The Risk Managers Society of Nigeria has outlined the possible impact of the ongoing crisis in the Middle East on Nigeria and its economy.
The United States and Israel launched a large-scale offensive against Iran on Saturday, sparking a regional escalation.
RIMSON president, Abbas Idriss, said in a statement in Abuja on Tuesday, that the potential consequences of the war could have significant implications for Nigeria and its economy in several ways
Mr Idriss, who is also the chairman of the governing board, said the war could impact Nigeria’s oil price and revenue.
He noted that Nigeria, being one of Africa’s largest oil producers, is highly sensitive to global oil prices.
According to him, a conflict involving Iran could lead to higher oil prices due to supply disruptions or fears of instability in the Middle East, thereby boosting Nigeria’s revenue.
”Conversely, if the conflict leads to a global recession or reduced demand for oil, Nigeria could suffer economically,” he said.
He also said that Nigeria might find itself navigating complex geopolitical dynamics, as Iran supports certain groups and governments in West Africa.
He said that the ongoing crisis in the Middle East involving Iran may influence Nigeria’s diplomatic relations and foreign policy, especially regarding its Muslim population and regional stability.
The president also raised some security concerns, stressing that any conflict could worsen the already tense regional security dynamics in the country.
”Nigeria has been grappling with its own security issues, including terrorism, banditry and ethnic conflicts. Increased instability in the Middle East may lead to a focus on security spending, which can divert resources from economic development and infrastructure projects,” he said.
He also said that the sustained conflict could disrupt international trade routes and impact global supply chains.
He explained that, as Nigeria relied on imports for certain goods, disruptions could lead to higher domestic costs and inflation.
Mr Idriss further said that the war could negatively impact remittances, which he described as “vital parts of Nigeria’s economy”.
He noted that many Nigerians have family members abroad, including in the Middle East, and stressed that if a conflict led to instability in the region, it could affect remittances.
According to him, reduced remittances can lead to decreased household incomes and increased poverty.
He said that a global conflict could lead to increased risk aversion among investors.
According to him, if investors perceive Nigeria as a risky environment due to global instability, it can lead to a decrease in foreign direct investment, which is crucial for economic development.
Mr Idriss identified humanitarian and refugee issues as another concern, noting that conflicts typically lead to humanitarian crises.
He said that if tensions spilt over into the region, Nigeria might face an influx of refugees, placing additional pressure on its resources and social services.
He added that there could also be an increase in arms proliferation, which would further increase the nation’s insecurity.
”Overall, the consequences of such a conflict will depend on several factors, including the duration and intensity of the conflict, Nigeria’s diplomatic responses, and the resilience of its economy.
”The interplay of global energy markets, security issues, and regional dynamics will play crucial roles in shaping the outcome for Nigeria. The price of oil is expected to rise to up to $150 per barrel. Dangote has already responded by increasing the pump price. Others will surely follow,” he said.
He urged the federal government to implement risk management measures to manage, retain, and transfer certain risks as appropriate.
”This further amplifies RIMSON’s call for a proactive risk management culture that is far more beneficial than the reactionary one,” he added.
(NAN)