Feature/OPED
Multilateral Collaboration Still Crucial For Tackling Africa’s Conflicts
By Professor Maurice Okoli
Burkina Faso, Mali and Niger have adopted an incredible approach towards tackling chronic conflicts and related security threats from various extremist groups like Boko Haram, al-Qaida, and Islamic State-affiliated groups by creating a formidable military alliance in the semi-arid Sahel region in West Africa.
As these West African States are entangled in fierce ethnic-Islamic conflicts that have adversely impacted their sustainable development and economic progress, the trio-military force reflects more proactive and dynamic coordination in resolving their security hurdles. It would also enhance practical possibilities of combating terrorism and extremism in the interests of strengthening peace and security in the Sahel-Sahara region and other parts of West Africa.
Historically the three were closely under French political control and have extended economic and security ties since colonial times. This geographically landlocked Burkina Faso has had several military coup d’états, the latest took place in Jan. 2022. Mali (May 24, 2021) and Niger (July 26, 2023) witnessed similar political trends, and both are now under military administration and share startling critical accusations of corruption and malfunctioning of state governance against previous governments. But the finger-end points to France for gross under-development and large-scale exploitation.
These former French colonies have, for the past years, suffered from growing political deficiencies and frequent Islamic attacks. But the key reason, the underlying cause, those tribes are rebelling is due to deep-seated abject poverty across the region. Staging military takeovers was the trio’s dynamic struggle to wage a collective war against their governments and France’s influence and hegemony. For instance, France, the United States and other European nations have poured hundreds of millions of dollars into shoring up Niger’s army and the coup has been seen as a major setback. Overall security environment poses uncertain challenges and devises strategies to tackle these emerging threats in the region.
Existing Sanctions
Since last year, Burkina Faso, Mali and Niger have been under regional and continental sanctions. The 15-member West African regional bloc has imposed stringent sanctions, finding a peaceful solution to the deepening crisis, but yielded little tangible results with no clarity on the next steps.
The African Union (AU), the continental organization which primarily coordinates the political and economic as well as the socio-cultural activities, observes the new trends as military rule spreads or re-appears in the West African region. That however, the Chairperson of the African Union Commission, Moussa Faki Mahamat, strongly condemned such actions and further moved to impose its sanctions as well on the military-ridden states. Their AU memberships, since then, have accordingly been suspended too.
Quite recently, on 28 November 2023, the United Nations Secretary-General António Guterres and the African Union Commission Chairperson Moussa Faki Mahamat convened their seventh African Union-United Nations Annual Conference in New York. In a joint communiqué issued at the end of the meeting, both reviewed progress in the implementation of the UN-AU Joint Framework for Enhanced Partnership in Peace and Security and the AU-UN Framework for the Implementation of Agenda 2063.
In particular, António Guterres and Moussa Mahamat again condemned the resurgence of unconstitutional changes of government in Africa and stressed the need for a timely and peaceful return to constitutional order in Burkina Faso, Gabon, Guinea, Mali, Niger and Sudan which are undergoing complex political transitions to sustain peace, development and human rights in the long term. There must be extensive political awareness among the people in the Sahel region to focus on democracy, development, security and stability. It also called for the release of President Bazoum and other arrested government officials.
Nevertheless, the Economic Community of West African States (ECOWAS) and the Intergovernmental Authority for Development (IGAD) were tasked to enhance their joint efforts to promote inclusive political transitions in those countries in support of the efforts of the respective transitional authorities and regional bodies. The meeting called for continued efforts towards the timely completion of all ongoing political transitions through peaceful, inclusive, transparent and credible elections.
Against this backdrop, they expressed concern over the challenges African countries continue to face towards the achievement of the AU Agenda 2063. Burkina Faso, Guinea, Mali and Niger, nevertheless have displayed defiance to the sanctions and, crafting a number of approaches and making their efforts toward addressing security and development-oriented issues combined with some kind of good governance.
Revisiting the Past
Within the context of the changing political situation, Russia is rapidly penetrating the Sahel. Moreover, to Russia’s expectations, these Sahelian States have in place provisional governments, which include civil society representatives. “We believe that a military approach to settling the crisis in Niger risks leading to a protracted standoff in the African country and a sharp destabilization of the situation in the Sahara-Sahelian region as a whole,” according to the statement posted to the Foreign Affairs Ministry’s website.
South African Institute of International Affairs reports established the fact that Russia seeks to build on Soviet-era ties, steadily widening its influence, and noticeably deploy the rhetoric of anti-colonialism in Africa. Russia is engaged in an asymmetric influence campaign in Africa. Borrowing from its Syria playbook, Moscow has followed a pattern of parachuting to prop up politically isolated leaders facing crises, often with abundant natural resources. Russia is fighting neo-colonialism from the West, especially in relations with the former colonies. According to the report, Russia sees France as a threat to its interests in Francophone West Africa, the Maghreb and the Sahel. The SAIIA is South Africa’s premier non-government research institute on international issues. (SAIIA, Nov. 2021 Report).
“Sanctions have already been announced against Niger, and its membership in the organization is likely to be suspended. Thus, a belt of states in political isolation and bordering on each other is forming in the Sahara-Sahelian region: Guinea – Mali – Burkina Faso – Niger. Russia is interested in expanding relations with Niger, as well as with all other African States, and thus could help to normalize the situation there,” Vsevolod Sviridov, Expert at the HSE University Center for African Studies, told Russia’s Financial Izvestia.
Russia’s Economic Interest
In pursuit of development, the five Sahel states need peace. An analysis of geopolitical factors underscores glaring facts that Russia is getting stronger with its military influence on a bilateral basis, bartering equipment in exchange for access to natural resources. Mali has an agreement with Russia to build a gold refinery while Burkina Faso also wanted energy power. A four-year memorandum guarantees the West African country’s largest gold refinery. Russia’s state nuclear energy company Rosatom signed a deal with Mali in October 2023 to explore minerals and produce nuclear energy. It unreservedly offered a high-level promise to build a 200- to 300-megawatt solar power plant by mid-2025.
Economic Performance
International Monetary Fund (IMF) and the World Bank research reports show that Sahelian states’ economy may face relative stagnation due to unstable conditions including persistent protests in the region. Burkina Faso, Chad, Mali and Niger have been severely affected by the rise in militancy, affecting overall economic performance. Agriculture represents 32% of its gross domestic product and occupies 80% of the working population in Burkina Faso. A large part of the economic activity of the country is funded by international aid, despite having gold ores in abundance. Burkina Faso is the fourth-largest gold producer in Africa, after South Africa, Mali and Ghana.
The December 2023 report by the World Bank, for example, indicated that the poverty rate across the Sahelian region is still deepening due to poor management and governance. The economic and social development could, to some extent, be sustained based on ensuring political stability in the subregion, supporting and intensifying local production, its openness to international trade and export diversification.
According to the UN’s Multidimensional Poverty Index (MPI) report of 2023, Niger is one of the poorest countries in the world. It faces challenges to development due to its landlocked position, even though it possesses some natural resources including uranium ore. Government finance is derived from revenue exports (mining, oil and agricultural exports) as well as various forms of taxes collected by the government. Reports, however, estimated improvement in its revenues after the exit of France. Niger was the main supplier of uranium to the EU, followed by Kazakhstan and Russia.
Across the Sahel, the estimated aggregate population of 120 million is predominantly young, with 49.2% generally under 25 years old. The conflicts have only deepened poverty and food insecurity, and the challenges increasingly gaining ground in those countries. Future growth may be sustained by the exploitation of various untapped resources. Uranium prices have recovered somewhat over the last few years. But much also depends largely on state control, and good governance, by prioritizing economic sectors in the region.
Latest Developments
Niger has scrapped two key security agreements with the European Union that were intended to help fight violence in the Sahel region. It completely withdrew from EU Military Partnership Mission that was launched in February in Niger. It has also revoked approval for the EU Civilian Capacity-Building Mission, which was established in 2012 to help the country’s security forces fight militants and other threats. Most of Niger’s foreign economic and security allies have sanctioned the country, including France, which had 1,500 troops operating in Niger. All of them have been asked to leave.
In June 2022, Mali also abruptly withdrew from the G5-Sahel group and its Joint Force. The Joint Force was created in 2017 by the “G5” Heads of State—Burkina Faso, Chad, Mali, Mauritania and Niger—to counter-terrorism in the region. Reports pointed to the anti-French sentiments and under-equipped local armies to quickly step up their game against Islamist rebels in the volatile Sahelian region. By the end of 2022, France reduced and moved its troops. That ended the so-called “Operation Barkhane” which was a military mission marked by a tactic of permanent occupation of the Sahel countries by French troops. The French government, however, apparently would try to reorganize its strategy in Africa. From some indications, it appears the focus of action turns to the Gulf of Guinea.
At the AU Extraordinary Summit from May 25 to 28, 2022, held in Equatorial Guinea, Moussa Faki Mahamat, Chairperson of the African Union Commission, highlighted the factors contributing to the lack of development including good governance, the growing tendency of usurping power by the military and the significance of forging collective solidarity as a basis for resolving continental and regional problems. Both Senegalese president Macky Sall (then the AU Chairperson) and Moussa Mahamat, issued statements urging the interim military governments to return to constitutional regimes as early as possible, reassuring that the solutions to continental problems and overcoming the existing challenges depend on strong mobilization of African leaders and the effective coordination provided by the African Union. Regrettably, all these have not yet become a thing of the past.
United Nation’s Approach
The United Nations (UN) Under-Secretary-General for Peace Operations, Jean-Pierre Lacroix, has argued that the peacekeeping and terrorism fight faces greater challenges than ever and that it requires multinational mechanisms and approaches. It also requires member-states to adopt a collective capacity to support political and peace processes. Conflict is more complex and multi-layered.
According to Jean-Pierre Lacroix, peacekeepers are facing terrorists, criminals, armed groups and their allies, who have access to powerful modern weapons and a vested interest in perpetuating the chaos in which they thrive. Further complicating this situation is the fact that most peacekeeping operations – particularly our large, so-called multidimensional missions in Africa – have long been affected by a discrepancy between their capacities and what is demanded of them by the Security Council and host countries. Financial resources are often inadequate for their mandated tasks.
What’s at Stake
Niger and Burkina Faso exited the anti-Islamist force this early December 2023, withdrawing from an international force known as the G5 that was set up to fight Islamists in the Sahel region. Now Burkina Faso, Mali and Niger – run by military rulers following coups who have formed their mutual defence pact. Their so-called Alliance of Sahel States (AES) was signed back in September. United Nations Secretary-General António Guterres has often spoken against such inter-state collaboration.
But Chad and Mauritania are still part of the G5 force which is meant to be made up of about 5,000 soldiers. A statement from the military-led governments of Burkina Faso and Niger was critical of the G5 force for failing to make the Sahel region safer. It also suggested the anti-jihadist force undermined the two African nations’ desire for greater “independence and dignity” – and was serving foreign interests instead. They almost certainly meant France, whose power has dramatically deteriorated.
Usually referred to as the G5 Sahel, these countries – Burkina Faso, Chad, Mali, Mauritania and Niger – are engulfed with various socio-economic problems primarily due to the system of governance and poor policies toward sustainable development. In addition, rights abuse and cultural practices to a considerable extent affect the current state of development.
The big question is what impact this would have on the Islamist militant groups that have been growing in numerical strength, scope of operations and degree of force across the Sahel region. Russia is back in prominence on the world stage. As it flexes its muscles and tentacles to gain influence, the stature of the EU/US continues seemingly fading away. And former French colonies are simply turning to Russia for military support, bartering their natural resources for further much-anticipated collaborative partnerships. Russia has already agreed to develop nuclear power plants in Mali, while in Burkina Faso, it plans to construct an oil refinery.
For fear and concerns about the new rise of all kinds of terrorism and frequent attacks, the Sahel-5 are all turning to Russia for military assistance to fight growing terrorism, and efforts to strengthen political dialogue and promote some kind of partnerships relating to trade and the economy in the region. At the same time, with renewed and full-fledged interest to uproot French domination, Russia has ultimately begun making inroads into the entire Sahel region, an elongated landlocked territory located between North Africa (Maghreb) and West Africa, that stretches from the Atlantic Ocean to the Red Sea.
Unique Lessons from Southern Africa
At least the majority of African leaders have to consider a complete overhaul of their security system across Africa. The Security Committees of the African Union and that of the Economic Community of West African States have to learn a few lessons and methodological approaches in dealing with indiscriminate threats of terrorism, militant groups, Islamic State-linked insurgencies and other related issues in Mozambique.
The worsening security situation at that time was a major setback for Mozambique but has been controlled by the involvement of regional troops from Rwanda and the Southern African Development Community Military Mission (SAMIM). Rwanda offered 1,000 in July 2021. South Africa has the largest contingent of approximately 1,500 troops. External countries are enormously helping to stabilize the situation in Mozambique. Its former colonizers Portugal and the United States both sent special forces to train local troops. Mozambique’s approach towards fighting growing threats of terrorism and conflict resolution offers explicit valuable lessons for the G5 Sahel which are Burkina Faso, Chad, Mali, Mauritania and Niger.
At the panel discussions during the mid-December U.S.-Africa Summit in Washington, Mozambican President Filipe Nyusi was very outspoken and shared valuable experiences with the audience about the use of well-constituted regional military force for enforcing peace and security in Mozambique. He told the panellists that there has been “remarkable progress” as businesses have restarted and displaced people began returning to Cabo Delgado, northern Mozambique. His argument simply was on the necessity of adopting ‘African solutions to African problems’ on peace and security issues across Africa, and this should be seriously considered as the most suitable, comprehensive approach under the current emerging geopolitical situation.
Joint regional forces within the context of multilateralism still have, to a large degree, significance in tackling conflicts in Africa. The Joint Forces of the Southern African Development Community are keeping peace in northern Mozambique. The rules, standards and policies, provision of assistance as well as the legal instruments and practices are based on the protocols of building and security stipulated by the African Union. It falls within the framework of peace and security requirements of the African Union. And has an appreciable commendation from the United Nations Security Council.
“We welcome collective action from SADC in committing to bringing sustainable peace to the region. We urge our leaders to consider the lessons learnt from other similar conflicts in Africa. In the Sahel, Somalia, and the Niger Delta offer stark contemporary reminders that a purely militaristic solution (devoid of measures to address the causes of the insurgency) increases the likelihood of its intractability. It is also unlikely to pave the way towards achieving sustainable peace,” the official statement from SADC.
The complexity and challenges in navigating this regional security partnership could be diverse, it depends also on political culture and mechanism of pragmatic approach. There have been various assessments and interpretations, but the security initiative to create the joint southern force underscores the multiplex dynamics to better play at home-grown solutions. The SADC initiative portrays a distinctive blueprint for purely African-headed peacekeeping success stories in the region, precisely for Mozambique and this could be replicated in West Africa.
With the changes sweeping across the world, it is glaringly well-known that a number of external countries are using Africa to achieve geopolitical goals, sowing seeds of confrontation which threaten African unity. Prime Minister Abiy Ahmed, the Federal Democratic Republic of Ethiopia (FDRE), during the 36th Ordinary Session of the African Union (AU) held in Addis Ababa, interestingly used the phrase – “African solutions to African problems” – seven times in his speech delivered on February 2023. He strongly suggested that for the existing conflicts and disputes on the continent, it is necessary to mobilize collective efforts to resolve them and “must be confined to this continent and quarantined from the contamination of non-African interference.”
Final Security Breathe
As the security situation stands, the best option is to consider new approaches, taking into cognizance local factors, to regulate tensions and to prioritize development and economic sovereignty in the Sahel. And of course, many experts have suggested that addressing the Sahel crisis requires collective efforts and cooperation from all parties involved that can bring positive change in the region. Ultimately, it must be through tailored collective efforts and, most importantly, within the African context taking local conditions into account. As shown by Mozambique, carefully evaluating the tangible advantages combined with results, underscores the degree of consideration given to foreign involvement in conflicts without bartering natural resources. Sometimes the geopolitical factors are intertwined, though. In any case, to separate facts from fiction, Mozambique’s exemplary case is undoubtedly marked by significant successes.
In the context of – “African solutions to African problems” – the SADC’s regional force was earlier constituted in April 2021, agreed to deploy a regional force (3,000 troops) in Cabo Delgado, located in northern Mozambique and to fight threats of terrorism in neighbouring Southern African countries. What is referred to as Islamic attacks and insurgency caused havoc and devastation in Cabo Delgado province of Mozambique. The insurgency began in 2017 and left an unimaginable negative effect on settlements of the civilian population, and business and industry operations. The situation now is under control and seen as a distinctive example for the rest of Africa. With relative regional peace, Southern Africa looks now toward the direction of attaining its economic sovereignty. Besides that, SADC counted on funding from the United States and European Union (EU) and the United Nations.
Professor Maurice Okoli is a fellow at the Institute for African Studies and the Institute of World Economy and International Relations, Russian Academy of Sciences. He is also a fellow at the North-Eastern Federal University of Russia. He is an expert at the Roscongress Foundation and the Valdai Discussion Club. As an academic researcher and economist with a keen interest in current geopolitical changes and the emerging world order, Maurice Okoli frequently contributes articles for publication in reputable media portals on different aspects of the interconnection between developing and developed countries, particularly in Asia, Africa and Europe. With comments and suggestions, he can be reached via email: ma***********@***il.com.
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
