Foreign direct investment (FDI) and portfolio inflows into the economies of Nigeria and other West African nations may sharply fall as a result of the Israel-Iran conflict.
This is the position of SBM Intelligence in its most recent insight, “The Escalating Iran-Israel Conflict and its Implications for West Africa”.
According to the company, “An escalation in direct military engagement between Iran and Israel has raised significant global concerns, creating a complex and perilous situation with repercussions for international security and the global economy. For West Africa, this presents a double-edged sword of short-term economic opportunity against a backdrop of significant long-term political and security risks.”
The most immediate consequence of the hostilities was a sharp spike in global oil prices, with Brent crude jumping over 4% from $69.36 to $74.23 per barrel.
The group notes, “For Nigeria, whose 2025 budget is benchmarked at $73 per barrel, this price hike provides a volatile windfall, theoretically boosting national revenue and easing pressing fiscal pressures.”
The report further noted that this development may further diminish investor confidence and pose serious risks to regional currencies. The report noted that the “geopolitical instability erodes investor confidence, prompting a flight to safer assets. For Nigeria and Ghana, this translates into a sharp decline in foreign direct investment (FDI) and portfolio inflows, which stalls projects, slows job creation, and potentially leads to higher sovereign borrowing costs.”
The report further warns that the conflict has the potential to turn the West African region “fragmenting into distinct geopolitical camps”. This is because this “divergence renders a coordinated regional response impossible, leaving every state more vulnerable to the conflict’s economic and security repercussions,” the report noted.
What you should know
Nairametrics previously reported that the fresh wave of geopolitical tensions in the Middle East may soon translate into higher fuel prices in Nigeria as global oil markets react to Israel’s recent airstrikes on Iranian nuclear facilities.
- On June 12, Israel launched rounds of attacks on several locations in Iran, including the Natanz nuclear site and Tabriz.
- Prime Minister of Israel Benjamin Netanyahu said strikes targeted Iran’s nuclear and ballistic missile programs and that the operation would continue until the threat was removed.
- Hours after the first Israeli strikes, Tehran launched more than 100 drones.
On Saturday, June 14, 2025, the Federal Government called for an immediate end to hostilities between the Islamic Republic of Iran and the State of Israel, urging both parties to exercise maximum restraint in the interest of regional and global peace.
In a statement, the Minister of Foreign Affairs, Ambassador Yusuf Tuggar, expressed grave concern over the recent escalation marked by sustained missile and aerial exchanges between the two nations.
He called on the international community, particularly the United Nations Security Council, to intensify efforts towards immediate de-escalation and to facilitate constructive dialogue.
