EXPLAINER: How Middle East tensions are shaping costs and pressures for women entrepreneurs in Nigeria

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Nigeria is experiencing renewed inflationary and currency pressures partly linked to global geopolitical tensions, including ongoing instability in the Middle East, with early 2026 economic indicators showing sustained increases in food, transport and imported goods prices.

While geographically distant, the conflict is contributing to volatility in global crude oil markets, shipping routes and investor sentiment—factors that are feeding into domestic inflation and disproportionately affecting small and medium-sized enterprises (SMEs), particularly women-led businesses.

Data from the National Bureau of Statistics (NBS) show that inflationary pressures have remained elevated in early 2026, driven largely by food prices, transport costs and exchange rate pass-through effects.

Global oil market shock and transmission channels

One of the earliest channels through which Middle East tensions affect Nigeria is global crude oil pricing.

Energy market analysts cited by the International Energy Agency (IEA) note that geopolitical risks in oil-producing regions typically lead to a “risk premium” in global oil prices due to fears of supply disruptions and insecurity along major shipping routes.

For Nigeria, an oil-exporting country, higher crude prices do not always translate into domestic economic gains.

The World Bank has consistently observed that Nigeria’s oil revenue benefits are constrained by structural challenges, including production shortfalls, crude theft, pipeline vandalism and fiscal dependence on imports.

As a result, increases in global oil prices often lead more directly to higher domestic costs than to fiscal expansion.

In practical terms, higher crude oil prices raise: the cost of imported refined petroleum products, shipping and marine insurance premiums, the cost of imported raw materials and finished goods. These increases are typically passed on to consumers, feeding inflation across markets.

Inflation pressures and cost-of-living impact

Nigeria’s inflation profile in early 2026 remains elevated, with food and transport inflation continuing to account for a significant share of the Consumer Price Index (CPI) basket.

The Central Bank of Nigeria (CBN) has repeatedly identified exchange rate pass-through and imported inflation as key drivers of price instability in its monetary policy communications.

For women entrepreneurs—who dominate a large share of Nigeria’s informal and micro-enterprise sector—this translates into immediate operational pressure.

Across major commercial hubs such as Lagos, Abuja, Port Harcourt and Onitsha, women engaged in food vending, retail trade, fashion, cosmetics and agro-processing are reporting:

• Rising transportation costs for goods and inputs
• Higher prices for imported stock such as fabrics, cosmetics and packaging materials
• Increased energy costs from diesel and petrol dependence
• Declining customer purchasing power

These factors combine to compress already thin profit margins in low-capital businesses.

Foreign exchange volatility and business uncertainty

Another key transmission channel is foreign exchange volatility.

During periods of global geopolitical tension, investors often move capital into “safe haven” assets, placing pressure on emerging market currencies. The naira remains particularly exposed due to Nigeria’s import dependency and limited export diversification.

The International Monetary Fund (IMF), in its Article IV consultations on Nigeria, has consistently identified exchange rate volatility as a structural constraint that amplifies inflation and weakens business predictability.

For women entrepreneurs, FX volatility results in:

• Unstable pricing of imported goods
• Higher cost of raw materials

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• Reduced access to affordable credit for SMEs
• Difficulty in long-term business planning

A Lagos-based textile entrepreneur, Amaka Ogbonna, told Bizwatch Nigeria that “price changes no longer last a month before they must be reviewed again,” highlighting the rapid turnover in input costs.

Impact on women-led small businesses

Women entrepreneurs are disproportionately affected due to their concentration in micro and small-scale enterprises with limited access to credit, hedging tools or foreign currency buffers.

The World Bank has noted that SMEs in developing economies are often “first to absorb shocks and last to recover,” particularly during inflationary cycles.

In Nigeria, this dynamic is reflected in:

• Shrinking profit margins
• Reduced inventory turnover
• Increased reliance on informal credit
• Scaling down of operations and workforce

Food vendors are among the hardest hit, as rising costs of grains, transport and cooking fuel directly affect daily business operations.

Seun Oyeniyi, a Lagos-based crayfish trader, said rising transportation costs had forced her to reduce the quantity of stock she brings in from Akwa Ibom to Lagos.

She added that customer demand has also weakened significantly. “Before now, people would buy crayfish in larger quantities to prepare meals like jollof rice and stew. Now, many either cook without it or buy in very small quantities,” she said, noting that reduced purchasing power has affected both sales volume and income.

Interest rates, credit and consumer demand

As inflation rises, monetary authorities often respond by tightening interest rates to stabilise prices.

The CBN has maintained a tight monetary stance in recent policy cycles aimed at curbing inflation expectations, though analysts caution that higher interest rates can further restrict access to credit for small businesses.

For women entrepreneurs, this creates a dual burden: Higher borrowing costs for loans and microcredit and weaker consumer demand due to reduced household purchasing power

As disposable income declines, spending on non-essential goods and services is typically the first to be cut, affecting sectors such as fashion, beauty, catering and informal retail where women are highly represented.

Conclusion

The ongoing tensions in the Middle East highlights Nigeria’s exposure to global economic shocks through oil markets, exchange rates and inflationary pressures.

While the effects may appear indirect, they are already evident in rising costs, weakened purchasing power and growing operational strain on women entrepreneurs operating at the base of the economy.

Without structural reforms that strengthen domestic production, stabilise the naira and reduce import dependency, external geopolitical shocks are likely to continue shaping Nigeria’s inflation trajectory and business environment.