigeria At Risk As Global Financial System Faces Deepening Fragmentation — WEF Report
A Warming Global Economic Warning
A new report by the World Economic Forum (WEF) has raised concerns over increasing fragmentation in the global financial system, warning that geopolitical tensions, trade restrictions, and economic rivalries are imposing heavy costs on the world economy. The report suggests Nigeria and other emerging markets could be among the hardest hit.
Billions Lost, Trillions at Risk
Titled “The Cost of a More Fragmented Financial System,” the report estimates that global geoeconomic fragmentation is already costing between $213 billion and $307 billion annually. In a more severe scenario, losses could climb as high as $6.9 trillion—about 6.4% of global GDP.
Produced in collaboration with Oliver Wyman, the study highlights how shifting global alliances and rising economic nationalism are reshaping trade and financial flows.
Emerging Markets Face Disproportionate Exposure
According to the report, emerging markets and developing economies are the most vulnerable to fragmentation shocks. Under severe conditions, output losses in these economies could reach 10.7%, significantly above the global average.
This is largely due to their dependence on foreign direct investment, international capital flows, and external financing to sustain growth and development.
Nigeria’s Growth Ambitions Under Pressure
For Nigeria, Africa’s largest economy, the risks are particularly significant. The country’s ongoing economic reforms—aimed at attracting investment, stabilising foreign exchange liquidity, and diversifying away from oil—depend heavily on stable global financial access.
A fragmented system could increase borrowing costs, reduce investor confidence, and slow down infrastructure development across key sectors such as energy, transport, housing, and digital infrastructure.
A Shift in Global Economic Order
The report also highlights a growing wave of economic statecraft, including tariffs, sanctions, export controls, and investment restrictions, now affecting even traditional allies.
Multinational firms are already responding by diversifying supply chains and reducing exposure to geopolitical risks, further reshaping global trade patterns.
Resilience Through Regional Integration
Despite the risks, the WEF notes that Africa has significant opportunities to build resilience, particularly through the African Continental Free Trade Area (AfCFTA). The agreement could strengthen regional trade, improve supply chains, and reduce reliance on external markets.
Nigeria is positioned to benefit from these integration efforts as they align with its broader ambition to become a continental trade hub.
