Firms operating in the north of Nigeria will see weaker demand and some route-to-market disruption
The closing of Niger’s borders will cause operational disruption for firms operating in northern Nigeria. However, most MNCs and distributors operating in Abuja and Lagos are unlikely to endure direct adverse effects from the coup in Niger for the foreseeable future. MNCs should ensure their distributors, especially those operating in central and northern regions, are prepared for route-to-market disruptions, for example, by incorporating longer lead times when processing orders. Also, MNCs should consider reviewing their distributors’ vulnerability to higher insecurity in Nigeria, even though Abuja and Lagos face a lower risk of attack than rural areas. Additionally, MNCs should enhance their market monitoring for both economic and political changes to the Nigerien situation.
Overview
- On July 26, a military coup in Niger deposed President Mohamed Bazoum and proclaimed general Abdourahmane Tiani head of state on July 28.
- ECOWAS strongly condemned the coup, imposed national economic sanctions, and activated its standby force on August 10 for a possible military intervention to reinstate President Bazoum.
- On August 19, Tiani proposed a three-year transition of power, which was rapidly rejected by ECOWAS.
- Most Nigerien borders have been closed since July 26, affecting regional trade, especially with Nigeria.
Our View
FrontierView does not expect military intervention by ECOWAS or any other international body in Niger, mainly due to a lack of consensus between ECOWAS, the African Union, and Nigeria regarding the merits of military intervention to reinstate President Bazoum. Consequently, no military spillovers into neighboring countries such as Nigeria are expected. Instead, the most likely outcome is a diplomatic stalemate where the junta remains in power. The most direct economic impact will be felt by Nigeria because its border with Niger will probably remain closed to trade until relevant progress is made in the negotiations between the military junta and ECOWAS. Therefore, northern Nigeria will be the most affected with a general slowdown in economic activity. Firms exposed to cross-border trade will be most vulnerable, as happened in Côte d’Ivoire after the 2021 Malian coup. More broadly, in Niger, the security situation is expected to deteriorate in the coming months. This poses a risk to West Africa’s economic climate, security (in particular, a potential rise in urban terrorism), and humanitarian situation, which are expected to worsen, especially if negotiations between the military junta and ECOWAS stagnate.
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