• NESG projects foreign reserves to hit $52 billion
• Urges focus on manufacturing, agriculture to consolidate stabilisation gains
• Inflation ticks up to 15.15% in Dec. after months of decline
• Economist questions inflation rebasing, warns of flaws in new CPI framework

Nigeria’s economy is projected to grow by 5.5 per cent in 2026, with inflation moderating to 16 per cent and foreign reserves rising to $52 billion, according to projections released by the Nigerian Economic Summit Group (NESG) at the launch of its 2026 Macroeconomic Outlook yesterday.

The projections, presented by the Chief Economist and Director of Research at NESG, Dr Olusegun Omisakin, represent a significant increase from the 3.8 per cent growth recorded in the first nine months of 2025.

However, economists at the summit warned that achieving these targets depends critically on avoiding policy reversals and sustaining reform momentum.

“By emphasising the role of agriculture and manufacturing, we think we can do 5.5 per cent driven by the urgency of consolidation,” Omisakin said.

The NESG outlook centres on what it describes as the “Consolidation Phase” of Nigeria’s economic reform journey, positioned between the Stabilisation Phase of 2024–2025 and an anticipated Acceleration Phase from 2030 onwards.

Omisakin warned that Nigeria faces a “critical 18-month window” following stabilisation reforms, citing experiences from countries such as Ghana and Brazil, where initial gains were reversed due to policy inconsistency and reform fatigue.

“After a series of reforms to stabilise the economy, most countries are so satisfied with this that they relax. And after 18 months of non-consistent implementation and consolidation, the economy reversed. By 2027, if we are distracted by the gains we’ve seen now and we are not really going deep in terms of deepening our reforms and our institutions, the fear is we might not be able to achieve or go beyond what we have classified as consolidation rates,” he said.

The NESG Chairman, Mr Olaniyi Yusuf, reinforced this message, noting that while stabilisation had begun to show results, “stability is a necessary condition for growth, but it is not sufficient”.

“Growth remained modest and uneven. It was driven by a narrow set of sectors, with weak transmission to employment and household incomes. Real purchasing power remained under pressure, and welfare outcomes continued to lag behind macro indicators,” Yusuf said in his opening remarks.

The Minister of Finance and Coordinating Minister for the Economy, Mr Wale Edun, however, presented slightly more conservative government projections, stating that the economy is expected to grow by 4.68 per cent in 2026, with inflation averaging 16.5 per cent and the exchange rate settling at N1,400 to the dollar.

“The 2026 budget, aptly titled Budget of Consolidation, Renewed Resilience, and Shared Prosperity, reflects Mr President’s commitment to ensure that macroeconomic gains translate into real improvements in the lives of Nigerians,” Edun said, emphasising that success would be measured not by metrics but by tangible improvements in electricity supply, food availability and living standards.

Both projections mark a critical juncture for Africa’s largest economy, which has undergone painful structural reforms since mid-2023, including the removal of petrol subsidies and the unification of multiple exchange rates. These reforms triggered inflation, which peaked above 33 per cent in 2024 before moderating to around 21 per cent in 2025, following a rebasing exercise.

Despite the positive macroeconomic trajectory, both the NESG and the minister acknowledged significant structural challenges that could undermine consolidation efforts.

The manufacturing sector, which grew by only 1.5 per cent, and agriculture, which expanded by just 2 per cent, remain major concerns. Omisakin described these growth rates as risky signals, given the sectors’ importance for job creation and inclusive growth.

“To have 2.2 or 2.5 contribution to GDP growth in agriculture seems to me we are underplaying our strength and our capacity,” he said, adding that with proper support, particularly at the ports, agricultural growth could reach between 6 and 8 per cent.

The services sector, which accounts for nearly 60 per cent of GDP and is driven by financial services, transport and ICT, continues to power overall growth. However, trade activity has underperformed, reflecting weakened household purchasing power.

On the fiscal front, Edun revealed that implementation of the 2025 budget faced significant revenue shortfalls, with both revenue and expenditure reaching only about 60 per cent of annual targets by the third quarter.

“While non-oil revenue performance did improve significantly at the federation level, overall revenue was constrained by shortfalls in oil and gas receipts compared to where we had budgeted,” the minister explained.

The fiscal deficit stood at 3.4 per cent of GDP in 2025, slightly above the Fiscal Responsibility Act’s 3 per cent ceiling. Public debt rose to N152 trillion, just over $100 billion, although Edun emphasised that N30 trillion of this represented previously off-books “ways and means” borrowing brought into formal accounting, while another N50 trillion reflected exchange rate adjustments on dollar-denominated debt rather than new borrowing.

For 2026, the government projects a budget deficit equivalent to 4 per cent of GDP, with total revenue forecast at just over N1 trillion.

The minister stressed that reducing reliance on debt financing would require boosting revenue through the digitalisation of tax collection, the implementation of a central payment system, and the enforcement of the new tax laws, which he said “are designed to broaden the tax base, simplify compliance and exempt essential items, food items, and small businesses”.

Both the NESG and the government underscored the indispensable role of the private sector in achieving consolidation goals, particularly in the context of constrained public resources and retreating multilateral financing.

Edun called on Nigerians at home and abroad to invest in the domestic economy, noting that the removal of distortions had created a more level playing field.

The minister cited the expansion of a 90,000-kilometre fibre-optic network, supported by a World Bank project, as an example of infrastructure development aimed at empowering young Nigerians in the technology sector.

Omisakin stressed that the private sector must not only partner with the government but also “hold them accountable for reforms, which is one of the critical missions of the NESG”.

The NESG outlined four critical pillars for successful economic consolidation through 2029: macroeconomic anchoring, including single-digit inflation, foreign reserves above $50 billion, positive real interest rates and exchange rate stability; structural transformation focused on reviving manufacturing and agriculture; institutional deepening through stronger monetary-fiscal coordination and implementation of tax reforms; and evolved social protection that moves beyond traditional safety nets.

“It shouldn’t be business as usual protection, it should be protecting people to launch higher, protecting people to be part of the productive atmosphere,” Omisakin said.

The summit also featured the soft launch of the National Industrial Policy by the Federal Ministry of Industry, Trade and Investment.

Inflation ticks up to 15.15% in December after months of decline
NIGERIA’S headline inflation rate edged up to 15.15 per cent in December 2025, ending eight consecutive months of decline, according to the latest consumer price index released by the National Bureau of Statistics yesterday.

The figure represents a slight increase from the 14.45 per cent recorded in November, which the statistics agency attributed to heightened economic activity typically associated with the festive season.

Despite the uptick, the December 2025 inflation rate was 19.65 percentage points lower than the 34.8 per cent recorded in December 2024, reflecting a significant year-on-year moderation.

Food inflation, a major driver of price pressures in recent years, declined sharply. On a month-on-month basis, food inflation fell to minus 0.36 per cent in December from 1.13 per cent in November, representing a drop of 1.49 percentage points.

Year-on-year food inflation also eased substantially, falling to 10.84 per cent in December 2025 from 39.84 per cent in the corresponding period of 2024.

While the decline in food prices has brought some relief to households grappling with a high cost of living, it has raised concerns for farmers who are still struggling to recover production costs and investments.

Data from the NBS showed that Nigeria spent about N5.27 trillion on food and beverage imports in the first nine months of 2025, an increase of 11.7 per cent compared with spending in the same period of 2024.

The inflation data was released shortly after the Nigeria Economic Summit Group published its Business Confidence Monitor for December 2025, which painted a gloomy picture of the operating environment.

The report noted a relative slowdown in business performance during the month, attributing it to the continued rise in the cost of doing business across the country.

Manufacturers, in particular, complained about the high cost of energy, citing rising operating expenses and a loss of competitive edge. Although power supply was acknowledged to have improved last year, operators said they continued to pay a premium for electricity tariffs and alternative energy sources.

These developments have raised questions about the extent to which base effects alone explain the slight rise in inflation in December, as suggested by the NBS.

Prices of manufactured goods have continued to rise, reflecting higher production costs, while transport fares have remained elevated despite recent moderation in fuel prices, further pushing up logistics and distribution costs.

Economist questions inflation rebasing, warns of flaws in new CPI framework
The Group Chief Economist at the African Export-Import Bank, Mr Yemi Kale, has warned that Nigeria’s recent overhaul of its inflation data may be fundamentally flawed, potentially masking the true scale of the cost-of-living crisis facing the country.

Kale, who also led Nigeria’s 2014 GDP rebasing and served as statistician-general for a decade, raised the concerns while speaking at the Lagos Chamber of Commerce and Industry economic outlook event in Lagos.

He suggested that the National Bureau of Statistics may have “rushed” the transition to a new Consumer Price Index (CPI) framework.

The rebasing exercise shifted the base year for inflation measurement from 2009 to 2024, a move that saw headline inflation technically fall from above 34 per cent to about 15 per cent, a sharp drop that many Nigerians have struggled to reconcile with prevailing market prices.

“I think all the comments on the CPI and the true consistency are valid. I just assumed that some things were rushed. I don’t know why,” Kale said.

At the core of his argument is the issue of technical continuity in inflation tracking. He noted that standard statistical practice requires overlapping old and new data over a 12-month period to ensure consistency. However, by declaring previous figures non-comparable while introducing a new 2025 inflation series, the NBS has, in his view, created a gap that undermines year-on-year analysis.

“How do you calculate year-on-year when you say the previous numbers are not comparable?” Kale asked. “There are some questions that need to be answered regarding the CPI.”

The comments came as the NBS yesterday released the headline inflation figure for December 2025, which it put at 15.15 per cent. The bureau acknowledged that without a specific methodological adjustment, inflation would have appeared to “spike” to 31.2 per cent following the rebasing exercise.

To address this, the Statistician-General, Mr Adeyemi Adeniran, said the bureau moved away from using December 2024 alone as the base month, opting instead for a 12-month average for 2024 as the reference period.

Kale urged the government to move away from what he described as a defensive posture and engage more openly with independent economic experts to correct structural weaknesses in the data framework.

“Mistakes can be made and as long as you’re ready to fix errors and listen to experts, that’s what matters, not the defensive posture, it’s getting actual data,” he said.