Iran and Israel War: Implications on Nigeria’s Foreign Direct Investment
Working Paper
The intensifying Israeli-Iranian confrontation in 2025 has brought about global geopolitical uncertainty, with significant ramifications for developing nations like Nigeria. Nigeria's economy is still heavily reliant on foreign direct investment (FDI) to maintain development, finance infrastructure, and generate jobs. With a total FDI influx of US$1.87 billion in 2023, up from US$0.89 billion in 2022, Nigeria's FDI stock accounted for 19.6% of GDP. This advancement is susceptible to outside shocks, though. Israel and Nigeria have close commercial and security relations. There are about 50 Israeli businesses working in Nigeria in industries including defence, water resources, ICT, agriculture, and construction. In 2023, Israel and Nigeria's trade totalled US$12 million in imports and US$553 million in exports. Israel has also helped Nigeria in her fight against terrorism and insurgency by providing military training and intelligence sharing. Iran, on the other hand, is not very active in Nigerian commerce or investment. Investor risk aversion, oil price shocks, and global financial market volatility could result from the Israel Iran conflict. Furthermore, Nigeria's diplomatic stance, especially if it chooses a side in the conflict, may have an impact on its foreign investments and strategic partnerships, particularly with the US, EU, and Israel. To ensure Nigeria’s neutrality in the Israel-Iran war and to protect Nigeria’s Foreign Direct Investment, the brief hereby recommends the following: i. The National Assembly (NASS), through its oversight functions, may wish to work with the Federal Ministry of Industry, Trade and Investment to develop a geopolitical risk framework that integrates real-time diplomatic intelligence into Nigeria’s FDI strategy; ii. NASS may also wish to leverage oversight to advise the federal government through the FEC and NEC meetings on the need to maintain neutrality on the on-going war between Israel and Iran, to desist from any media utterances or support that may have economic, political or socio-cultural implication on Nigeria.