Nigeria’s Uneven Path to Economic Recovery

Nigeria enters 2026 with its economy stabilised but not yet healed. The defining test is whether reform gains can reach ordinary households, not just the macro numbers, writes Festus Akanbi

There is a new calm in official circles. At the Central Bank, policymakers speak with more assurance than they have in years. In Lagos boardrooms, bankers now talk about “stability” as if it were a long-lost friend. The figures appear to justify the mood: inflation has eased sharply from about 34 per cent to 14.45 per cent, the naira has steadied around N1,436 to the dollar, and foreign exchange reserves have crossed $45 billion.

Away from these polished spaces, however, the mood is far less upbeat. In Kano’s Dawanau market and among spare-parts dealers in Ladipo, Lagos, traders tell a different story. “Food is still expensive,” says Amina Yusuf, a grain seller. “People don’t buy the way they used to. They now buy half of what they bought last year.”

This contrast defines Nigeria’s economic story in 2026. The country has regained macroeconomic stability after years of turbulence, but that stability has yet to translate into broad prosperity.

PwC recently described the gains as “fragile and highly exposed.” Even the World Bank’s praise of Nigeria as a “global reference point for reform” comes with the understanding that international approval does not automatically improve household welfare.

The View from the Boardroom

Sam Ado, PwC’s Regional Senior Partner for West Africa, describes the moment as one that requires “two lenses.” At a recent PwC Executive Roundtable in Lagos, he explained that business leaders are forced to look both short- and long-term simultaneously.

“On one hand, CEOs are focused on immediate risks, geopolitics, cyber threats, global uncertainty,” Ado said. “On the other hand, they are looking ahead to opportunities in technology, artificial intelligence, and innovation.”

From the long-term view, confidence is rising. PwC’s 29th Global CEO Survey shows that 90 per cent of Nigerian CEOs expect economic improvement in 2026, up from 64 per cent a year earlier. More than half are confident their companies will grow revenues, far above the global average.

This optimism is not without basis. Exchange rate stability has restored predictability that was missing for much of 2023 and 2024. Companies can now plan budgets and investments without constantly hedging against currency shocks. The stock market reflects this renewed confidence, with market capitalisation rising to about N99.4 trillion. Many firms that delayed expansion during the worst of the volatility are cautiously investing again.

Still, Ado offered a reminder: “Macroeconomic stability is not the same as success. It is only the foundation. Sustainable growth still has to be built on it.”

The Warning from the Watchtower

Economists, while acknowledging the progress, remain careful. Olusegun Zaccheaus, PwC’s Chief Economist for West Africa, says the recovery has yet to reach ordinary consumers.

“The numbers look good at the macro level,” he said. “But there is a clear gap between investment recovery and consumer recovery.”

Data support this concern. Nominal household spending rose in 2025, but when adjusted for inflation, real spending actually declined. Nigerians are spending more money but buying less.

According to PwC projections, poverty could rise to affect about 62 per cent of the population, roughly 141 million people, by the end of the year.

Growth is also uneven. Oil and gas, boosted by reduced theft and new investments, are expected to lead the expansion. Services, especially finance and technology, are performing well. Manufacturing, however, remains constrained by high costs and limited access to foreign exchange. Agriculture, which employs the majority of Nigerians, continues to face insecurity and climate-related pressures.

“The sectors driving growth are not the ones employing the most people,” Zaccheaus warned. “That is the core challenge.”

The Ghost of Elections Past

Hovering over the outlook is a familiar Nigerian concern: elections. With 2027 approaching, economists worry about the return of pre-election spending pressures that have derailed past stabilisation efforts.

History is instructive. In 2018, inflation was kept in check despite election-related spending. In 2022, however, monetary expansion, combined with foreign exchange volatility, pushed inflation sharply higher. Today, the money supply has already grown significantly, raising fresh concerns.

The PwC report notes that pre-election fiscal pressures could reignite inflation. Put simply, political demands may clash with economic discipline.

Under Governor Yemi Cardoso, the Central Bank has pursued a tight monetary policy, keeping interest rates high to control inflation. While this has helped stabilise prices, it has also restricted credit to businesses. Any premature easing, whether for political or growth reasons, risks undoing recent gains.

Oil and the Vulnerability

Nigeria’s dependence on oil remains its biggest vulnerability. Despite years of talk about diversification, government revenue and foreign exchange earnings still rely heavily on crude oil. The budget’s break-even oil price is around $60 per barrel. Current prices offer some comfort, but oil markets are famously unpredictable.

S&P Global Ratings projects strong credit growth in 2026, driven largely by oil and gas investments. While positive in the short term, this increases exposure to price shocks. Analysts noted that a sustained decline in oil prices would reduce government revenue, weaken the naira, and strain banks.

The Fiscal Arithmetic of Impossibility

Behind the improved indicators lies a difficult fiscal reality. Nigeria’s public debt stands at about N152 trillion. Debt servicing consumes roughly 45 per cent of federal revenue.

A Lagos banker, Stephen Ogunsola, argued that the projected 2026 deficit of N24 trillion will require more borrowing at a time when global interest rates are high.

Kenneth Erikume, PwC’s Tax Strategy Leader, summed it up bluntly: if this were a household budget, it would be unsustainable. While governments can raise taxes, Nigeria’s tax-to-GDP ratio remains low, and collection capacity is limited.

The per-capita budget of about $288 highlights the problem. Compared with peers such as South Africa, Nigeria lacks the fiscal space to invest heavily in infrastructure, education, and security. Ambitions of rapid growth and a $1 trillion economy are possible on paper, but difficult in practice without stronger state capacity.

The Path Forward

For businesses, 2026 calls for careful judgment rather than unquestioning optimism. PwC’s Executive Playbook emphasises selectivity, resilience, and adaptation. Companies are advised to focus on sectors with built-in protection against shocks, plan for volatility, and invest in technology that improves productivity.

Digital transformation and artificial intelligence are becoming essential tools, not optional extras. But success depends on proper governance, skills, and cybersecurity, areas where many firms still lag.

At the African Business Convention, NGX Chairman Umaru Kwairanga struck a hopeful note, saying Nigeria has the resources to achieve a $1 trillion economy. The capacity may exist, but execution remains the real test.

President Bola Tinubu often says Nigeria has passed the hardest stage of reform. In whatever way this is viewed,  the shock of subsidy removal, exchange rate unification, and tight monetary policy has been absorbed. Stability has returned.

But economic watchers argued that the journey from stability to transformation is far from complete. Praise from global institutions and caution from analysts reflect the same truth: reform credibility must now deliver real improvements in daily life.