Follow Us on Google
•Says Nigeria regained balance in 2025
By Merit Ibe
The Centre for the Promotion of Private Enterprise (CPPE) has warned that Nigeria’s hard-won macroeconomic stability could face fresh tests in 2026 as rising debt-service obligations of over N15 trillion, persistent insecurity that could disrupt agriculture and logistics and other structural pressures threaten to limit the federal government’s fiscal flexibility.
While calling on the government to be more fiscally frugal and strategic in the coming year, it noted that the economy regained balance and stability in 2025 after a turbulent reform period.
In its reviewed economic performance in 2025 and projected outlook for 2026, CPPE’s Director General, Dr Muda Yusuf, noted that 2025 will be remembered as one of macroeconomic stabilisation, with renewed confidence, easing inflationary pressures and a clearer pathway toward growth in 2026.
Yusuf said the most visible symbol of the turnaround was exchange-rate stability. Throughout much of 2025, the naira traded within a relatively narrow N1,440–N1,500 to the dollar band, punctuated by periods of marginal appreciation. The consistency, the CPPE noted, restored predictability to pricing, contracting and investment planning, eased imported inflation and significantly improved sentiment across the business landscape after months of volatility.
Inflation followed a similar downward trajectory. Headline inflation fell sharply from 24.48 percent in January to about 14.45 percent by November, driven by currency stability, easing logistics bottlenecks and improving supply conditions. Several food items and imported consumer goods recorded outright price declines, helping to stabilise household budgets and temper the sharp price swings that had characterised the previous year. The result was a noticeable improvement in consumer confidence and spending behaviour.
CPPE also noted that businesses responded positively to the macro gains. The NESG–Stanbic IBTC Business Confidence Index stayed positive for most of the year, reflecting improved investor perception and a gradual rebound in corporate profitability. Many firms that posted losses in 2024 returned to profit in 2025, reinforcing the view that stability, rather than volatility, is the bedrock of sustainable enterprise growth.
Yet, beneath the surface of macroeconomic calm, fiscal performance at the federal level remained a key weakness. Heavy debt-service obligations continued to squeeze fiscal space and undermine effective budget execution. Revenue shortfalls persisted, largely due to underwhelming oil-sector performance. The 2025 federal budget had been built on optimistic assumptions of a $75 per barrel oil price and production of 2.06 million barrels per day, but actual outcomes fell well below target. Average oil prices hovered around $66 per barrel, while production averaged closer to 1.66 million barrels per day. As a result, the projected N41 trillion revenue target was significantly missed, constraining capital expenditure and slowing project delivery.
In contrast, sub-national governments posted relatively stronger results. Improved liquidity conditions, better internally generated revenue performance and more disciplined capital spending translated into tangible infrastructure delivery and social interventions across several states, highlighting the growing importance of fiscal management beyond the federal centre.
Structurally, the economy continued its gradual shift away from oil. By the third quarter of 2025, services accounted for about 53 percent of GDP, while oil’s contribution shrank to just 3.44 percent. The non-oil sector made up an overwhelming 96.56 percent of GDP and grew by 3.91 percent, highlighting Nigeria’s slow but steady diversification.
Services remained the dominant growth driver, expanding by 4.14 percent on the back of telecommunications, financial services, trade, construction and real estate. Manufacturing, however, remained fragile, growing by only 1.25 percent and contributing 7.62 percent to GDP. Chronic power shortages, high energy and logistics costs, weak access to finance and competition from imports continued to weigh heavily on industrial output. Agriculture showed signs of modest recovery, growing by 3.79 percent and contributing 31.21 percent to GDP, but insecurity, low productivity and post-harvest losses still limited its impact on exports and public revenue.
Futuristically, the CPPE expressed cautious optimism for 2026, projecting GDP growth of between 4.0 and 4.5 percent if reform momentum is sustained. Continued moderation in inflation is expected to strengthen domestic demand and create room for gradual monetary easing, potentially lowering interest rates and stimulating private investment. Services are expected to remain the main engine of growth, with telecommunications, finance, construction, real estate and trade leading the charge.
Capital-market prospects are also brightening. Policy credibility remains strong, and the potential listing of the Dangote Refinery could significantly deepen market liquidity, attract new domestic and foreign portfolio inflows and further bolster investor confidence.
However, the CPPE warned that downside risks remain pronounced. Persistent insecurity could continue to disrupt agriculture, logistics and investment. Fiscal performance remains vulnerable to oil price and production shocks, while high power and logistics costs will keep pressure on real-sector productivity. Debt-service obligations, estimated at over N15 trillion in the 2026 appropriation, about half of projected revenue. will continue to constrain fiscal flexibility. External geopolitical tensions, pre-election uncertainties and resistance to tax reforms could also test the resilience of the recovery.
Even so, the CPPE concluded that 2025 laid a solid foundation of stability. If reforms are sustained and security challenges effectively addressed, 2026 could mark the start of a more robust and inclusive growth phase, with clearer improvements in living standards and long-term economic prospects for Nigerians.
