Security as a Stimulus: How Nigeria’s joint operations are de-risking the economy

Mr Wale Edun, Minister of Finance and Coordinating Minister of the Economy

Nigeria’s decision to confront terrorism through a targeted joint security operation with the United States is being read in financial and diplomatic circles as more than a military action. It is a signal to markets, partners and investors that Africa’s largest economy is aligning security, reform and global cooperation to underpin economic growth and restore confidence.

The Christmas Day operation in Sokoto, carried out by Nigerian forces with U.S. support, was precise and intelligence-led, aimed solely at terrorist elements that have disrupted communities and economic activity in parts of the country.

Nigerian authorities have been clear that the action does not mark an escalation into conflict, but rather a reinforcement of stability, a distinction with significant implications for capital markets.

“Nigeria is not at war with itself, nor with any nation,” Finance Minister and Coordinating Minister of the Economy Wale Edun said in a statement released Dec. 28.

“What Nigeria is decisively confronting alongside trusted international partners is terrorism.”

For investors accustomed to linking Nigeria’s risk premium to security headlines, the message was deliberate: security actions that protect lives and productive regions are pro-growth, not destabilising.

Security as an Economic Signal

Edun framed the operation as part of a broader reform agenda under President Bola Ahmed Tinubu, positioning security as inseparable from economic stability. “Security and economic stability are inseparable; every effort to safeguard Nigerians is, by definition, pro-growth and pro-investment,” he said.

That argument resonates in markets where stability, policy clarity and institutional resolve matter as much as headline growth. Nigeria’s reform programme including exchange-rate adjustments, fiscal consolidation and regulatory tightening has already begun to reshape investor perceptions in 2025. The security cooperation with the U.S. adds a geopolitical layer, signalling Nigeria’s readiness to work closely with global partners to protect both people and capital.

Macroeconomic Momentum Builds

Nigeria’s economic indicators provide context for the confidence. Gross domestic product grew 4.23 percent in the second quarter of 2025 and 3.98 percent in the third, with the government projecting a stronger fourth quarter. Inflation, long a pressure point, has decelerated for seven consecutive periods and is now below 15 percent, reflecting tighter coordination between fiscal and monetary authorities.

Credit rating agencies have taken notice. Moody’s, Fitch and S&P Global Ratings all upgraded Nigeria in 2025, citing improved policy credibility, stronger external buffers and fiscal discipline. For a country that spent years battling downgrades, the upgrades represent an independent endorsement of reform traction.

“Domestic and international debt markets are stable and functioning efficiently,” Edun said, adding that Nigeria has maintained macroeconomic stability despite global shocks and volatile commodity prices.

Capital Markets Lead the Repricing

Nowhere is the renewed confidence more visible than in Nigeria’s capital markets. The Nigerian Exchange Group (NGX) emerged in 2025 as one of Africa’s strongest performers, defying global uncertainty and persistent foreign-exchange concerns.

By Dec. 24, the NGX All-Share Index had gained nearly 49.2 percent for the year, placing it among the continent’s top-performing stock markets. Equity turnover more than doubled year on year, underscoring rising investor engagement, according to Alhaji Umaru Kwairanga, Chairman of the Nigerian Exchange Group (NGX) in his year end review.

Domestic investors drove much of the activity, accounting for roughly 79 percent to 80 percent of transaction value, while foreign investors contributed about 20 percent to 21 percent, modest by global standards, but a meaningful increase in absolute terms. Market participants see this as a foundation on which deeper offshore participation can be built as reforms mature and policy risks recede.

Total market capitalisation expanded sharply. As of December, the combined value of equities, debt instruments and exchange-traded funds listed on the NGX stood at about ₦149.9 trillion, with equities accounting for more than ₦98 trillion, or roughly 65 percent of the total. Banking,consumer goods, industrials and telecommunications led the gains, supported by strong earnings and balance-sheet resilience.

The primary market also played a critical role in mobilising long-term capital. New listings and capital raised surged to an estimated ₦6.34 trillion in 2025, boosted in part by strategic bank recapitalisation. The scale of issuance reflected confidence from issuers as well as investor appetite for Nigerian risk.

Foreign Capital: Interest Returns, Cautiously Foreign portfolio investment has begun to recover, with several reporting periods showing double-digit year-on-year growth in offshore trading activity. Still, foreign participation remains constrained by concerns around exchange-rate dynamics, capital gains tax clarity and the need for sustained policy consistency.

For policymakers, the challenge is not only attracting foreign flows but anchoring them. The government’s message is that security cooperation, macroeconomic reform and market development are parts of a single strategy.

“Nigeria remains open for business, anchored in peace, and firmly focused on the future,” Edun said.

A Broader Geopolitical Message

Beyond economics, the joint operation carries diplomatic weight. It places Nigeria within a framework of shared global responsibility against terrorism, reinforcing its role as a regional anchor for stability in West Africa.

For multinational investors and development partners, that cooperation reduces tail risks that are difficult to price but critical to long-term commitments.

President Tinubu, in a recent address, set 2026 as a consolidation year, building on 2025’s gains to strengthen resilience and deliver inclusive growth. The administration’s resolve to align security, fiscal discipline and reform is central to that vision.

As markets reopen on Dec. 29, Nigeria is betting that investors will see the Sokoto operation not as a warning signal, but as reassurance: a country confronting its risks head-on, in partnership with allies, while laying the groundwork for sustained growth.

For a market long defined by volatility and potential, the message is clear. Stability is being enforced, reforms are gaining traction, and Nigeria is repositioning itself, not just as a high-yield frontier, but as a credible, cooperative player in the global economy.

Ifeoma Okeke-Korieocha is the Aviation Correspondent at BusinessDay Media Limited, publishers of BusinessDay Newspapers.

She is also the Deputy Editor, BusinessDay Weekender Magazine, the Saturday Weekend edition of BusinessDay.

She holds a BSC in Mass Communication from the prestigious University of Nigeria, Nsukka and a Masters degree in Marketing at the University of Lagos.

As the lead writer on the aviation desk, Ifeoma is responsible and in charge of the three weekly aviation and travel pages in BusinessDay and BDSunday. She also overseas and edits all pages of BusinessDay Saturday Weekender.

She has written various investigative, features and news stories in aviation and business related issues and has been severally nominated for award in the category of Aviation Writer of the Year by the Nigeria Media Nite-Out awards; one of the Nigeria’s most prestigious media awards ceremonies.

Ifeoma is a one-time winner of the prestigious Nigeria Media Merit Award under the 'Aviation Writer of the Year' Category.

She is the 2025 Eloy Award winner under the Print Media Journalist category.

She has undergone several journalism trainings by various prestigious organisations.

Ifeoma is also a fellow of the Female Reporters Leadership Fellowship of the Wole Soyinka Centre for Investigative Journalism.

Join BusinessDay whatsapp Channel, to stay up to date