Oil prices soared over the weekend after Israel launched a major pre-emptive strike on Iran, raising fears of a wider conflict in the Middle East and potential disruptions to critical oil supply routes. Brent crude futures for July delivery jumped over nine percent to $75.15 per barrel — the highest level since early February. West Texas Intermediate (WTI) crude also surged, peaking at $74 per barrel, marking a 10 percent gain.
Markets are closely monitoring the impact on Iranian oil production, but experts warn that rising tensions around the Strait of Hormuz — the world’s key oil chokepoint — could trigger a sustained rally in global oil prices. This development holds significant implications for Nigeria, whose economy relies heavily on oil exports. Higher crude prices could strengthen Nigeria’s dollar earnings, bolster foreign exchange reserves, and enhance exchange rate stability.
Already, Nigeria’s economic outlook shows improvement. Oil prices have crossed the Federal Government’s 2024 budget benchmark of $75 per barrel for the first time this year. Alongside this favorable trend, structural reforms by the Central Bank of Nigeria (CBN) have helped address longstanding economic imbalances. Nigeria’s Gross Domestic Product (GDP) grew by 3.4 percent in 2024, with fourth-quarter growth reaching 4.6 percent — the strongest quarterly performance in over a decade.
Inflation is gradually easing, and prices of staple food items such as rice and beans are stabilizing. The CBN has also recorded a fivefold increase in net foreign reserves, while the naira exchange rate has strengthened after months of volatility. These macroeconomic gains reflect deliberate policy measures led by CBN Governor Olayemi Cardoso.
Beyond the boost expected from rising oil revenues amid global supply uncertainties, Governor Cardoso is spearheading a broader strategy to diversify Nigeria’s dollar inflows. Drawing lessons from China’s export-led growth model, the CBN is promoting a competitive exchange rate policy to stimulate export-driven development. Cardoso encourages Nigerian businesses to focus on sectors with high export potential, including agriculture, manufacturing, and the creative industries.
Emphasizing value addition, the CBN aims to shift Nigeria’s export profile from raw materials to finished goods, enhancing foreign exchange earnings and industrial capacity. To reduce import dependence and strengthen local production, the CBN is also advocating backward integration in key sectors. Recently, Cardoso urged telecom companies to begin manufacturing critical components such as SIM cards, cables, and towers domestically.
During a meeting in Abuja with Airtel Africa’s Group CEO Sunil Taldar, Cardoso explained that local production would ease pressure on foreign exchange reserves, create jobs, and stimulate the real economy. Taldar praised the ongoing reforms and confirmed Airtel’s commitment to expanding local manufacturing and promoting financial inclusion through digital technologies. The telecom sector, long reliant on imports, is now poised for transformation through domestic innovation.
The creative economy is another area of focus. Cardoso highlighted its potential to generate up to $25 billion annually through exports of music, film, crafts, and digital content. He encouraged creatives to leverage digital platforms, international tours, and collaborations to expand Nigeria’s export footprint.
Market confidence is returning as foreign portfolio investors re-engage with Nigeria’s foreign exchange market, supported by improved transparency, stronger fundamentals, and effective CBN interventions. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that despite global uncertainties, Nigeria is increasingly seen as a safer investment destination compared to riskier markets.
Historically, there is a positive link in Nigeria between crude oil prices, GDP growth, and stock market performance. “The outlook for the Nigerian stock market is likely positive in the current environment,” Yusuf said.
He explained that rising crude prices would increase Nigeria’s forex earnings, given that oil is the country’s largest foreign exchange source. This would strengthen foreign reserves, improve forex liquidity, and stabilize the naira exchange rate.
“The oil sector accounts for a significant portion of government revenue. An improvement in crude oil prices will positively impact fiscal consolidation and could help moderate fiscal deficits,” Yusuf added.
He also pointed out that continued high oil prices would benefit upstream oil and gas investors, with better returns expected if the Middle East conflict persists.
Analysts at Afrinvest West Africa project that the Federal Government’s oil revenue target of N19.5 trillion for 2024 remains achievable amid the current price surge. They advise a prudent fiscal framework prioritizing sustainable budget growth.
To sustain revenue gains, they recommend the government allocate increased funds toward critical infrastructure development and tackle insecurity to boost productivity, especially in agrarian communities. Additionally, efforts to curb crude oil theft and increase output to the targeted 2.06 million barrels per day are vital.
The World Bank has also emphasized the importance of reducing governance costs to support Nigeria’s economic revitalization, especially given the country’s current debt levels.
Telecom Sector Recovery and Local Manufacturing Push
According to the Nigerian Communications Commission (NCC), active telephony subscribers rose 3.2 percent month-over-month to 164.93 million in December 2024, reflecting recovery following the NIN-SIM linkage program completed in September.
Market shares among operators stood at: MTN Nigeria with 51.4 percent (84.61 million subscribers), Airtel Nigeria with 34.4 percent (56.62 million), Globacom with 12.2 percent (20.14 million), and 9mobile at 2.0 percent (3.28 million). Internet subscribers increased by two percent to 139.28 million.
Cordros Securities analysts expect further subscriber base recovery driven by SIM reactivation efforts, particularly by MTN and Airtel.
The information and communication sector—which includes telecoms, publishing, media production, and broadcasting—contributed significantly to Nigeria’s GDP growth in Q3 2024, according to the National Bureau of Statistics.
Gbolahan Awonuga, Executive Secretary of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), stressed the need for local production of telecom components, highlighting the role of government in ensuring reliable power supply to keep costs competitive.
He noted telecom’s vital role in banking services, digital payments, and transaction security, underscoring that backward integration would benefit both sectors.
Charles Abuede, Head of Research at Cowry Asset Management, said the CBN governor’s push to limit importation of foreign telecom services aims to reduce forex demand and stabilize the naira. He added that with adequate infrastructure and a supportive environment, local manufacturing of telecom components could reduce costs and improve profitability.
Foreign Exchange Market Gains Reflect Reform Success
Under Governor Cardoso, the CBN has made significant strides in improving the foreign exchange market. Average daily turnover in the Nigerian Autonomous Foreign Exchange Market rose 226 percent in the first half of 2024 compared to the same period in 2023. Foreign portfolio inflows increased by over 72 percent, while foreign exchange reserves grew from $32 billion in May 2023 to over $40 billion — the highest in nearly three years, representing eight months of import cover.
Investors have been able to repatriate capital and dividends freely, a marked improvement from previous delays, signaling restored confidence in Nigeria’s economic reforms.
The CBN also reported a $6 billion current account surplus in the first half of 2024, driven by reduced petroleum product imports due to improved refining capacity, growing non-oil exports, and higher remittance inflows.
Governor Cardoso emphasized that these results affirm the effectiveness of the reforms and set the stage for sustained macroeconomic stability amid ongoing global uncertainties.
