CPPE: How Russia’s invasion of Ukraine will affect Nigerian economy

Wasilat Azeez

The Centre for the Promotion of Private Enterprises (CPPE) says the Russia-Ukraine conflict will affect the Nigerian economy.

According to NAN, Muda Yusuf, chief executive officer of CPPE, said this in a report released on Tuesday.

Yusuf said the crisis would lead to escalation of energy prices (diesel, aviation fuel, kerosene and gas), mounting petrol import and subsidy bills and the aggravation of petrol smuggling.

He added that there were also significant macroeconomic outcomes, including the heightened fiscal deficit, growing debt levels, the spike in debt service payments and money supply growth.


Others, he said, were depreciation of the local currency and more intense inflationary pressures.

“Additionally, the cost of flour, price of bread and other confectioneries may also take a hit,” he said.

“The summary is that if the conflict is protracted, these would be the downside risks to the Nigerian economy.”


Yusuf said that with Russia as the second-largest producer of oil globally, the conflict in the region would disrupt oil supplies, reduce output and trigger higher prices.

“Already, oil price is above 100 dollars, and the impact on energy prices is already being felt around the world,” he explained.

“In Nigeria, the deregulated components of petroleum products would witness sharp increases.

“These include diesel, aviation fuel, and kerosene and gas would suffer the same fate.”

According to Yusuf, the escalation of these costs would have serious inflationary implications across sectors.

He projected an upsurge in Nigeria’s petrol import and subsidy bill in the coming months as the landing cost of petrol increases on the back of the rise in crude oil price.

He said that since Nigeria remained a major importer of petroleum products, and typically when oil prices increase, petrol import bill and subsidy payment also increase.

Yusuf, however, said there would be a positive investment effect on companies in the upstream segment of the oil and gas sector.


According to him, this was good news because of the positive correlation between crude oil price and return on investments.

He said the war would disrupt the supply of wheat in the global market.

“Ukraine and Russia are major producers of wheat and account for about 30 percent of the global wheat export used for bread and some other confectionaries,” he said.

“There is, therefore, a risk of a hike in the cost of wheat which will affect the price of flour and a knock-on effect on the price of bread and other confectioneries.

“Nigeria also imports a substantial amount of wheat which would also suffer some disruption and impact on prices.”

The CPPE boss said the ongoing tension may also affect bilateral discussions, which had significantly progressed between the federal government and the Russian government on the resuscitation of the Ajaokuta Steel Plant.

He said the conflict may cause a major setback to this agreement because of the torrent of sanctions against Russia.

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