Nigeria’s economy is exhibiting early signs of stabilisation, with the Central Bank of Nigeria projecting stronger growth and easing inflation for 2026. The apex bank forecasts GDP growth of 4.49 per cent, average inflation of 12.94 per cent, and external reserves climbing to $51.04 bn, driven by structural and monetary reforms. The CBN expects these measures, along with higher oil production, fiscal restructuring, and improved market discipline, to recalibrate the economy and foster a more competitive and resilient growth trajectory, SAMI TUNJI reports

Nigeria’s economy appears to be entering a phase of renewed stability, with the Central Bank of Nigeria projecting stronger growth and lower inflation in 2026, driven by key structural and monetary reforms. In its latest macroeconomic outlook, the CBN forecast that Gross Domestic Product will grow by 4.49 per cent this year, while inflation is expected to moderate to an average of 12.94 per cent. The bank also expects external reserves to rise to $51.04bn, while the cost of lending is projected to decline as monetary conditions gradually loosen.

These forecasts are rooted in the bank’s confidence that foreign exchange reforms, improved oil output, fiscal restructuring and stronger market discipline will underpin economic stability. The apex bank believes that its broader policy reforms will support a stronger, more globally competitive domestic economy. The past year has already been described as one marked by global uncertainty, domestic recalibration and institutional rebuilding, yet the authorities insist that clarity and policy purpose are gradually resetting the economy.

The CBN Governor, Olayemi Cardoso, recently reflected on the progress so far, saying the institution had worked deliberately to restore credibility, transparency and policy alignment. Speaking at the 59th annual Bankers Dinner organised by the Chartered Institute of Bankers of Nigeria, Cardoso said, “I am pleased to report meaningful progress on all three fronts, even as we remain fully aware of the work ahead. Our actions continue to reflect the policy direction we articulated from the outset; in other words, we said what we would do, and we have done it, transparently and consistently.”

The CBN has consistently pushed policies targeted at moderating inflation, boosting output growth, building up foreign reserves, and improving earnings from non-oil exports. The CBN expects reserves to reach $51.04bn, up from $45.01bn in 2025 and $40.19bn in 2024. The bank said this expected improvement would be driven by better crude output, improved local refining, higher remittances, and increased capital inflows. Supporting this view, analysts at United Capital Research have expressed optimism that Nigeria’s external reserves will continue their steady ascent, buoyed by stronger oil export receipts, robust diaspora remittances, and a favourable trade balance.

“With the reserves position strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market. This, in turn, should help to maintain relative stability in the naira across both official and parallel markets,” analysts at Cowry Assets said in a recent weekly market report.

The CBN further said in its outlook that the growth prospect in 2026 is positive on account of continued gains from broad-based structural reforms and improved stability in the exchange rate. It added that easing monetary policy would add impetus to growth following the anticipated reduction in lending costs.

The Central Bank kept its policy rate at 27 per cent at its November 2025 meeting, signalling confidence that inflation would continue to ease. Cardoso explained that the economy had moved from crisis containment to reform-based stabilisation. He said, “After nearly a decade in which real GDP growth averaged about two per cent, reforms have restored momentum and confidence in our broad macroeconomic environment. Our economy grew by 4.23 per cent in the second quarter of 2025, the strongest pace in four years, driven by improvements in telecommunications, financial services, and oil production.”

He also confirmed that inflationary pressures were easing. He said, “More importantly, in terms of long-term stability, inflation, while still high, has moderated consistently. From a peak of 34.6 per cent in November 2024, it has more than halved to 14.50 per cent in November 2025. This marks eight consecutive months of disinflation.”

Cardoso said this decline was restoring real purchasing power and solidifying policy credibility. He added, “We continue with determination to bring inflation down further. The current double-digit rate cannot be acceptable. Price stability is the foundation of sustainable growth. Our transition to an inflation-targeting framework is gaining traction. We have improved data analytics, strengthened communication, and ended monetary financing of fiscal deficits. These actions have strengthened monetary policy transmission and anchored expectations.”

He further stated that the CBN’s models project continued disinflation in 2026, helped by stronger production, improved FX liquidity and disciplined liquidity management. “As inflation moderates and becomes firmly anchored, we will calibrate the policy rate in line with evolving data.”

According to him, observers have recognised Nigeria’s turnaround. “Domestic and international observers alike have noted Nigeria’s ‘huge turnaround’ in macroeconomic management. Our commitment remains clear: monetary policy will stay evidence-based, data-driven, and unwavering in its pursuit of price stability.”

The bank also expects the current account surplus to rise to $18.81bn in 2026, supported by stronger exports, steady remittances and better petroleum sector performance. Portfolio inflows and external borrowings are expected to leave the financial account in a net borrowing position of $10.15bn, while the International Investment Position is projected at $69.58bn in net borrowing terms.

The CBN insists that reforms are already yielding results. It highlighted that the balance of payments posted an estimated surplus of $5.80bn in 2025, supported by higher export earnings and the gradual recovery of investor confidence.

In April 2025, the International Monetary Fund said that while the Nigerian government has taken important steps to stabilise the country’s economy, the impact of these reforms is yet to be felt by most citizens, as poverty and food insecurity remain high. In a statement, the IMF acknowledged that Nigerian authorities had taken bold fiscal and monetary measures in recent months, such as removing fuel subsidies, halting monetary financing of the fiscal deficit, and implementing reforms to improve the foreign exchange market. However, it noted that the benefits of those policies had yet to trickle down to the wider population. “Gains have yet to benefit all Nigerians as poverty and food insecurity remain high,” the Fund said in a statement published on its website.

While policy stability is improving, economists warn that the real challenge lies in ensuring these gains translate into better living conditions for Nigerians. Speaking earlier at the Seminar for Finance Correspondents and Business Editors in Lagos, the CBN Deputy Governor, Corporate Services, Ms Emem Usoro, said that despite recent gains in stabilising the economy, more work is required to strengthen macroeconomic fundamentals and improve the living standards of Nigerians. In a keynote address delivered on her behalf by the Acting Director of the Corporate Communications Unit, Mrs Hakama Sidi-Ali, she stressed that the progress recorded so far was insufficient to improve living standards significantly. “While progress has been made, more work is required to improve macroeconomic fundamentals and the standard of living for Nigerians,” she said.

The Director-General of the West African Institute for Financial and Economic Management, Dr Baba Musa, described Nigeria’s economic story as one of resilience and recalibration but warned that reforms must remain consistent. In his report titled Nigeria’s Economic Outlook at a Turning Point, he wrote that Nigeria has demonstrated determination in the face of domestic inflationary pressures, unemployment and infrastructure gaps. He stated that “to sustain the recovery, Nigeria must maintain macroeconomic stability, deepen structural reforms, and ensure that growth translates into tangible improvements for citizens. Achieving this requires collaboration among government, the private sector, civil society, and development partners.”

He added that the true measure of progress lies in whether Nigerians experience improvements in their daily lives. Musa said, “The real test, however, lies not only in achieving stability but in ensuring that it translates into tangible socio-economic outcomes: decent jobs, rising incomes, improved productivity, and broader social welfare. If Nigeria deepens reforms, invests strategically in human capital, and leverages its structural advantages, the country can achieve not only recovery but also inclusive and durable economic transformation.”

Musa explained that the growth outlook is supported by stronger crude production following operational reforms in the oil sector, improvements in services such as telecommunications, financial services and transportation, and better agricultural performance from improved weather conditions and mechanisation. He also highlighted that the recent GDP rebasing gives a more accurate picture of the economy, recognising emerging sectors such as digital services, creative industries and modular refining.

Global institutions have also acknowledged Nigeria’s resilience while warning about external risks. The World Bank, in its Global Economic Prospects report, stated that Nigeria will record three straight years of growth, with GDP rising by 3.6 per cent in 2025, 3.7 per cent in 2026 and 3.8 per cent in 2027. However, it warned that global growth is slowing, tariff tensions are rising, and uncertainty remains elevated worldwide.

Balancing reforms, risks and future growth prospects

The CBN remains confident that its reforms will help Nigeria consolidate its recovery. It forecasts a sharply higher current account surplus of $18.81bn in 2026, reflecting expected improvements in oil output, diaspora inflows and non-oil sector performance. It also expects portfolio inflows and external borrowings to deliver a net borrowing financial account position of $10.15bn, with the International Investment Position projected at $69.58bn in net borrowing terms as high yields attract investors.

The bank maintains that the relative foreign exchange stability achieved in 2025 came from reforms in the FX market, higher capital inflows, increased local refining capacity and rising export receipts.

These factors are expected to strengthen in 2026, further boosting reserves and confidence.

However, risks remain on the horizon. The bank warned that fiscal pressures, global economic shocks, oil production disruptions, climate risks and volatile capital flows could still weigh on the outlook. While inflation has slowed, domestic price pressures remain a concern and could resume if fiscal and monetary coordination weakens.

For the experts at Comercio Partners, non-oil activities are stabilising and helping cushion the impact of external and structural pressures. “Non-oil sectors are stabilising and providing a buffer against external and structural shocks, while the oil sector faces operational bottlenecks that limit its contribution to aggregate growth,” the investment house said, adding that “Future GDP performance will depend on improvements in oil-sector operations, continued non-oil expansion, and the transmission of monetary policy into investment and consumption.”

Cardoso stressed that the bank will continue to prioritise evidence-based policy. He maintained that the reforms had restored credibility and discipline to monetary management and would continue to evolve in response to economic realities. At the heart of the bank’s projections is a belief that economic stability, price moderation and structural reforms can create a more resilient Nigerian economy. However, the translation of these reforms into real income growth, job creation and social welfare remains the key test.

Economists agree that reforms in taxation, energy pricing, public sector management, security, and infrastructure remain critical to amplifying the gains from monetary stabilisation. The CBN also sees non-oil export growth as vital in reducing the economy’s vulnerability to oil price shocks.

FCMB Group Plc has secured a national banking licence for its flagship banking subsidiary after completing a major capital raise, positioning the lender to maintain domestic operations while pursuing the higher capital threshold required for international status under Nigeria’s ongoing banking sector recapitalisation programme.

The development comes as the Central Bank of Nigeria’s (CBN) recapitalisation exercise, introduced in 2024, continues to expose differing strategies among lenders ahead of the March 31, 2026 deadline. Under the new framework, banks operating with international licences are required to maintain a minimum paid-up capital of N500bn, while national banks must meet a N200bn threshold.

Regulatory filings show that FCMB crossed the national requirement following the successful completion of a N147.5bn public offer in 2024, enabling it to secure the national licence for its banking subsidiary.

The move places the group ahead of the minimum requirement for domestic banking operations and provides operational continuity as the recapitalisation process unfolds.

The group is now targeting the international licence benchmark through further capital raising initiatives.

These include a N160bn offer launched in late 2025 and a shareholder-approved capital raising programme of up to N400bn, subject to regulatory approvals.

If completed, the additional funds would lift FCMB above the N500bn threshold, expanding its operational scope beyond national borders.
Several tier-one banks, including Access Bank, Zenith Bank, Guaranty Trust Bank, United Bank for Africa, Fidelity Bank and First Bank of Nigeria, have already announced transactions that place them above the international capital requirement.

In contrast, other lenders such as Stanbic IBTC Holdings and Wema Bank are expected to retain national licences, reflecting varied balance-sheet positions and strategic priorities.
Market analysts say the divergence in approaches underscores differences in capital strength, risk appetite and timing rather than regulatory pressure. According to one fund manager, the recapitalisation framework allows flexibility in execution, noting that the key risk lies in missing the deadline rather than the pace at which capital is raised.

The recapitalisation exercise is also reshaping the broader banking landscape through mergers, asset divestments and strategic realignments. Smaller lenders are increasingly opting for regional or niche licences, while non-interest banks have largely met their capital requirements.

For FCMB, analysts say the outcome remains optional rather than existential. The national licence ensures business continuity, while securing an international licence would enhance strategic flexibility and growth prospects.

With market conditions still volatile, the final phase of the recapitalisation programme is expected to test execution capabilities across Nigeria’s banking sector.