Nigeria's North-Central Conflict: A Catalyst for Economic Fracture and Investment Risks

The escalating intercommunal violence in Nigeria's north-central region—particularly between farming and herding communities—has reached a critical threshold, with over 6,900 deaths and 450,000 displaced since 2024. This crisis, driven by competition over land, water, and ethnic-religious tensions, is destabilizing key sectors such as agriculture, mining, and logistics. For investors, the risks are profound, yet opportunities may emerge in firms capable of mitigating these risks through security infrastructure and stabilization projects.

Agricultural Productivity Under Siege: The Human Cost and Economic Toll

The violence in Benue State's Yelewata community—a microcosm of the broader crisis—has displaced over 3,000 people, including 400 children, and destroyed crops and livestock. Such attacks disrupt labor availability, seed distribution, and harvest cycles, directly threatening Nigeria's agricultural output. The sector contributes roughly 25% of Nigeria's GDP, but could decline sharply if violence persists.

The humanitarian crisis exacerbates food insecurity, with 1 million children under five at risk of severe malnutrition in 2025. For investors in agribusiness, the risks include supply chain disruptions, higher insurance costs, and reputational damage linked to operating in conflict zones. Companies reliant on Nigerian commodities—such as cocoa or groundnuts—should reassess exposure to regions like Benue and consider hedging via futures contracts or diversifying to less volatile markets.

Infrastructure and Logistics: A Fragile Lifeline

The north-central region's logistics networks—critical for transporting agricultural and mineral goods—are increasingly vulnerable. Attacks on roads, railways, and border crossings disrupt the movement of goods, inflating costs for firms such as mining companies and logistics providers. The has already lagged regional peers, and instability could worsen this.

Cross-border violence, including ISWAP's incursions into Cameroon, further strains regional trade corridors. For example, disruptions to the Lagos-Maiduguri highway—a lifeline for northeastern Nigeria—could cripple supply chains for mining operations in states like Zamfara (rich in gold and lead). Investors in logistics firms should seek exposure to diversified portfolios with minimal reliance on conflict zones.

Foreign Direct Investment: Retreat or Resilience?

FDI into Nigeria has long been hampered by insecurity, bureaucratic hurdles, and energy shortages. The north-central violence compounds these challenges, deterring investors in mining, agriculture, and infrastructure. show a downward trajectory, with 2024's figure dropping to $6.7 billion, down from $8.3 billion in 2019.

The humanitarian crisis also strains public services. With 70% of health facilities and 50% of nutrition programs underfunded, the government's capacity to stabilize regions is limited. This creates a “negative feedback loop”: underfunded security and infrastructure → higher risks → lower FDI → reduced tax revenues → weaker governance. For now, short-term investors should avoid sectors directly exposed to the region unless they can hedge currency risks (e.g., using NGN/USD forward contracts).

Strategic Investment Considerations: Hedging and Security Plays

Short-Term Hedging Strategies:
- Currency Derivatives: Hedge against the Nigerian Naira's volatility with .
- Sector Diversification: Reduce exposure to agriculture and mining in conflict zones, favoring sectors such as tech or financial services with less geographic dependency.

Long-Term Opportunities:
- Security Infrastructure: Invest in firms providing surveillance, protection, or stabilization services. Companies like G4S (GFS.L) or FLIR Systems (FLIR), which offer drone surveillance and cybersecurity solutions, could benefit from rising demand in volatile regions. Their may reflect this trend.
- Post-Conflict Rebuilding: Consider infrastructure funds or contractors poised to rebuild roads, schools, and healthcare facilities once stability returns.

Conclusion

Nigeria's north-central violence is not merely a humanitarian tragedy but a systemic economic risk. While short-term caution is warranted, investors with a long-term horizon may find value in firms addressing security gaps or positioning for post-conflict reconstruction. The path to stability will require coordinated international aid and Nigerian governance reforms—but until then, prudence and strategic hedging are essential.

For those willing to wait, the region's agricultural and mineral wealth could reward those who master the risks. The question remains: Will investors bet on Nigeria's fragility—or its resilience?