The Nigerian economy recorded notable improvements in macroeconomic stability during the first quarter of 2026, according to a policy brief released today by the Centre for the Promotion of Private Enterprise (CPPE).
The report highlights a moderation in inflation, stabilization of the naira, and strengthened foreign reserves as key indicators of economic consolidation. Headline inflation eased to 15.06% in February 2026, down from over 24% in early 2025.
The naira remained relatively stable within ₦1,340–₦1,430 per dollar in the official market, while external reserves rose above $50 billion, underpinned by stronger oil earnings and improved foreign exchange liquidity.
Economic growth momentum also persisted, with real GDP growth standing at 4.07% year-on-year in Q4 2025 and full-year growth at 3.87%.
The Purchasing Managers’ Index (PMI) consistently indicated expansion, reflecting continued activity in both oil and non-oil sectors.
In response to these improvements, the Central Bank of Nigeria reduced its policy rate by 50 basis points to 26.5% in February 2026, signaling a cautious easing cycle.
Despite these gains, the CPPE report warns that structural challenges and rising costs continue to weigh on households and businesses.
Energy prices remain high, driven by reliance on generators amid grid unreliability and ongoing global oil price volatility.
Transportation and logistics costs also remain elevated, and insecurity in key agricultural regions continues to disrupt supply chains and food production.
Access to affordable credit is constrained, limiting investment opportunities, particularly for small and medium-sized enterprises.
Looking ahead to the second quarter of 2026, the CPPE notes a cautiously optimistic outlook tempered by several risks.
Geopolitical tensions, particularly in the Middle East, have pushed crude oil prices above $100 per barrel, potentially reversing recent disinflation gains through higher domestic fuel and logistics costs.
The upcoming 2027 elections may further pose policy and fiscal risks, with political considerations threatening reform momentum and budget execution.
The 2026 federal budget, estimated at ₦68 trillion, is also under scrutiny. While it could stimulate economic activity, delays in capital releases, weak revenue performance, and politically influenced expenditure decisions could undermine its effectiveness.
For businesses and investors, the CPPE advises a focus on resilience, operational efficiency, and strategic risk management. Measures such as energy optimization, local sourcing, and careful foreign exchange risk management are recommended to navigate the current high-cost and politically sensitive environment.
Dr. Muda Yusuf, CEO of CPPE, emphasised: “The first quarter marks a critical inflection point. While macroeconomic stability is improving, structural constraints, cost pressures, and emerging geopolitical and political risks underscore the need for vigilance, resilience, and targeted policy interventions.”
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