Economy: Is this Nigeria’s boom year?

As Nigerians enter the new year with cautious optimism and unsure of how things would pan out in coming months, analysts are upbeat that things bode well for the economy in 2026, judging by indices and key fundamentals, which they are certain would manifest and project positively across all fronts, reports Ibrahim Apekhade Yusuf.

Certainly 2026 could be the much awaited glory year of Nigeria, if the assurances given by some economic and financial experts are anything to go by. Hope is rising for a further economic rebound in 2026.

The Central Bank of Nigeria (CBN), one of those institutions that controls the levers of the economy and should know which way the pendulum could swing, has given what could possibly be an assurance of what to expect. 

Specifically, it has said Nigeria’s external reserves would rise to $51.04 billion this year, supported by easing pressure in the foreign exchange market, stronger oil earnings and sustained inflows from remittances and foreign investments,

The apex bank disclosed this in its 2026 Macroeconomic Outlook for Nigeria published on its website last Tuesday, noting that the projected reserve level compares with an estimated $45.01 billion in 2025.

The CBN said the expected improvement in external reserves would be driven largely by reduced pressure in the FX market, anchored on a combination of higher oil receipts, sovereign bond issuances and steady diaspora remittance inflows.

It added that the ongoing expansion of the Dangote Refinery’s nameplate capacity to 700,000 barrels per day from 650,000 barrels per day in 2025, and ultimately to 1.4 million barrels per day in the medium term, would further strengthen reserve accretion.

According to the bank, recent reforms in the FX market are expected to further enhance efficiency and transparency, narrow the premium between the Nigerian Foreign Exchange Market (NFEM) and Bureau de Change (BDC) rates, and sustain exchange rate stability. Improved domestic refining capacity is also expected to significantly reduce foreign exchange demand for fuel imports, thereby easing pressure on the reserves.

The CBN said Nigeria’s external balance is expected to remain positive in 2026, supported by robust export growth and steady remittance inflows. It noted that the projected rise in export earnings hinges on increased crude oil and gas output, as infrastructure improvements and better security around oil installations boost production.

Overall, the external position is expected to benefit from improving demand conditions in major trading partner economies, reinforced by a projected uptick in foreign investments.

The current account balance is projected to record a higher surplus of $18.81 billion, representing 11.16 percent of gross domestic product (GDP) in 2026, compared with a surplus of $16.94 billion, or 10.94 percent of GDP, in 2025. This outlook is underpinned by steady diaspora remittances and increased export receipts.

In the goods account, export receipts are projected to rise to $58.26 billion in 2026 from $54.59 billion in 2025, driven by stronger oil and non-oil exports.

Oil export earnings are expected to improve on the back of higher domestic crude oil production, supported by improved security around oil facilities and sustained investments in the sector. In addition, the commencement of petroleum products exports in 2025 is expected to further lift export earnings.

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For non-oil exports, the CBN said sustained growth in agricultural commodity and fertilizer exports is expected to boost receipts. The recently launched National Export Trading Company, aimed at addressing persistent gaps in the export value chain, as well as the National Intellectual Property Policy designed to support creative exports, are expected to further strengthen non-oil export performance.

Imports are projected to increase to $43.27 billion in 2026 from $39.92 billion in 2025, reflecting anticipated higher demand for capital goods and intermediate inputs as economic activity strengthens.

The services account deficit is expected to widen to $13.68 billion in 2026 from $12.80 billion in 2025, driven by higher payments for business and transport services. The rise in business services payments reflects Nigeria’s increasing demand for research and development services, while payments for transport services are expected to rise in line with higher freight charges associated with increased imports of non-oil merchandise.

The primary income account is projected to remain in deficit at $8.62 billion, due to higher investment income payments to non-resident investors, as relatively attractive yields continue to attract foreign portfolio inflows.

Meanwhile, the positive performance of the secondary income account is expected to be sustained in 2026, with a projected surplus of $26.13 billion compared with $23.82 billion in 2025. This projection is based on anticipated growth in diaspora remittances through formal channels, as well as higher inflows of general transfers, particularly those linked to preparations for national elections.

The financial account is expected to remain in a net borrowing position of $10.15 billion, reflecting higher portfolio inflows and new external borrowings by the government, the CBN added.

Assurances of economic revamp by more experts

A leading economist, Bismarck Rewane, holds this view and very strongly too that Nigeria could enter 2026 on its strongest economic footing in more than a decade.

According to him, a combination of factors both complex and superficial including easing inflation, rising investment, major corporate listings and stabilising monetary conditions will propel the country into a new and more durable cycle of growth.

Rewane made his projections at the Parthian Economic Discourse 2025 in Lagos, mid last month, where he described 2026 as a defining year in which structural reforms, private-sector expansion and improved policy coordination converge to reposition Africa’s largest economy for a significant turnaround.

The economist hinged his optimism in what he says, are clearly visible signs at play in the key commanding heights of the economy including but not limited to – manufacturing, banking, technology, telecoms, the creative industry and real estate – under more favourable macroeconomic conditions.

He says matter-of-factly that after years of unstable inflation, exchange-rate distortions and suppressed investment, Nigeria is finally approaching an economic juncture where fundamentals and reform momentum can reinforce each other rather than work in conflict.

A major fulcrum of his forecast is an explosive expansion of the capital market, where he projects that the Nigerian Exchange’s total market capitalisation could jump to N262 trillion in 2026, up sharply from the current N90 trillion – a staggering 191% surge.

At that level, he notes, the market would represent 72% of Nigeria’s projected GDP, placing it among the fastest-expanding markets in the emerging-economies across the universe.

Pressed further, he said the coming expansion, no doubt, is anticipated because of the planned listings of mega corporates, including the Dangote Refinery and the Nigerian National Petroleum Company (NNPC), alongside accelerating profitability across sectors such as telecoms, cement, consumer goods and banking.

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Expectedly, he said investor sentiment is already shifting due to improving FX stability, sustained disinflation and stronger earnings guidance from top-tier companies.

He further maintains that Nigeria’s equity market is entering a new cycle powered by corporate expansion, regulatory reforms and the return of long-delayed market-moving listings.

Rewane also forecasts a significant easing of inflation in 2026, describing it as one of the most fundamental development to affect the nation’s economic recovery projections.

He also expects food and core inflation to fall to around 20%, driven by a firm disinflationary stance by the Central Bank of Nigeria (CBN), improvements in domestic refining capacity that will reduce volatility in fuel prices, stronger manufacturing output, rising productivity, and reforms aimed at lowering logistics and supply-chain costs.

With inflation easing, he predicts an improvement in household purchasing power, which will in turn stimulate demand across retail, services and industrial sectors.

On monetary policy, Rewane emphasises that 2026 will likely mark the beginning of cautious interest-rate cuts by the CBN after nearly two years of aggressive tightening. However, he warns that the apex bank will move slowly and conditionally.

He further argues that the CBN must first be convinced of sustained disinflation, improved liquidity control through robust CRR and liquidity-ratio management, more efficient FX market operations, strengthened reserves, and credible fiscal consolidation with reduced deficit financing. In his view, monetary authorities will be navigating a delicate balance – cutting too soon could reignite inflationary pressures, while cutting too late risks suppressing the investment momentum that Nigeria urgently needs.

Rewane predicts a more stable and stronger Naira in 2026, projecting that the exchange rate will appreciate and stabilise within the N1, 450 to N1, 500 per dollar band.

He expects this outcome to be supported by higher oil production and export earnings, improved FX supply from rising reserves, policy reforms that reduce arbitrage and speculation, favourable inflation-interest differentials that attract capital flows, and a moderation in import demand due to fiscal and trade measures.

He stresses that sustained exchange-rate stability will be central to investor confidence, business planning and macroeconomic predictability.

On overall economic performance, Rewane forecasts Nigeria’s GDP growth to rise to 4.1% in 2026, driven by expanding business activity, infrastructure improvements, industrial-policy execution, stronger private-sector credit, better trade flows and higher domestic value addition. He notes that consumption – which has been heavily eroded by inflation – is expected to recover gradually, while investment spending will be supported by strong government-bond issuance and public infrastructure expansion.

Rewane identifies six industries he believes will shape Nigeria’s economic direction in 2026: agriculture and agro-processing with projected earnings of ₦104.6 trillion; real estate and construction with ₦72.41 trillion; telecommunications with ₦41.07 trillion; manufacturing with ₦38.25 trillion; the creative economy with ₦7.23 trillion; and technology and fintech with ₦2.97 trillion.

He noted that each of these sectors is undergoing its own structural transformation driven by demographic pressure, digital expansion, urbanisation, regional trade integration and the broader macroeconomic adjustment.

Corporate earnings, according to him, will be one of the strongest indicators of renewed economic vitality next year.

He highlights MTN Nigeria and Dangote Cement as standout performers. MTN is projected to see Q1 2026 revenue rise to N1.7 trillion and Q2 revenue to N2.22 trillion, driven by data-led growth, cost efficiency and tariff adjustments.

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Dangote Cement is expected to post Q1 2026 revenue of N1.3 trillion and Q2 revenue of N1.37 trillion, with profit after tax in Q2 jumping by more than 100% to N628 billion, boosted by clinker exports, infrastructure demand and regional expansion. He argues that strong corporate results will play a critical role in sustaining investor confidence and driving market capitalisation higher.

The CEO of Financial Derivatives Company (FDC) Limited, also expects Nigeria’s banking sector to enter 2026 with strengthened stability indicators, helped by moderating inflation, reduced FX exposure as the naira stabilises, improved digital banking penetration, increased sector diversification, and stronger capital buffers following the recapitalisation exercise.

He predicted that the sector will be led by large universal banks with strong balance sheets, digital-first institutions and fintechs that continue to disrupt retail payments and SME finance.

On pensions, he projects that funds will experience short-term volatility at the start of 2026 due to global and domestic shocks but will recover strongly by year-end, with net asset value expected to rise to 12–15% as liquidity improves and political risk fades. He expects domestic equities and government securities to outperform as confidence returns.

Global shocks foretold

However, Rewane believes that Nigeria’s outlook will not be insulated from global turbulence.

He warns that geopolitical tensions, moderating commodity prices, potential declines in cocoa and other key exports, fragile global growth and shifts in global energy markets could affect Nigeria’s fiscal and market stability.

Domestically, he identifies four major risks that could upset the projections: oil prices falling below $60 per barrel, worsening insecurity in food -producing states, excessive election-year spending in 2026, and a sharp decline in global commodity prices if geopolitical tensions ease.

Ultimately, Rewane concludes that 2026 will be a year in which Nigeria’s economic direction is determined by the quality of policy choices, the discipline of fiscal and monetary authorities, and the country’s ability to secure its productive regions.

In his words, Nigeria is “standing at the threshold of a profound economic reset,” with the potential either to accelerate into a new era of stability and growth or stumble at the edge of transformation if reforms stall.

Echoing similar sentiments, Group Managing Director of Parthian Capital, Oluseye Olusoga, said Nigerians should take charge of the country and not leave it only to the government.

He said: “Security is not a job only for the government. It should be our own job too. Without security, investment won’t flow”.

Dr. Ayo Teriba, CEO, Economic Associates, has also projected that Nigeria’s inflation could slow to a single digit by January 2026 as the lag effect of ‘Detty December’ is poised to further cool prices that have remained in the double-digit range for more than five years.

Teriba projects that prices could ease to about 12 percent in December 2025 compared to about 33 percent it stood in the same period last year, noting that the cooling inflation was more of a lag effect than the rebasing exercise conducted by the National Bureau of Statistics last year.

“The steep deceleration in YOY inflation from 33% in December 2024 to 24.48%, in January 2025 was not the as a result of rebasing but the lagged effect of Detty December as steep retail price cuts continued into January and indeed less steeply to the rest of the year to the detriment of large retail chain stores that are now known to be closing down one after the other,” Teriba said in a statement recently.

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“This explains the -5.2 month on month deceleration in January 2025. This effect should repeat in January 2026 to push year on year inflation into single digits, where it will remain for the rest of 2026. We predict that the deceleration Detty December should repeat to bring YOY inflation to about 12% in December 2025.”

According to Teriba, Nigería is finally experiencing a return to economic calm for the first time since 2019/2020, urging the NBS to stay committed to communicating clearer data that would help restore confidence and decision-making as month-on-month data for January 2025 remains elusive.

“Never in recent memory has the NBS’ rebasing produced this level of ambiguity. The remedy is straightforward: publish the missing month-on-month figure for January 2025 and clarify the December 2024 index value,” Teriba said.

While attempting a post mortem of the performance of the nation’s capital market in the outgoing year, Dr. Umaru Kwairanga, Chairman of the Nigerian Exchange (NGX) Group, said the market has made measurable progress toward its strategic vision of a globally competitive, inclusive, and innovation-driven capital market.

The NGX equities market, he stressed, sustained strong performance in 2025, with overall turnover more than doubling year-on-year. The All-Share Index (NGX-ASI) registered robust gains, placing the NGX among the top-performing African stock markets in 2025 with a near 49.17% increase as of December 24, 2025.

Dr. Kwairanga identified policy and regulatory reforms, realigning financial sector capitalisation, and enhanced retail and institutional participation as key drivers of the market’s performance in 2025.

Recommendations for 2026

Looking ahead to 2026, Dr. Kwairanga recommended that stakeholders, regulators, and market operators work together to deepen market resilience, international competitiveness, and inclusive growth.

He suggested embracing long-term investment frameworks, leveraging technology for engagement, and focusing on environmental, social, and governance (ESG) practices.

Lending credence to the foregoing, Dr. Peter Adebola, financial expert and economist, who is also the Managing Director of Edgefield Capital Management, is very optimistic that the economy would indeed turn the tide in 2026, if all the boxes are ticked and the authorities push the frontiers of socioeconomic growth without faltering.