The Director/Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has warned that the recent threat of possible military action against Nigeria by the President of the United States, Donald Trump, can erode investor confidence, among other far-reaching implications for the economy.
Dr. Yusuf said in CPPE’s policy brief titled ‘Potential Economic Implications of the U.S. Threat of Military Action on Nigeria,’ that Trump, had named Nigeria as a “country of particular concern” on October 31, 2025, and that the development reflects a global worry over Nigeria’s rising insecurity.
President Trump had through his Truth Social platform on Saturday, directed the Department of War to prepare for “possible action” if the killings continued.
It noted that “although the statement appears to have been made on the basis of incomplete intelligence and misjudged assumptions, its source, the President of the United States, magnifies its potential impact.
“Regardless of its inaccuracy, the pronouncement has already generated economic, diplomatic, and perceptional consequences for Nigeria. The statement risks undermining the country’s image as a stable investment destination, unsettling financial markets, and eroding confidence among both domestic and international investors”.
The document highlighted that “even the mere threat of military action by a global superpower has inflicted significant reputational damage on Nigeria’s image as a safe and viable investment destination”.
It added that such rhetoric can trigger “declines in foreign direct investment inflows, capital flight from portfolio and equity investors, a decline in venture capital and startup funding, and heightened country risk ratings and investor anxiety”.
The CPPE further cautioned that “market volatility would likely intensify as investors reassess Nigeria’s risk profile,” noting that the likely consequences include “falling stock market valuations, rising country risk premiums and insurance costs, higher sovereign bond yields, and Naira depreciation due to capital outflows and portfolio reversals”.
The brief also warned that “an escalation in perceived geopolitical risk could tighten financial conditions and distort macroeconomic indicators,” adding that “Nigeria may experience rising interest rates, weakened currency and higher inflationary pressures, reduced foreign reserves and lower external buffers, and pressure on fiscal balances from increased defence spending and lower investment inflows”.
Yusuf urged the Nigerian government to “adopt a strategic and proactive diplomatic response. Key policy measures should include high-level diplomatic engagement. Immediate bilateral discussions with the U.S. government to clarify facts and de-escalate rhetoric. Deepening cooperation with U.S. and regional partners on intelligence, counterterrorism, and peacebuilding. Coordinated public messaging to reassure domestic and international investors of Nigeria’s stability and continued reforms in governance, transparency, and macroeconomic management to reinforce resilience against external shocks”.
According to the report by Punch newspaper on Tuesday, the policy brief described the U.S. President’s threat as “unwarranted, counterproductive, and economically destabilising. It is a disproportionate response that fails to reflect the complexity of Nigeria’s internal security dynamics. Such statements send unsettling signals to investors, heighten risk perception, and undermine confidence in Nigeria’s economy. While Nigeria must continue to strengthen its internal security architecture and governance, any external engagement should be cooperative, not coercive.
“Unilateral military action would destabilise Nigeria’s economy, threaten regional stability, and aggravate humanitarian conditions. The constructive path forward lies in diplomacy, partnership, and shared commitment to peace, development, and mutual respect for sovereignty,”
GIK/APA