Lagos, March 1, 2026 – Dr Muda Yusuf, the Chief Executive of the Centre for the Promotion of Private Enterprise (CPPE), says the ongoing Iran–U.S.–Israel conflict represents a classic double-edged shock for Nigeria.
He said while the higher oil prices arising from the crisis might strengthen Nigeria’s fiscal and external balances in the short term, its inflationary pressures, welfare deterioration, capital flow volatility, and global growth risks would pose significant countervailing threats.
Yusuf made this observation on Sunday in a policy brief on the implications of the war on Nigeria issued in Lagos
He, however said, the ultimate impact will depend less on external events and more on domestic policy discipline.
“Strategic savings, production efficiency, macroeconomic prudence, and structural diversification will determine whether Nigeria converts geopolitical turbulence into macroeconomic resilience,” he said.
The CPPE boss said while the higher oil prices would typically strengthen Nigeria’s current account balance, improve foreign exchange liquidity, reduce short-term pressure on the naira and reinforce investor confidence, the attendant geopolitical instability could also trigger global risk aversion.
“During periods of uncertainty, capital tends to migrate toward safe-haven assets such as U.S. Treasury securities and gold. Emerging markets frequently experience portfolio outflows in such episodes.
“Given Nigeria’s relatively shallow capital market and sensitivity to foreign portfolio investment, volatility in global financial conditions could offset part of the FX gains from higher oil prices.
“The net exchange rate impact will therefore depend on the balance between stronger oil inflows and potential capital reversals,” he said.
Yusuf also said while the oil windfalls would naturally lead to expenditure expansion, it also presents an opportunity for disciplined fiscal consolidation.
He advised that priority actions should be to include saving part of any oil windfall in stabilization mechanisms, reduce fiscal deficits and moderate public debt accumulation as well as prioritise capital expenditure over recurrent spending
“Without prudent management, temporary revenue gains could encourage unsustainable spending patterns, increasing vulnerability when oil prices eventually decline,” he said.
The CPPE boss urged the government to strengthen the country’s oil production capacity and intensify anti-theft operations and incentivize upstream investment to maximise output within OPEC limits.
He also advised that government should channel excess revenues into stabilization and sovereign savings frameworks and sustain foreign exchange market reforms and enhance transparency and liquidity in the market to mitigate volatility.
Yusuf said government should cushion vulnerable households against energy-driven inflation shocks and fast-track economic diversification by expand non-oil exports, manufacturing, agro-processing, ICT, and services to reduce external vulnerability.
