Why Nigeria may not benefit from Russia-Ukraine war
Experts have allayed fear that Nigeria is yet to and may not be benefiting from the ongoing war between Russia and Ukraine despite being at the top list among crude oil-producing countries in Africa.
According to experts who spoke during a webinar titled, “Nigeria’s Economic Landscape – a blend of optimism and uncertainty,” hosted by Coronation Merchant Bank, the Ukraine-Russia war has its own effect on the Nigerian Economy but Nigeria probably won’t benefit from the yields as it may be late to the party.
Russia happens to be a powerhouse in the global economy, being one of the largest exporters of crude products, coupled with its impact in the energy sector, representing one of the biggest producers of natural gas in the world. Russia is also big on commodity exports, but the sanctions by the United States and Europe is supposed to completely isolate and cut off Russia from international trade to pressure them into withdrawing from Ukraine.
What the experts are saying
Speaking on the effect of the Russia-Ukraine war in Nigeria, Joseph Nnana, Chief Economist at the Development Bank of Nigeria said, “This is a crisis where Nigeria can capitalize on. Unfortunately, we are unable to do that just yet. The price of crude has gone up, meanwhile, we are suffering from fuel scarcity in Nigeria and that’s the real economy being affected. Consequently, prices are going up and food prices increasing.”
Speaking on the opportunities for Nigeria, Dr. Biodun Adedipe, Founder and Chief Consultant, Adedipe Associates noted that there is a disruption to the supply of gas to Europe, especially looking at Nord Stream 2 project that connects Russia to Germany. He said, “With the disruption of that, it means the supply of gas to Europe is under pressure and that is where Nigeria should begin to see an opportunity to take advantage of.”
He also added, “Unfortunately for us, we don’t have anything we can call defence industry because again, the beneficiaries of war are those on the defence industry that have to manufacture replacement weapons. The question is; the weapon used in executing this war, where is the supply coming from? Because where the supply comes from is where the defence industry will also benefit.”
“The other side is the disruption to import in Nigeria, Ukraine is a major exporter of wheat, but how does that affect Nigeria? When we interrogate the flow of trade between Nigeria and Ukraine, and other European countries that are contiguous to Ukraine, then we can begin to profile how the war would affect our economy.
“There are consequences. Nigeria’s premium crude, Bonny Light, it is currently trading at around $115 per barrel. That ordinarily should be good news to Nigeria, but unfortunately, almost 100 percent of petroleum products we consume is imported. To that extent, those refined products will also become more expensive in line with the price of crude and if that is the case, it means the landing cost here will also go higher.”
Bottomline
Nigeria has failed to live up to its title as the Giant of Africa and the Largest Oil producer in Africa. The country has missed out on oil earnings because of underperforming production capacity.
If Nigeria has developed its oil reserves and production capacity, the country would have been a major force in the world to fill in gaps.
Also, if wheat supply from Russia is distorted for whatever reason, Nigeria could be faced with further surging wheat prices in its local market as a result of the supply gap, which could lead to an increase in the price of some other by-products of wheat, such as bread, wheat meal amongst others.
The post Why Nigeria may not benefit from Russia-Ukraine war appeared first on Nairametrics.