Sustained disinflation, stable foreign exchange (forex), improving energy situation, growing reserves, bullish financial markets and new impetus to revenue in new tax laws and ports’ initiatives have set up Nigerian economy for momentous period in 2026. But it’s also a pre-election year, or more appropriately, the election year. The implementation of the new Nigerian Tax Acts, which started on January 01, is already symptomatic of the policy environment for the year. Politicking will moderate policy decisions- accentuating, decelerating, compounding and confusing, leaving the public the additional burden of shifting grains from the shafts.
Despite the downside risks, most analyses see growth and stability. The economy is expected to continue on growth path, with almost a consensus estimate of more than four per cent. Inflation will remain curtailed, fluctuating downward to nearly single digit. That should stimulate monetary easing, with positive multipliers on corporate earnings and returns. The naira is projected to remain stable, with a lean towards considerable appreciation.
Downside risks exist. The fiscal template depends on government meeting its revenue targets. Recent conflicts have heightened global oil risks, leaving less chances for domestic foibles. The N58.47 trillion 2026 Appropriation Bill rests largely on expectations of higher revenue. The 2026 Appropriation Bill projected total revenue of N34.33 trillion, total expenditure of N58.18 trillion, including N15.52 trillion for debt servicing, recurrent non‑debt expenditure of N15.25 trillion, capital expenditure of N26.08 trillion and budget deficit of N23.85 trillion, representing 4.28 per cent of GDP.
The budget was premised on crude oil benchmark of $64.85 per barrel, crude oil production of 1.84 million barrels per day; and exchange rate of N1, 400 per dollar. Key sectoral allocations included defence and security, N5.41 trillion; infrastructure, N3.56 trillion; education, N3.52 trillion and health, which got N2.48 trillion. The fiscal space for borrowings is already tight, and the government’s fiscal balance depends on disciplined implementation of headlining policy initiatives in ports’ revenue, taxes and remittances. Security remains the big elephant in the room, and everything else may depend on government’s handling of security issues.
In 2026, it’s either a consolidation of the macroeconomic reforms or a consideration for political leverage.
