Russia-Ukraine war has high implications for the Nigerian economy – Patience Key

Tayo AFOLABI

The former Chairman of Nigerians in Diaspora Organisation Americas (NIDOA), USA, Mrs Patience Key,  says the Russo-Ukraine conflict will pose high implications for the Nigerian economy as the largest oil-producing country in Africa..

Key on Sunday, said Russia’s invasion of Ukraine led to a sharp rise in global oil prices amounting to almost 100 dollars per barrel and counting if the tension deepens.

“This development without a doubt will pose high implications for the Nigerian economy as the largest oil-producing country in Africa. By extension, Africa will also feel the impact as its largest economy is affected.

“Russia happened to be among the first three largest oil-producing countries in the world and the 11th largest economy globally, and by that its impact is felt in the global market as one of the major actors who determines the global economy.

“Its recent and continuous onslaught on Ukraine has moved her contemporaries like the U.S, U.K, etc. to placing strict economic sanctions on the country and her citizen’s investments outside the shores of Russia.

“This has a ripple effect on the economies of Nigeria and Africa,’’ she said.

Key mentioned an example of the ongoing bilateral discussions on the resuscitation of the Ajaokuta Steel Mill between the Federal Government and the Russian government.

There were indices that the discussions could be frustrated and strained as the conflict between Russia and Ukraine progresses.

“Though the global oil prices surged as a result of the sanctions placed on Russia; the second-largest oil-producing country in the world, it adversely had placed Nigeria at an advantage as the largest oil-producing country in Africa as demand for its crude oil rises.

“Amidst all that, economists are thrilled with mixed feelings over pointers showing that there are still strong indications that the inherent distortions in the Nigerian economy might eventually worsen and topple the already fragile economic condition,’’ she said.

Meanwhile, she said the conflict could be a blessing in disguise, noting that the conflict presently brings about an increase in global oil prices.

“I feel it is the right time for the Nigerian government to make some money as much as they consider and use the profit to pay-off, service some of our loans and grow the economy.

“Our already depleting foreign reserve can also be revisited and serviced for rainy days. If our foreign reserve is fatty, we wouldn’t be running to countries seeking for loans,’’ she said.

In addition, she said the development would also lead to an increase in the amount payable as ‘fuel subsidy’ which might consequently result in inflation and impact other sectors such as the external sector accounts and domestic economy.

“It might result in inflation and impact other sectors because while the Central Bank of Nigeria (CBN) may have enough supply to support the foreign exchange market over the short term, declining foreign inflows and weakening of the external reserves could force further currency depreciation.

“The impact of Ukraine’s invasion by Russia might also result in absence of investment from investors within and outside the country.

“This will slow the development of Africa, especially on the competition to cope with the 4th industrial revolution.”