By Marcel Okeke
The palpable optimism that hallmarked practically all the analyses and projections about Nigeria’s economic outlook for this year has effectively been shattered by developments in the local and global economy since the dawn of March 2026. Not only has the price of crude oil gone through the roof, prices of petrol (PMS), food items, transportation costs, among others, have all spiked markedly.
There are also indications that chunks of the much-courted foreign portfolio investments (PFIs) have begun to ‘fly away,’ as the war in the Middle East unleashes uncertainty and socio-economic headwinds across the globe. The grounding of numerous airplanes; the cancellation or postponement of pilgrimages to Israel and/or Mecca; and the virtual halting of tourism (especially in the Middle East) translate to huge loss for Nigeria and Nigerians.
Specifically, since February 28, 2026, when the U.S.-Israeli military airstrikes hit Iran, and the country in a retaliatory move, struck almost the entire Middle East, the world has been on edge, as the ripple effect of the war keeps spreading. Many Nigerians are yet trapped in the ‘war theatre’ in Iran, and elsewhere in the Middle East—even as the Nigerians in Diaspora Commission (NiDCOM) said it had commenced arrangements for the evacuation of “willing Nigerians” in the Gulf region.
As the price of crude oil keeps rising—already above US$100 per barrel—Nigeria certainly looks forward to a windfall. This means that the country could end up getting more than double its projected (foreign exchange, FX) inflow from crude oil sales. Nigeria’s 2026 budget is hinged on oil price assumption of only US$64.85 per barrel.
However, the obverse of the expected windfall is the concomitant rise in the price of refined (oil) products—petrol (PMS), diesel, etc. Somehow, Nigeria yet imports these products, even as local refining has been ramped up in the past few years, with the coming on-stream of Dangote Refinery—which, unfortunately still imports part of its (crude oil) input.
Owing to these vulnerabilities, the sudden spike in the prices of crude and refined products have been transmitted into Nigeria: Dangote Refinery has adjusted the prices of its products upwards for the third or fourth time in a couple of weeks. From below N800 per liter pump price at end-February 2026, the Refinery has raised PMS’ price to around N1060 per liter. And the trend may yet linger!
Oddly enough, some entrepreneurs licensed by the Federal Government are still importing these products—further draining the scarce FX resource of the country. As the price of PMS, for instance, keeps soaring, unscrupulous elements are already (allegedly) flooding the Nigerian market with imported “fake fuel” or poor quality petrol—to cash in on the new trend.
All these redound to increase in the cost of transportation, soaring prices of all food items, house rents—leading ultimately to another round of hyperinflationary trend in the economy. This, for a Government that targets a single-digit inflation rate, the emerging high inflationary trend, courtesy of rising fuel prices, calls for a return to the drawing board for new policy direction.
Also, for a Government that is yet running three annual budgets (2024, 2025 and 2026) or parts thereof, the impending windfall calls for nothing short of reworked fiscal roadmap—intentionally deploying the ‘new’ resources to areas of critical public interest. Unfortunately, even as the first quarter 2026 is fast running out, the current Appropriation Bill is still in the works in the National Assembly: meaning that rather than going for a supplementary budget, the original Bill badly needs vast rejigging.
In the face of all these, the emerging scenario largely rubbishes the optimism that informed the recent marginal reduction of the Monetary Policy Rate (MPR) from 27 to 26.50 per cent by the Central Bank of Nigeria (CBN). For upwards of two years, the apex bank had used fight against high inflation rate as a subterfuge for maintaining a tight monetary stance. Now, ineluctably, the rising inflationary trend is re-emerging (though largely externally-induced).
Already, one of the much-flaunted gains of the tight monetary policy—attraction of huge FPIs—is about dissipating. Dynamics in the FX market in recent times show that the local currency (Naira) has been losing the strength it gained against the dollar. This trend is attributable to the massive ‘exit’ of FPIs; foreign investors seem to have embarked on ‘flight to safety’ in the face of rising uncertainty engendered by the crisis in the Middle East. The Naira which was almost heading for N1300/US$ in recent weeks has recommenced sharp depreciation against the greenback. On Monday, March 9, 2026, for instance, the local currency depreciated to N1425 per dollar (in the official market), the lowest in two months, following ‘capital flight’ triggered by the raging conflict in the Middle East. Should this war linger, it is very likely that more FPIs will ‘fly’ out of the country. This is likely to some depletion of the nation’s stock of external reserves.
Emerging issues from the Middle East crisis actually point to policy failures on the part of the Nigerian Government. Had some policy initiatives sequel to fuel subsidy removal in 2023 been effectively implemented, massive dependence on PMS and diesel would no longer be. It was believed that from 2023 to date, most Nigerian vehicles would have been running on Compressed Natural Gas (CNG) and some other fuel—as was widely publicized.
Now, more than two years down the road, ripples of the Middle East conflict are awakening the Nigerian Government to ‘dust’ the CNG initiative. And in a fire brigade style, President Bola Ahmed Tinubu on Wednesday, March 11, 2026, ordered the deployment of one hundred thousand CNG conversion kits nationwide. Although a body known as the Presidential Initiative on CNG (PICNG) has been in place all along, it had remained literally ‘recumbent’ until the onset of the war in the Middle East.
Rather than devising any strategic initiative to effectively deal with road infrastructure decay, and high cost of transportation, the Federal Government is deploying its palliatives-dispensing ‘culture.’ Rushing to share some thousands of CNG kits is certainly not any lasting solution to ever-rising transportation or logistics cost in Nigeria.
If anything, the lingering conflict in the Middle East is exposing the imperative for the Nigerian economy to be returned to the drawing board—for a fresh roadmap for sustainable development. Impromptu initiatives or impulsive rounds of palliatives sharing provide no lasting solution. A stitch in time saves nine!
The author, Okeke, a practicing Economist, Business Strategist, Sustainability expert and ex-Chief Economist of Zenith Bank Plc, lives in Lekki, Lagos. He can be reached via: obioraokeke2000@yahoo.com (08033075697) SMS only
