Rethink Strategies For Survival Amid Middle-East Conflict, Economist Urges Businesses

…Says inflation to rise by 100bps

As the Middle East crisis involving Iran intensifies, disrupting global supply chains and energy markets, Nigerian businesses face mounting pressures and must urgently realign strategies to stay afloat, chief economist at the Development Bank of Nigeria (DBN), Prof. Joseph Nnanna, has urged.

Delivering the keynote at the inaugural Investors Roundtable organised by VNL Capital Asset Management, Nnanna warned that the volatile macroeconomic environment—marked by geopolitical tensions, logistics breakdowns, and stubborn inflation—demands immediate adaptation.

“What you envisioned in your strategic retreats last year, coming into this year, will have to change. If you remain static, you will regress backwards and get left behind,” he said.

Central to his message was a stark inflation forecast: Nigeria’s rate, which eased slightly to 15.06 per cent in February from 15.1 per cent in January despite double-digit food inflation, could surge by at least 100 basis points in coming months.

“I guarantee you, minimally, you will see at least 100 basis points increase in the next CPI report,” Nnanna stated.

He explained that the conflict’s shockwaves extend beyond oil—disrupting routes handling 20 per cent of global supply, plus electronics, pharmaceuticals, and more—leading to fuel price swings, higher transportation costs, and broad cost-of-living hikes. “Inflation cuts across every facet: food, energy, doing business, living generally. Everything happens at once,” he noted.

Nnanna highlighted how these forces are squeezing margins, especially for small and medium enterprises (SMEs). Common responses include belt-tightening, cost reductions, and staff cuts to protect shareholder value. Supply chain reconfiguration adds further strain: “When shipping routes are affected, it takes time and money—businesses have to pivot strategically,” he said.

He also pointed to policy dynamics, noting recent monetary adjustments aim to spur growth but remain vulnerable to global shocks.

“Authorities want to stimulate, but policy direction could shift again. Build flexibility into your plans,” Nnanna advised, stressing that time is critical: “If you’re a business owner, you don’t have the luxury of waiting—you must act proactively.”

Yet, amid challenges, Nnanna saw silver linings for agile players.

“The uncertainty elsewhere can signal opportunity, but only for those prepared to adapt,” he said, calling on leaders to blend local knowledge, disciplined capital, and forward-thinking partnerships. “That’s how you generate not just returns, but lasting value.”

According to him, the ongoing conflict involving Iran has further compounded the challenges for businesses globally, with far-reaching implications for costs and planning.

“Because the war has continued to fester, businesses generally will have to take a strategic pivot. You cannot operate with the same assumptions you had before,” he said

Nanna stressed that inflation remains a major trigger forcing businesses to rethink operations, as rising costs continue to squeeze margins.

“Inflation cuts across everything we do, transportation, cost of doing business, food, energy, everything goes up. That is the reality businesses are dealing with,” he said.

He explained that for many firms, particularly small and medium enterprises, the immediate response has been cost-cutting and restructuring.

“The natural disposition is to maximise shareholder value. So the first reaction is to cut costs, tighten belts, and in many cases reduce staff strength,” he noted.

The economist further pointed to disruptions in global logistics and supply chains as another factor compelling businesses to adjust their strategies.

“When shipping routes are affected, when supply chains are disrupted, businesses have to reconfigure. That doesn’t happen overnight, it takes time and money,” he said.

He added that time constraints and uncertainty make it even more critical for firms to be proactive rather than reactive. “If you are a business owner, time is money. You don’t have the luxury of waiting to figure things out. You must act,” he stressed.

On the policy front, he noted that monetary authorities are also adjusting to the changing environment, which in turn affects business conditions. “The signal from the recent monetary policy adjustment was that authorities want to stimulate growth. But given current global shocks, the outlook remains uncertain,” he said.

He added that businesses must therefore factor in possible policy shifts in their planning. “It is not inconceivable that policy direction could change again. Businesses must build flexibility into their strategies,” he advised.

While acknowledging the challenges, Nanna said the current environment also presents opportunities for forward-looking firms. “The uncertainty we see elsewhere can actually be a signal to move forward. But only for those who are prepared and willing to adapt,” he said.

He urged investors and corporate leaders to leverage local insights and partnerships to navigate the turbulent environment.