Citi’s Cowan Calls Nigeria the “Unambiguous Winner” From Iran Conflict

Citi’s Senior Africa Economist, David Cowan, has identified Nigeria as the primary economic beneficiary in Sub-Sahara Africa from the ongoing Iran-Israel-U.S. conflict.

While the war has triggered sovereign debt default fears for oil-importing African nations like Malawi and Mozambique, Nigeria’s unique position as an Atlantic crude exporter with massive new refining capacity has turned a global crisis into a local windfall.

According to Cowan, Nigeria is “particularly insulated” because it can capitalize on high global oil prices without facing the direct supply disruptions plaguing Middle Eastern producers in the Strait of Hormuz.

The Refining Revolution: From Importer to Net Exporter

The opening of the 650,000 bpd Dangote Refinery hit full capacity just as a global petroleum product shortage began to bite. This has fundamentally rewired Nigeria’s trade balance.

• Regional Surplus: Cowan notes that when combining the Dangote Refinery with regional players like Cote d’Ivoire (SIR) and Ghana (Tema), West Africa now enjoys a petroleum product surplus.

• The Export Footprint: Dangote is already shipping products to Togo, Ghana, Benin, and Ethiopia, capturing market share that was previously held by European and Middle Eastern traders.

The Fertilizer and Agriculture Shield

Nigeria’s insulation extends beyond fuel. The country has successfully commercialized its gas reserves via massive fertilizer plants.

• Dangote & Indorama: With the Indorama’s third urea line and Dangote’s expansion, Nigeria is on track to produce 8 million tonnes of urea annually.

• Import Substitution: By producing its own soil nutrients, Nigeria has avoided the 200% price spikes in global fertilizers caused by the Iran war, protecting its domestic food security.

The Subsidy Paradox: High Prices, No Queues

Nigeria has transitioned from a system of low prices with chronic shortages to one of market prices with high availability.

• Ending the Scarcity: Cowan observes that the removal of subsidies has ended the “artificial” shortages that plagued Nigeria for decades.

• Consumption Shift: While fuel is now available, the ₦1,200+ per litre price point has naturally moderated consumption, allowing even more of the refinery’s output to be diverted for high-value Foreign Exchange (FX) exports.

GDP Reality Check: The Service Sector vs. Oil

Despite the “oil windfall” headlines, Cowan cautions that the oil sector’s direct influence on headline GDP growth remains limited compared to its historical peaks.

• Sectoral Weight: Nigeria’s economy is now dominated by the Service Sector (Fintech, Telecoms, Creative Arts).

• The Current Account Alpha: The real gain from the war is not necessarily GDP growth, but the Current Account Surplus, which Citi expects could reach 6% to 7% of GDP. This provides the CBN with the ammunition needed to stabilize the Naira and build reserves.