By Dr Felix Ijeh
As Nigeria enters 2026, the term financial reset is not rhetoric; it captures a shift in policy architecture and economic behavior shaped by tangible data from Nigeria’s fiscal and monetary landscape.
Lets break down what the numbers tell us about production, consumption, investment, and institutions pointing what they imply for households, businesses, and policymakers.
1. Macro baseline: Growth, prices, and fiscal reality
Growth:
Nigeria’s real GDP growth has shown resilience even under structural pressures. In Q3 2025, the economy expanded by 3.98% year-on-year, slightly faster than the 3.86% recorded in the same quarter of 2024, with services and agriculture contributing to the uptick.
Looking ahead, the Central Bank of Nigeria (CBN) projects growth around 4.49% in 2026, reflecting expected gains from stabilization in foreign exchange markets, reform continuity, and non-oil sector improvements.
Inflation dynamics:
Inflation has been a headline theme. After peaking at elevated levels, headline inflation moderated through 2025, partly due to a CPI rebasing by the National Bureau of Statistics (NBS). From 24.48% in January 2025, inflation dipped to around 21.9% by July 2025—a rare mid-year disinflation in Nigeria’s recent history.
By late 2025, inflation slid further to 14.45%, and business and household sentiment surveys suggest expectations of continued relative stability in the near term, though price pressures, particularly in energy and transport, remain concerns.
Fiscal position:
Fiscal adjustment continues, but challenges persist. In 2024, the fiscal deficit widened to approximately 7.6% of GDP, significantly higher than the earlier target of 3.8%, driven mainly by revenue shortfalls and unplanned expenditures.
The 2026 budget framework approved by government foresees a deficit near 3.6% of GDP, with debt servicing consuming a substantial share of projected spending.
2. Production: Structural shifts underway
Sector performance:
The Nigerian economy, after rebasing the GDP base year to 2019, now reflects a broader and more accurate picture of both traditional and emerging sectors. Nominal GDP in 2024 reached ₦372.82 trillion ($243bn)—about 30% larger than before rebasing, underlining the economic weight of previously under-measured activities like digital services.
In Q1 2025, key contributors to GDP included real estate, trade, crop production, and telecommunications—highlighting a shift from an oil-centric profile toward diversified services and non-oil sectors.
Agriculture and industry:
Agricultural output has remained positive but modest, growing in Q3 2025 at 3.79%, while industry expanded by 3.77%. These improvements, though meaningful, still lag behind services sector growth, which reached 4.15%—underscoring the ongoing structural challenge of broad-based productivity enhancement.
Production challenges remain linked to security, supply-chain disruptions, and infrastructure gaps, which continue to dampen potential output in key sectors—especially agro-industry, which employs a large share of the populace and underpins rural consumption.
3. Consumption: A pressured but adjusting household sector
Price pressures and real wages:
Even as headline inflation cools, the experience of Nigerians at the market level tells a harsher story. Food prices—central to daily consumption—have historically risen faster than general inflation, imposing heavy burdens on households that spend up to 70% of their income on food.
Electronic payment data points to robust monetary flows, with total e-payment transactions in 2024 reaching N1.07 quadrillion—a 79.6% increase over 2023. This suggests resilient consumption demand, though the bulk of this activity is likely necessity-driven rather than discretionary.
Consumer behavior reset:
Given elevated prices and tightening credit conditions, households are shifting toward essential spending and savings preservation. Discretionary consumption—luxury goods, non-critical services—faces downward pressure, forcing firms to rethink demand forecasts and inventory strategies.
4. Investment: Strategic realignment, not blind expansion
Private sector sentiment:
Business sentiment surveys reveal expectations of stable inflation, yet persistent concerns around energy costs, transport, and currency volatility temper investment enthusiasm.
Corporate investment is redirecting toward sectors with clearer long-term returns—technology, agribusiness value chains, financial services, and logistics. Infrastructure gaps, however, remain a soft spot, with high financing costs and policy uncertainty still evident in credit markets.
Public investment focus:
The 2026 budget proposal allocates significant capital expenditure aimed at infrastructure, security, education, and health—an acknowledgment of the need to crowd in private investment through improved public goods.
Yet, heavy debt servicing requirements constrain fiscal space, reinforcing the need for efficient public investment that yields tangible productivity gains rather than recurrent spending.
5. Institutions: Transmission and credibility at the core
Monetary policy transition:
The CBN’s policy stance reflects a shift from pure inflation targeting to a more balanced approach supporting growth while anchoring prices. The first interest rate cut in five years—to 27% in 2025—signals this adjustment.
Recovery in foreign reserves—above $42 billion at recent readings—combined with stronger external accounts, including balance of payments surpluses, enhances external stability and institutional credibility.
Fiscal institutions and reform:
Tax reforms and revenue-mobilisation efforts are beginning to show traction, but execution remains uneven. The persistent gap between budgeted and actual revenue highlights the need for stronger institutional capacity and transparency in public financial management.
6. Policy implications: What this means for you
For households:
Budget with an emphasis on essentials and savings. Price volatility—especially in food and energy—requires conservative planning and diversified income sources.
For businesses:
Align investment plans with sectors where reforms and consumer demand converge. Prioritise efficiency gains and supply-chain resilience over capacity expansion for its own sake.
For policymakers:
Sustain fiscal discipline while protecting productive investment streams. Strengthening institutional quality—especially in revenue administration and public expenditure management—remains critical for long-term stability.
Conclusion: Reset with realism
Nigeria’s economic reset is built on measurable shifts in output, prices, and policy direction. Growth persists, inflation moderates, and external positions improve but these narratives carry nuanced implications for real consumption, investment, and institutional performance.
These dynamics help individuals, corporates, and governments make grounded decisions. The reset ahead favors data-driven planning, strategic resource allocation, and credible policy execution.
Stay informed, stay ahead.
