Feature/OPED
How Nigeria, Other African Countries Can Forge an Inclusive Economic Recovery
By Tolu Oyekan
As of this writing, the spread of COVID-19 in many African countries has been more contained, and the death toll lower, than some had expected in 2020.
The economic fallout of the pandemic for Africans, however, will be different and could be direr than for the rest of the world.
Sub-Saharan Africa accounts for more than half of the world’s populations living at or below the poverty line. A recent World Bank scenario estimates that COVID-19 could push up to 40 million people in Sub-Saharan Africa into extreme poverty, seriously eroding the progress that African countries have made to reduce deprivation during the past two decades.
When the pandemic was declared in April 2020, BCG counselled African governments to develop comprehensive plans in response to the health care crisis and take on broader economic and societal challenges.
We continue to believe that the best course for African leaders is to accelerate economic policy reforms and investments that accentuate inclusion and position countries for a stronger post-pandemic recovery.
Indeed, Africa’s economic recovery from the COVID-19 crisis depends on how effectively governments will be able to balance urgent actions to stabilize economies with the structural reforms needed to stimulate sustainable economic development initiatives. An inclusive approach to economic recovery can protect the most vulnerable populations in the short term and improve their prospects in the long term. Select initiatives in Nigeria present a case in point.
The Pandemic’s Economic Fallout in Nigeria
Nigeria is the largest economy in Africa and one of four African countries included on BCG’s Middle Billion list of rapidly transforming developing countries where local entrepreneurs attract global investment, especially in emerging tech-driven industries.
Yet, almost 83 million people—40% of the country’s population—live below the country’s poverty line of $381.75 per household, per year, according to the 2018–2019 living standards survey by Nigeria’s National Bureau of Statistics (NBS).
World Bank 2021 projections for Sub-Saharan Africa as a whole warn of protracted economic flux throughout the year. Even with a modest rebound from recession, there is a risk that a steep drop in per capita income could push tens of millions more people into poverty.
South Africa and Nigeria, the continent’s most populous country, face the most severe setbacks, according to the projections. Lower oil prices, combined with pandemic-related factors, add to the strains on Nigeria’s economy and the risks for its most vulnerable citizens.
These concerns prompted the Nigerian government to undertake a wide range of activities to stimulate economic growth with a focus on economic inclusion. Specifically, Nigeria aims to leverage public-private partnerships to create economic opportunities for marginalized populations.
In June 2020, Nigeria’s government revised its economic sustainability plan to double down on stimulus investments and policy interventions in order to revive the growth of bedrock industries (such as oil, tourism, and aviation), and accelerate growth in emerging businesses in other industries (such as small and midsize enterprises and alternative energy) that promote economic inclusion and opportunity.
Specifically, the government is focusing on expanding mobile smartphone service, digital financial services, and home-based solar electricity for low-income households.
Mobile Money and Telcos Connect
Using cash and paying bills in person have historically been the norm, especially among the unbanked populations. This has changed since COVID-19. From the early days of the pandemic, leading contactless payment startups in Nigeria launched initiatives to encourage consumers and merchants to sign up for their services. As BCG has written, financial institutions in Africa were the first to introduce mobile payments.
In Nigeria, the push for cashless transactions has prompted mobile money providers to leverage the networks of telecommunications companies in order to sign up mobile money customers. This is important because most poor Nigerians own a cell phone, but they don’t have a bank account.
The percentage of the adult population with access to financial services in Nigeria grew at a compound annual growth rate (CAGR) of 6% from 2008 to 2012 but by only 1% from 2012 to 2018, according to an annual survey by Enhancing Financial Innovation & Access, a financial-sector development organization. This low rate persisted despite meaningful reforms implemented by the Nigerian government before the pandemic to accelerate financial inclusion.
In 2018, for example, the government issued payment services guidelines for financial service providers and telcos seeking to expand their customer bases among the unbanked, especially in rural areas. However, it took some time for the Central Bank of Nigeria (CBN) to issue the licenses that telcos need to operate as a payment service bank (PSB).
In August 2020, the CBN licensed three new PSBs, which can now offer high-volume, low-value digital transaction services, such as remittances, microsavings accounts, and withdrawals. Extending the reach of mobile banking services to rural unbanked populations could also allow the government to deliver social welfare benefits directly to those citizens’ bank accounts.
Pay-as-You-Go Solar Service
The Nigerian government is aiming to install new home solar power systems and mini-grids for 5 million low-income households by the end of 2023.
Many of those households—which either rely on small, inefficient generators for electricity or have no power source at all—will need to use PAYGo, an instalment financing option offered with mobile money bank accounts, to purchase the installation kits for these systems. Customers with an existing mobile money account may apply and qualify for a PAYGo loan more easily than others.
Our analysis shows that a PAYGo loan would make solar kits affordable for about half of the 31 million households that do not have reliable electricity and may also be considered to be in a low-income bracket.
What’s more, we found that 3.2 million out of 17 million households currently using kerosene and candles as their lighting source could afford the monthly PAYGo payments based on their current spending on lighting, plus about 10% of their nonfood budget.
We expect that the scaling of mobile money accounts, along with home solar power kits financed with instalment loans, will have a sustained economic impact on low-income populations well beyond any 2021 recovery.
A recent USAID research brief estimates that 15% to 30% of PAYGo solar customers will create a credit history for the first time when they purchase a solar home system with a PAYGo plan. That credit history could, in turn, lead to other loans for large expenses, such as school fees, which can consume up to 40% of a family’s annual income. Credit histories are also a critical driver of growth for small-business enterprises and first-time business entrepreneurs.
The USAID brief also noted advantages for providers: PAYGo solar customers generate more than twice as much revenue per user for a mobile money provider than the average customer.
A Stronger Recovery and Future
While increases in poverty and economic inequality are possible, they are not inevitable. As we see it, the economic hardships caused by the pandemic give governments a chance to examine the strengths and shortcomings of past policies and strategies and address the current structural inequities in their economies.
Linking economic inclusion initiatives across several industries could also have positive, and enduring multiplier effects. Time will tell whether Nigeria’s inclusive recovery plans succeed. All African governments, and the policymakers who are working with them, must look beyond the crisis to ensure that the resources deployed today build a better foundation to achieve a more equitable future.
Tolu Oyekan is a partner in BCG’s Lagos office. He leads the firm’s work on total societal impact across West Africa and is a core member of BCG’s Corporate Finance & Strategy practice
By Blaise Udunze
Daily, the world watches Nigeria through a familiar lens in what appears to be a gory situation. Especially in cases when the news headlines tell stories of farmer-herder clashes, bandit attacks, kidnappings, villages reduced to ashes or deserted by the dwellers, as thousands of Nigerians have been displaced across states such as Zamfara, Plateau, Benue, Niger, Kaduna and Nasarawa. Subliminally, this is about to become a similarly ugly occurrence in southwestern Nigeria, which is fast becoming obvious if not nipped in the bud quickly.
Recorded data have shown that bandits, Boko Haram, and others killed over 190,000 Nigerians in 17 years and displaced 3.7 million people.
A human rights organisation, the International Society for Civil Liberties and Rule of Law (Intersociety), in its fearful revelation, has said that no fewer than 190,150 Nigerians have been killed by bandits, Boko Haram insurgents, and suspected armed herdsmen between July 2009 and March 19, 2026, as this calls for concern.
The dominant explanations often point to ethnic tensions, religious divisions, climate change, shrinking grazing routes or weak security institutions. No doubt, those factors are certainly part of Nigeria’s complex security crisis. Yet another question deserves serious examination.
What if, in some locations, the violence is also serving another purpose? What if some of the territories experiencing repeated displacement are the same places sitting atop some of Nigeria’s most valuable mineral deposits? More importantly, if such a pattern exists, who benefits when communities disappear?
Of a truth, these questions are uncomfortable, but undeniably they deserve careful investigation rather than dismissal.
For ages, Nigeria has been naturally endowed, and it is estimated to be rich in enormous significant reserves of gold, lithium, uranium, tin, columbite and other strategic minerals increasingly sought after in the global transition to clean energy technologies. As international demand for battery minerals continues to rise, these resources have become far more valuable than they were only a decade ago.
If one overlays publicly available geological information with maps showing persistent violence, some observers argue that striking geographical overlaps appear in several regions. Such overlaps alone cannot establish causation. Correlation is not proof of conspiracy. However, they raise questions worthy of independent scrutiny.
One issue attracting increasing attention and adequately yearns for answer is whether prolonged insecurity may inadvertently or deliberately create conditions that make mineral extraction easier.
Under Nigeria’s Nigerian Minerals and Mining Act 2007, mineral resources belong to the Federal Government, while mining rights are granted through licences and leases. Community engagement and land access are expected to form part of the licensing process, although implementation varies depending on circumstances. This raises an important policy question.
What happens when the communities expected to participate in those processes have already fled because of violence?
Displacement changes the dynamics of land ownership, consent and access. While no evidence automatically proves that attacks are orchestrated to facilitate mining, the sequence of violence followed by renewed commercial activity in some locations deserves closer examination by regulators, lawmakers and investigative journalists.
In conflict studies, researchers have long observed that wars often generate economic winners alongside humanitarian losers. Could elements of Nigeria’s insecurity also be producing economic beneficiaries?
Reports over the years have documented concerns about illegal mining operations across parts of northern Nigeria. Government agencies themselves have repeatedly acknowledged that criminal networks profit from the country’s vast mineral wealth. The unresolved question is whether isolated criminality has, in some instances, evolved into more sophisticated alliances involving political influence, financial interests and international supply chains. If so, the implications extend far beyond Nigeria.
Invariably, it is clearly known that lithium has become one of the world’s most strategic commodities, powering electric vehicle batteries and renewable energy storage systems. Gold has always remained one of the safest global investment assets during periods of uncertainty. Meanwhile, it is well confirmed that the global appetite for these minerals creates enormous financial incentives.
Suppose violent displacement reduces resistance to extraction. Suppose shell companies subsequently acquire mining interests. Suppose minerals then leave Nigeria through legitimate-looking export documentation while their true value remains understated.
These scenarios remain allegations unless supported by verifiable evidence. Yet they outline a framework that investigators may wish to test rather than ignore. Financial crime experts frequently identify trade mis-invoicing as one of the most common methods of illicit financial flows worldwide.
Could Nigeria’s solid minerals sector be vulnerable to similar practices? If valuable lithium ore is deliberately but inaccurately described as lower-value material on export documents, substantial wealth could potentially leave the country without reflecting its true market value. Likewise, if unrefined gold exits through privileged channels with limited scrutiny, questions naturally arise about oversight, transparency and accountability over criminal activities which have continued to stunt and disrupt the country’s socio-economic growth and at the same time cause carnage.
Such possibilities are not accusations against any particular institution or company. Rather, they illustrate why stronger monitoring systems are increasingly essential. Another question concerns logistics.
With the high level of criminal activities, industrial mining requires heavy machinery, diesel supplies, transportation networks and specialised personnel. These are not operations that can remain invisible indefinitely.
If certain territories are genuinely too dangerous for security agencies, how do industrial-scale extraction activities reportedly continue in some remote locations? If they do, who protects those operations? Who authorises their movement? Who verifies what is extracted? Who ensures royalties and export revenues reach public coffers? These are governance questions that demand institutional answers.
Equally important is the international dimension. Minerals extracted in Nigeria ultimately enter global supply chains. Gold may pass through international refining hubs before entering financial markets. Lithium may become part of battery manufacturing destined for electric vehicles, which are being sold across Europe, North America and Asia.
One known fact is that consumers purchasing products containing these minerals rarely know the full story of where they originated.
Increasingly, however, investors and governments are demanding ethical sourcing standards that trace minerals from extraction to final manufacture.
A critical factor that must be taken into cognisance is that if insecurity is creating opportunities for illegal or unethical extraction anywhere in the world, multinational companies have responsibilities alongside national governments, of which the onus falls on the Nigerian government.
Transparency cannot stop at the mine gate. Nor should accountability end at national borders. Another issue requiring attention concerns beneficial ownership.
Across many jurisdictions, shell companies can obscure the identities of individuals ultimately controlling commercial assets. If politically exposed persons or powerful business interests are hidden behind complex corporate structures registered offshore, identifying beneficiaries becomes significantly more difficult. This challenge is hardly unique to Nigeria.
Findings showed that from Latin America to Central Africa and Southeast Asia, resistant corporate networks have frequently complicated efforts to combat corruption and illicit resource extraction. That is precisely why open corporate registries, beneficial ownership databases and transparent mining licence disclosures are becoming global governance priorities. For Nigeria, the stakes could hardly be higher.
The country stands at the centre of the world’s emerging critical minerals economy. The Nigerian government can’t feign ignorance of the fact that, when handled transparently, these resources could finance infrastructure, education, healthcare, and industrial development for generations.
In no way would the government claim not knowing that when handled poorly, they risk becoming another chapter in the well-documented “resource curse,” where extraordinary natural wealth coincides with persistent poverty, insecurity and institutional weakness.
The ultimate challenge, therefore, is not simply about mining. It is about governance. It is about whether public institutions possess both the independence and capacity to ensure that natural resources benefit citizens rather than narrow interests. It is about whether conflict zones receive genuine peacebuilding efforts instead of becoming forgotten frontiers. And it is about whether international markets demand accountability with the same enthusiasm they demand raw materials.
None of these questions should be answered through speculation. They require rigorous investigations, forensic financial analysis, satellite imagery, mining license audits, customs records, beneficial ownership disclosures and courageous journalism.
They require governments willing to open their books. They require international cooperation capable of tracing money across borders. Most importantly, they require asking questions that have too often remained unasked.
Perhaps Nigeria’s security crisis is exactly what it appears to be: a tragic convergence of historical grievances, weak institutions, criminality and environmental pressures. Or perhaps, in some places, another layer of economic incentive deserves closer scrutiny.
Until those questions are thoroughly investigated, one possibility will continue to linger. Maybe the world’s attention has been fixed on the blood spilt above ground, while too little attention has been paid to the extraordinary wealth lying beneath it.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
Feature/OPED
What Does Nigeria’s $51bn Reserves Milestone Mean if Most New Foreign Money Can Leave Quickly?
Nigeria’s foreign reserves have climbed to about $51 billion, a decade-plus high, according to the Central Bank of Nigeria (CBN). EBC Financial Group (EBC) notes that this reflects stronger investor confidence, but the second half may show whether it holds, as the build rests on three cyclical drivers: oil earnings, short-term foreign money and a narrowing official-to-street naira gap.
Reserves rose from about $32 billion in April 2024, during a dollar shortage, to about $51 billion now, near the CBN’s target. Much came from two cyclical sources, strong oil earnings and money chasing high-yielding naira assets, so EBC expects the pace to slow or reverse. Fitch Ratings, a major international credit rating agency, expects a marginal decline to about $47 billion by the end of 2026, citing higher spending and external pressures.
David Precious, Senior Market Analyst at EBC Financial Group, said, “Nigeria’s reserve build is real but may not be durable yet, because nearly all of the new money is the kind that can leave quickly. Of the $10.37 billion that came in over the first quarter, the overwhelming majority was short-term portfolio funds rather than long-term investment, so a shift in oil prices, global interest rates or confidence in the naira might pull a large part of it straight back out.”
Most New Money Can Still Leave Quickly
The composition of the foreign inflows explains the caution over how long the build can last. The country attracted $10.37 billion in foreign investment in the first quarter of 2026, up 83.83 per cent year-on-year, according to the National Bureau of Statistics (NBS). Of that, $9.86 billion or 95.09 per cent, was portfolio money, largely short-term naira debt such as Treasury bills that investors can sell at the next auction, while foreign direct investment, the long-term kind that builds factories and jobs, was $135.08 million, or 1.30 per cent. Put simply, of each dollar coming in, about 95 cents can leave quickly, and barely one cent stays.
That money supports reserves while it stays. Dollars brought in to buy naira assets add to market supply, letting the CBN hold more reserves and steady the naira. It leaves when conditions change. Nigeria earns most of its export dollars from oil and gas, so lower oil prices mean fewer dollars, and as a member of the Organisation of the Petroleum Exporting Countries (OPEC), it cannot simply produce more, output capped by quota and reduced by theft and ageing fields. Higher global interest rates draw money toward safer returns abroad, and a weakening naira prompts investors to sell early. When oil fell in 2016 and 2020, foreign investors withdrew and could not convert naira to dollars as supply dried up, leaving the CBN to clear more than $7 billion in trapped obligations into 2024.
The Oil Boost is No Longer Certain
Oil looked like a dependable source of the dollars behind the reserves only months ago. Earlier in 2026, concern over disruption around the Strait of Hormuz lifted crude prices, and stronger receipts flowed in, with crude oil export earnings of $8.11 billion in the first quarter in the CBN’s balance-of-payments data. That support is now easing. The tension has subsided, and Brent traded near $72 on June 29, down about 24 per cent over the month, back to pre-conflict levels. With the price boost gone and output constrained, reserves are more exposed, leaning on non-oil earnings and investor patience rather than oil.
The Naira Still Trades at Two Prices
The naira has traded at two prices, an official rate and a higher parallel-market rate, and closing that gap into one trusted price is what many investors might watch most. Before committing funds, they may want assurance they can convert naira to dollars at a fair rate when they exit, and a wide gap revives the fear of being trapped that lingers from earlier shortages. The gap has narrowed to roughly N20 to N30, with the CBN’s official rate near N1,380 per dollar on June 26 against parallel-market quotes around N1,400. The International Monetary Fund (IMF) 2026 Article IV review urged Nigeria to depend less on this fast-moving portfolio money and to keep phasing out its multiple exchange-rate practices. The CBN’s Foreign Exchange Manual, in force from 1 June, is intended to make the market clearer, though such rules build confidence only once investors can freely trade dollars at the posted rate.
What could Make the Build Durable
A few signs that may show the build turning durable include a smaller gap between the official and street naira rates, more long-term foreign investment, and steadier oil earnings. A gap that stays small, now roughly N20 to N30, may mean investors trust the official rate and no longer need the street market. A clear rise in foreign direct investment, only $135 million last quarter against $9.86 billion of short-term money, might mean lasting capital is replacing funds that can leave at the next auction. Oil earnings that hold up, rather than sliding from the low $70s, should help keep reserves steady, since oil and gas bring in most of Nigeria’s export dollars.
“Reserves built on money chasing high yields can fall as fast as they rose, as they did after the last two oil shocks, when investors left, and the CBN spent years clearing a foreign-exchange backlog,” Precious added. “What holds through a downturn is slower money, direct investment, steady oil and non-oil export earnings and one credible naira rate, and that is the shift Nigeria has yet to make.”
By Olajumoke Bello
Across Nigeria, small and medium enterprises remain the backbone of economic activity. They drive trade, create jobs, and sustain millions of livelihoods. Yet, despite their importance, many SMEs continue to operate below their full potential due to persistent structural challenges.
Access to finance remains one of the most cited constraints. However, the issue today goes beyond the availability of capital. Many businesses struggle with financial readiness, weak documentation, and limited understanding of what lenders require. This often leads to missed opportunities, even when funding options exist.
At the same time, SMEs face gaps in market access and visibility. Business owners operate in highly localised environments, with limited exposure to broader networks that can unlock partnerships, new markets, and growth opportunities. This isolation can constrain scalability and reduce long-term competitiveness.
Equally important is the capability gap. Many entrepreneurs grow through resilience and experience but lack structured knowledge on critical areas such as financial management, export readiness, and digital adoption. Without this, even well-capitalised businesses can struggle to sustain growth.
These challenges point to a clear need for a more practical and integrated approach to SME support. It is no longer sufficient to offer standalone solutions. SMEs require ecosystems that combine knowledge, access, and direct engagement in ways that reflect how they actually operate.
A key shift is the move from centralised interventions to localised engagement. SMEs are deeply influenced by their immediate environments, whether markets, industrial clusters, or trade corridors. Solutions must therefore be brought closer to where these businesses function, allowing for more relevant support and stronger relationships.
Another important shift is from awareness to action. Business owners do not only need information; they need insights that they can apply immediately. This includes understanding how to structure their finances, how to access trade opportunities, and how to connect with the right partners to scale their operations.
There is also a growing need for continuity. Many SME-focused initiatives deliver strong initial impact but lack follow-through. For support to be effective, it must extend beyond one-off engagements into sustained relationships, with clear pathways for onboarding, advisory, and growth.
For financial institutions, this presents both responsibility and an opportunity. Supporting SMEs now requires moving beyond transactional banking to deeper partnership models. It requires understanding businesses at a granular level and co-creating solutions that evolve with their needs.
At Stanbic IBTC, this perspective continues to shape our approach to SME development. Our focus is on delivering practical support that translates into real business outcomes, helping enterprises grow, compete, and contribute more meaningfully to the economy.
As part of this commitment, we are extending our SME engagement to the regions through the Nigeria Business Summit Regional Tour. The tour will take structured, on-ground activations into key commercial hubs, where SMEs can access funding guidance, trade insights, advisory support, and direct engagement with financial experts.
The regional tour will take place across five strategic locations, bringing these solutions closer to business owners in Aba, Onitsha, Ibadan and Kano.
This approach reflects an important principle. When support moves closer to businesses and when solutions are delivered in ways that are practical and continuous, SMEs are better positioned to grow sustainably. In turn, this strengthens not only individual enterprises but the broader economy.
Olajumoke Bello is the Head of Enterprise Banking at Stanbic IBTC Bank
