June 16, 2025
The Centre for the Promotion of Private Enterprise (CPPE) has raised a red flag over the escalating geopolitical conflict between Israel and Iran, warning that the crisis could pose significant risks to Nigeria’s economic stability, business environment, and monetary policy management.
In a statement released by the organisation’s CEO, Dr. Muda Yusuf, the CPPE cautioned that the current tension in the Middle East may spark a surge in global oil prices, intensify inflationary pressures, and complicate the job of Nigeria’s financial and monetary authorities.
“High energy costs, elevated inflationary pressures, and a spike in interest rates are all headwinds that could undermine the profitability of businesses in the economy,” Dr. Yusuf said. “Investors in the non-oil sector are likely to be more vulnerable in the present situation.”
Rising Concerns for Nigerian Businesses
The CPPE emphasized that Nigerian firms with direct business ties to the Middle East, especially those that depend on supply chains running through the region, will be especially exposed during this period of instability. The conflict, which intensified following Israeli airstrikes on Iranian nuclear and missile sites, has already led to rising tensions that could disrupt international trade flows.
Dr. Yusuf also warned that central banks, including the Central Bank of Nigeria (CBN), may be forced to adopt tighter monetary policies to contain inflation. Such measures could include higher interest rates, which would raise the cost of borrowing for businesses and households alike.
“A tighter monetary policy regime is expected in Nigeria and other jurisdictions. Higher global interest rates could negatively impact portfolio flows, with direct implications for Nigeria’s foreign reserves,” the statement read.
A Double-Edged Sword: Oil Revenue vs Inflation
However, CPPE acknowledged that the geopolitical crisis could have some short-term benefits for Nigeria — particularly through increased government earnings from crude oil sales. Given that oil accounts for around 50% of Nigeria’s government revenue, any significant jump in oil prices may lead to revenue windfalls.
“An improvement in crude oil price would have a significant impact on government revenue. This could support fiscal consolidation and help moderate the growth of Nigeria’s fiscal deficit,” the CPPE added.
Investments in Nigeria’s oil and gas sector could also see improved returns if global energy markets remain tight due to the conflict, the organisation noted.
What Triggered the Latest Crisis?
Tensions reached new heights on June 12, when Israel launched a series of airstrikes on Iranian nuclear and missile facilities, including the Natanz nuclear site and locations in Tabriz. Israeli Prime Minister Benjamin Netanyahu stated that the attacks were aimed at dismantling Iran’s military capabilities and would continue “until the threat is removed.”
In retaliation, Iran fired over 100 drones at Israeli territory, further inflaming fears of a broader regional war.
Nigeria Calls for Restraint
In response to the escalating violence, the Federal Government of Nigeria issued a statement on Saturday, June 14, calling for an immediate cessation of hostilities between Israel and Iran. Nigeria urged both sides to exercise maximum restraint in order to prevent further regional instability that could ripple across global economies.
Implications Moving Forward
As global oil prices trend upwards and financial markets react to uncertainty, Nigeria faces a delicate balancing act. While higher crude prices may strengthen government revenue in the short term, the inflationary impact and monetary tightening could make life harder for households and businesses — especially those outside the oil sector.
For investors, entrepreneurs, and policy watchers, the CPPE’s warnings highlight the need for proactive planning, diversified business strategies, and continued vigilance as the global geopolitical landscape remains unpredictable.
Stay with us for updates on how the Israel-Iran conflict is shaping global energy markets and its implications for Nigeria’s economy.
