The war in Ukraine which started on February 24th is affecting the Nigerian economy and Nigerians in many ways. Some are direct while others are indirect.
According to the World Bank in a recent report, the direct ways the war is affecting Nigeria’s economy are: trade disruption; and commodity (mainly food, fuel, and fertilizer) prices.
The indirect ways include: The transmission of higher commodity prices to growth; and the tightening of global financial conditions, which impact foreign financing flows into Nigeria.
Trade disruptions
The war adds to the headwinds to global recovery by further disrupting supply chains, especially those between Russia and Ukraine and the rest of the world. Nigeria is among the top-ten importers of wheat grains from Russia, which accounted for 19 percent of Nigeria’s total wheat imports in 2020. As a result of the war, there is a gap that Nigeria must seek to fill from other sources.
Commodity prices
Disruptions caused by the war are causing supply shortfalls and increases in the international prices of commodities. This includes the cost of fuel and food staples (in particular, cereals and edible oils) and fertilizers, products for which Russia and Ukraine hold a considerable share of global exports.
In addition, higher cereal prices raise animal feed prices and, consequently, poultry and meat. Higher fuel and food prices in Nigeria exacerbate pre-existing inflationary pressures, eroding purchasing power and hurting the poor.
