The Minister of Finance and Coordinating Minister, Edun, has said Nigeria’s economy is experiencing a major shock triggered by the ongoing geopolitical crisis in the Middle East, warning of rising pressure on households and businesses.
Edun disclosed this while speaking at an event organised by the Islamic Development Bank (IsDB) Group in Lagos, noting that the global fallout from the conflict has intensified domestic economic challenges, including high fuel prices, rising food costs, and persistent inflationary pressures.
According to a statement issued, on Monday, by his media adviser, Dr Ogho Okiti, the shock comes at a time when Nigeria is implementing reforms aimed at strengthening economic foundations and lifting millions out of poverty.
The minister said volatility in global oil markets driven largely by disruptions in the Strait of Hormuz has significantly impacted Nigeria’s crude oil pricing, with transmission channels recording increases of between 35 and 50 per cent since the crisis began.
Nigeria’s Bonny Light crude, he noted, surged from about $70 $73 per barrel to highs above $110 $120, reflecting the global supply disruptions.
“As an oil producer, the government recognises that a longer duration of the conflict means improvements in foreign earnings and fiscal revenues. However, the shock comes as Nigeria seeks to strengthen its macroeconomic stability and resilience”, he said.
Edun explained that while higher oil prices may boost government revenues, the broader economic shock is negative, as it fuels inflation and raises the cost of living.
He identified three major transmission channels through which the crisis is affecting Nigeria’s economy energy prices, capital flows, and global logistics. According to him, heightened geopolitical risks are driving investors toward safer assets, potentially weakening capital inflows into emerging markets like Nigeria.
In addition, disruptions to global shipping routes are expected to increase freight costs, further raising import prices and worsening domestic inflation.
Meanwhile, the International Monetary Fund (IMF) has warned that countries facing balance of payments shocks may require up to $50 billion in emergency financing, as global growth prospects weaken due to the crisis.
IMF Managing Director, Kristalina Georgieva, indicated that the Fund may cut global growth projections at the ongoing Spring Meetings in Washington, citing rising energy costs, supply disruptions, and infrastructure damage linked to the conflict.
Edun, who is leading Nigeria’s delegation to the meetings, maintained that the government is taking steps to cushion the impact of the shock, including efforts to boost oil production to about 1.86 million barrels per day and maximise foreign exchange earnings.
He also highlighted key policy measures such as the naira for crude initiative, foreign exchange market liberalisation, and recent tariff adjustments aimed at supporting domestic production and trade.
Despite the external pressures, the Minister said Nigeria is entering the current crisis from a stronger macroeconomic position compared to previous shocks, including the COVID 19 pandemic and the Russia Ukraine war.
He added that ongoing reforms have improved the country’s resilience and positioned it to better navigate global uncertainties, with a focus on attracting private investment, expanding domestic capital markets, and driving inclusive economic growth.