Nigeria’s fragile economic recovery now faces an unexpected threat. Not from global headwinds or weak oil prices—but from a power struggle in Rivers State.
“Any significant disruption would not only cut oil production but also damage Nigeria’s export earnings and weaken the naira.”
The political battle between Siminalayi Fubara, governor, and his predecessor, Nyesom Wike, has deepened into a dangerous impasse. It may seem like a local feud, but the implications for the wider Nigerian economy and for ordinary Nigerians could be severe.
Rivers State: A fragile oil lifeline
Rivers State is not just another battleground in Nigeria’s fractious politics. It accounts for more than 20 percent of Nigeria’s crude oil production.
Oil exports remain the country’s primary source of foreign exchange and government revenue. Over 90 percent of Nigeria’s forex earnings and 60 percent of government income still come from oil.
This makes political instability in Rivers a systemic risk for Nigeria’s economy.
Economic reforms are finally bearing fruit—But fragile
Until recently, there were signs of improvement. Inflation, which peaked at 34.8 percent in December 2024, has slowed for two consecutive months.
According to the National Bureau of Statistics, headline inflation dropped to 23.18 percent in February 2025. Food inflation, a key pressure point for households, has also eased.
The Central Bank of Nigeria has kept its monetary policy rate steady at 27.5 percent, after a string of hikes.
For the first time in years, real interest rates are positive, drawing foreign portfolio investors back into Nigeria’s bond market. The naira has strengthened by over 7 percent against the dollar since November, aided by high local bond yields.
Nigeria’s policymakers appeared to have broken the cycle of economic decline. But these gains are at risk.
A crisis that could escalate
The feud between Fubara and Wike began over control of Rivers’ budget and political structures. What started as a political spat has now escalated into street violence and threats of institutional breakdown.
On October 7, suspected thugs attacked and set fire to four local government secretariats. In the aftermath, Fubara warned that escalating violence could threaten oil production in the state.
“We need peace,” he said, warning that further unrest could disrupt operations in Nigeria’s most productive oil fields.
So far, there have been no verified reports of widespread pipeline sabotage or attacks on energy infrastructure.
But security analysts warn that the conditions are ripe for a repeat of the instability that crippled Nigeria’s oil industry in the mid-2000s.
If vandalism were to escalate, critical infrastructure such as the Trans Niger Pipeline, a major artery capable of transporting 450,000 barrels per day, could be at risk.
Any significant disruption would not only cut oil production but also damage Nigeria’s export earnings and weaken the naira.
Oil still pays the bills
Nigeria has made efforts to diversify its economy, but oil remains its fiscal backbone. The ₦54.99 trillion 2025 budget assumes stable and high oil production.
But Brent crude prices are under pressure, and Nigeria’s oil production remains inconsistent, even without political disruptions.
Femi Olapade, principal consultant at Wilopad Consulting, cautions:
“Any disruption in Rivers will widen Nigeria’s budget deficit and increase borrowing costs. The more we rely on debt to plug revenue gaps, the less there is for infrastructure and social services.”
The country already spends nearly all its federal revenues on debt servicing. In 2023, debt service consumed 96 percent of Nigeria’s earnings. A further deterioration in oil revenues could push Nigeria’s finances into unmanageable territory.
What Nigerians stand to lose
For most Nigerians, the political crisis may seem far away from daily life. But its effects will be felt in the markets and at the filling stations.
Disruptions in oil production would put downward pressure on the naira. If dollar earnings shrink, the currency will weaken, raising the cost of imported goods, from fuel to food to medicine. Inflation, which had only just begun to ease, could quickly spiral again.
Foreign investors, who have shown tentative signs of returning, will think twice about committing capital. Jobs in key sectors, already scarce, could vanish.
And if militant groups seize on the instability, as they have in the past, the consequences for national security and the economy could be catastrophic.
The insurgencies in the Niger Delta during the mid-2000s nearly halved oil production and cost Nigeria billions in lost revenue.
A zero-sum political game
What is unfolding in Rivers is not just a local power struggle. It highlights the zero-sum nature of Nigeria’s political economy. Political power is too often a fight over access to state-controlled resources rather than a platform for governance.
“Governorship in Nigeria isn’t just a job; it’s control of enormous patronage,” says Ayo Teriba, CEO of Economic Associates. “Unless the incentive structure changes, these kinds of destructive battles will continue.”
The need for stability and urgency
The federal government’s intervention has done little to calm tensions. President Bola Tinubu’s imposition of a six-month emergency rule has been condemned by the Nigerian Bar Association as unconstitutional and risks inflaming the crisis further.
Restoring stability in Rivers requires dialogue, respect for democratic institutions, and compromise. Nigeria’s economic reforms cannot succeed without political stability, especially in regions as critical as Rivers State.
The stakes are national
Nigeria’s modest economic recovery is real but remains dangerously fragile. Without political stability in Rivers State, the hard-won progress of the past year risks unravelling.
It is ordinary Nigerians already burdened by rising inflation and unemployment who will bear the brunt of the fallout.
The window to prevent a full-blown economic crisis is closing fast. Restoring peace and stability in Rivers is not just urgent; it’s essential for Nigeria’s economic survival. (BusinessDay)
