A comprehensive review of Nigeria’s economic performance in 2025 reveals a year of critical stabilization, setting the stage for what analysts project could be a period of accelerated growth in 2026. The Centre for the Promotion of Private Enterprise (CPPE), through its Chief Executive Officer, Dr. Muda Yusuf, has provided a detailed analysis that moves beyond simple forecasts to explain the underlying mechanics of this potential transition.
The Pillars of Stability Established in 2025
The most significant achievement of 2025 was the dramatic stabilization of the Nigerian Naira. After a period of intense volatility, the currency traded within a narrow band of ₦1,440 to ₦1,500 per US dollar for most of the year. This was not merely a statistical win; it had profound practical implications. For businesses, especially importers and those with foreign currency obligations, predictable exchange rates reduced hedging costs, allowed for accurate long-term planning, and curbed the imported inflation that had plagued the economy. This stability acted as a cornerstone for rebuilding investor confidence.
This confidence was further bolstered by a sharp deceleration in inflation. The headline rate fell from 24.48% in January to approximately 14.45% by November. This disinflation was driven by a confluence of factors: the aforementioned exchange rate stability, improved domestic agricultural output easing food supply chains, and a notable reduction in port congestion and logistics bottlenecks. The tangible result was a decrease in the prices of several staple food items and imported goods, directly improving household purchasing power and consumer sentiment.
Consequently, business performance rebounded. Many corporations that reported losses in the challenging environment of 2024 returned to profitability in 2025. This recovery, however, was not uniform across sectors, highlighting a critical divergence in Nigeria’s economic structure.
Sectoral Performance: A Tale of Two Economies
The service sector solidified its position as the dominant engine of the economy, contributing 53% to GDP by Q3 2025. Telecommunications, financial services, construction, real estate, and trade led this expansion, demonstrating resilience and adaptability. Overall, the non-oil sector grew by 3.91%, accounting for over 96% of GDP—a clear indicator of the economy’s gradual diversification away from crude oil dependence.
In stark contrast, the manufacturing sector remained in a state of distress, contributing a mere 7.62% to GDP with a sluggish growth rate of 1.25%. Dr. Yusuf identified the core structural constraints: chronic power shortages, high and unpredictable logistics costs, unfair competition from smuggled imports, and spiraling operational expenses. These factors continue to stifle industrial capacity and job creation. Similarly, agriculture, while showing a modest recovery at 3.79% growth, is still hamstrung by insecurity in key food-producing regions and chronically low productivity, preventing it from reaching its transformative potential.
Fiscal Realities and Subnational Bright Spots
The federal government’s fiscal performance underscored persistent vulnerabilities. Revenue fell significantly short of the ₦41 trillion target, primarily due to two factors: average oil production of 1.66 million barrels per day (mbpd) missing the 2.06 mbpd budget assumption, and an average oil price of $66 per barrel against a projected $75. This shortfall inevitably constrained vital capital expenditure. Interestingly, a counter-narrative emerged at the state level. Many state governments reported stronger Internally Generated Revenue (IGR), better liquidity, and more effective project execution, suggesting a decentralization of fiscal resilience.
The 2026 Outlook: Cautious Optimism Amidst Known Risks
Building on the foundation of macroeconomic stability, the CPPE projects a GDP growth rate of 4% to 4.5% for 2026. This optimism is predicated on several factors: sustained lower inflation boosting consumer demand, the potential for monetary policy easing if inflation remains subdued, and the continued dominance of the services sector. A potential game-changer for the capital markets could be the much-anticipated listing of the Dangote Refinery, which would provide a massive boost to market capitalization and liquidity.
However, this outlook is tempered by a clear-eyed assessment of substantial risks. The report highlights a familiar yet urgent checklist of threats:
- Insecurity: Persisting in farming belts and affecting transport corridors.
- Oil Volatility: Both production challenges and global price fluctuations.
- High Operating Costs: Especially energy and logistics for manufacturers.
- Fiscal Pressures: From debt servicing and revenue shortfalls.
- Geopolitical & Political Uncertainty: Both globally and domestically.
- Tax Reform Resistance: Growing public pushback could derail crucial revenue mobilization efforts.
In essence, the path from the stability achieved in 2025 to the stronger growth forecast for 2026 is not automatic. It requires policymakers to deliberately address the sector-specific bottlenecks in manufacturing and agriculture, fortify the fiscal position, and decisively mitigate the outlined risks. The stability gained provides a crucial runway; the takeoff towards robust, inclusive growth will depend on strategic policy execution in the coming year.
Analysis based on the CPPE Economic Review & Outlook statement by Dr. Muda Yusuf. Edited by Sandra Umeh.
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