Nigeria is poised to enter a period of robust and sustainable economic growth by 2026, provided the government maintains its current trajectory of economic reforms and effectively addresses persistent security challenges. This optimistic forecast comes from the Centre for the Promotion of Private Enterprise (CPPE), a prominent private sector think tank, which highlighted 2025 as a pivotal year in the nation’s macroeconomic journey following an initial period of instability.
The CPPE’s 2025 economic review, signed by its CEO, Muda Yusuf, underscored significant macroeconomic stabilisation throughout the year. A key achievement was the notable stability of the exchange rate, with the Naira consistently trading within the N1,440 to N1,500 per dollar range. This newfound predictability significantly eased pricing uncertainties for businesses and played a crucial role in mitigating imported inflation, offering a measure of relief to consumers and industries alike.
Inflationary pressures, a major concern in previous periods, also saw a marked deceleration. The annual inflation rate, which stood at 24.48% in January 2025, sharply declined to approximately 14.45% by November of the same year. The CPPE attributed this moderation primarily to the sustained currency stability, coupled with an easing of logistics bottlenecks and improved supply chain conditions. These factors collectively reduced price volatility and, in some instances, led to outright price reductions for certain food items and imported consumer goods.
Alongside these positive macroeconomic indicators, business confidence across Nigeria experienced a significant uplift. The NESG–Stanbic IBTC Business Confidence Index remained positive for the majority of 2025, reflecting a renewed sense of optimism among investors and a gradual but steady recovery in corporate profitability. Many firms that had reported losses in 2024 managed to return to profitability in 2025, further reinforcing the signs of an economy on the path to stabilisation and recovery.
Despite these gains, the CPPE noted a dichotomy in fiscal performance. Federal government finances remained under pressure, primarily due to substantial debt-service obligations that continued to constrain fiscal space. Oil revenue, a critical component of the national budget, fell short of expectations, with actual outcomes significantly lower than the budgeted oil production of 2.06 million barrels per day at $75 per barrel. This shortfall resulted in missed revenue targets and hampered the implementation of capital expenditure projects.
In contrast, state governments demonstrated stronger fiscal outcomes, benefiting from enhanced liquidity and improved internally generated revenue performance. Their more effective execution of capital projects led to tangible improvements in infrastructure and social service delivery across several states, showcasing a more decentralised positive impact of economic adjustments. This disparity highlights the varied capacities and resource bases at different tiers of government.
The nation’s economic structure also continued its strategic shift away from its traditional reliance on oil. By the third quarter of 2025, the services sector emerged as the dominant contributor, accounting for approximately 53% of the Gross Domestic Product (GDP), while the oil sector’s contribution diminished to a mere 3.44%. The non-oil sector as a whole contributed over 96% of GDP, driven by robust performances in telecommunications, financial services, trade, construction, and real estate, underscoring the diversification efforts.
However, challenges persisted in key sectors. Manufacturing growth remained sluggish, hampered by persistent power shortages, high operating costs, and limited access to finance. Similarly, the agricultural sector recorded only a modest recovery, battling ongoing insecurity, especially in food-producing regions, and enduring low productivity levels, which continue to pose risks to food security and rural livelihoods.
Looking ahead to 2026, the CPPE maintains cautious optimism, projecting a GDP growth rate of between 4.0% and 4.5%. This growth is expected to be propelled by further easing of inflation and sustained strong performance in the non-oil sector. Moderating inflation is anticipated to bolster domestic demand and potentially create room for a gradual easing of monetary policy, while services are projected to remain the primary engine of economic expansion.
Capital market prospects also appear positive, with the potential listing of the Dangote Refinery expected to deepen market liquidity and attract both domestic and foreign portfolio inflows, further invigorating investor confidence. The CPPE stressed that strong policy credibility continues to reinforce this confidence, drawing in crucial capital inflows necessary for sustained development. Overall, 2025 established a solid foundation of macroeconomic stability, paving the way for a more robust growth phase.
However, the think tank cautioned that several risks could still impede this optimistic outlook. These include pervasive insecurity, the inherent volatility of global oil prices, the burden of heavy debt-service obligations, persistently high energy and logistics costs, and potential fiscal pressures that often emerge during pre-election periods. Addressing these vulnerabilities remains critical for Nigeria to fully realise its projected growth potential and translate macroeconomic stability into improved living standards for its citizens.
