Abstract:
We focus on computing the geopolitical risk index (GPRI) for Nigeria, the largest economy in
Africa. The country has faced crises, including Boko Haram insurgency, banditry, kidnapping,
EndSARS, and regional secession, affecting trade relationships with other countries. Existing GPR
indices do not include Africa, hence the need for this effort. The proposed index considers eight
prominent Nigerian newspapers and relevant keywords on a daily basis from Jan 1, 2012, to June
19, 2023. We evaluate the predictability of the index by examining its relationship with Nigeria’s
currency and stock markets. Our findings reveal a remarkable positive relationship between the
rising geopolitical tensions and the volatility of the currency and stock markets. Curbing
geopolitical tensions in Nigeria is crucial for financial market stability.