Nigeria’s Economy Poised for Steady Growth in 2026 Amid Reforms
Abuja, 14 January 2026 – Nigeria, Africa’s most populous nation and largest economy, is entering 2026 with cautious optimism as macroeconomic reforms begin to yield results. Following a challenging 2025 marked by high inflation and fiscal pressures, projections indicate a modest rebound in growth, driven by the oil sector and non-oil industries. However, persistent issues such as poverty and food insecurity remain hurdles, according to reports from the World Bank and IMF.
Economic Reforms and Policy Shifts
President Bola Tinubu’s administration has implemented bold reforms since 2023, including the removal of fuel subsidies, unification of exchange rates, and strengthening revenue collection. These measures have stabilised the foreign exchange market and boosted foreign reserves to over $42 billion by the end of 2025. The Central Bank of Nigeria (CBN) has maintained a tight monetary policy, with the Monetary Policy Rate (MPR) at 27 per cent, contributing to a gradual decline in inflation from peak levels above 30 per cent in 2024 to 14.45 per cent in November 2025.
GDP Growth Projections
Nigeria’s economy expanded by 3.98 per cent year-on-year in the third quarter of 2025, slowing slightly from 4.23 per cent in the second quarter but remaining solid. For 2026, real GDP growth is projected to reach 4.3 per cent, supported by higher crude oil production averaging 1.68 million barrels per day and robust performance in services and agriculture. The non-oil sector, accounting for 96.6 per cent of GDP, grew by 3.91 per cent in Q3 2025, with agriculture up 3.79 per cent and information and communication rising 5.78 per cent.
Key Facts / Stats
| Indicator | 2025 Value | 2026 Projection |
|---|---|---|
| GDP Growth Rate (Annual) | 3.98% (Q3) | 4.3% |
| Inflation Rate | 14.45% (November) | Moderate decline expected |
| Foreign Reserves | $42 billion+ | Stable |
| Oil Production | 1.68 million bpd | Increase anticipated |
| Poverty Rate | 61% | Projected to rise slightly |
Challenges and Opportunities
Despite progress, challenges persist. Poverty is estimated to affect 61 per cent of Nigerians in 2025, rising from 59 per cent in 2024, with food inflation at 11.08 per cent in November 2025. The World Bank highlights the need for stronger social protection, reduced trade barriers, and improved public spending efficiency. On the positive side, the Dangote refinery’s full operation in 2025 has reduced fuel imports, and the AKK gas pipeline, expected in 2026, could boost electricity production by 67 per cent.
Sectoral Performance
The oil sector contributed 5.84 per cent growth in Q3 2025, while services, the largest sector at 55 per cent of GDP, expanded by 3.94 per cent. Agriculture, employing 45 per cent of the workforce, grew modestly at 2.82 per cent but faces insecurity and infrastructure deficits. Manufacturing rose 1.25 per cent, and the digital economy is gaining momentum with regulatory clarity and AI adoption.
Frequently Asked Questions
What are the main drivers of Nigeria’s economic growth in 2026?
The primary drivers include increased oil production, reforms in the foreign exchange market, and growth in non-oil sectors like services and agriculture. Global dynamics, such as stable oil prices, will also play a role.
How is inflation expected to evolve?
Inflation is projected to moderate gradually due to tight monetary policy, improved foreign exchange stability, and the delayed effects of reforms. However, food prices remain a concern.
What reforms have been key to recent stability?
Key reforms include ending fuel subsidies, unifying exchange rates, and enhancing revenue mobilisation through tax base expansion. These have strengthened reserves and reduced fiscal deficits.