By Majeed Salaam
Africa’s economic resilience is once again being tested by geopolitical tensions, supply chain disruptions, tightening financial conditions and declining external development flows. Yet, amid these headwinds, Nigeria is projected to remain one of the continent’s more stable large economies, combining moderate growth, fiscal discipline and external sector strength, even as significant structural financing constraints continue to limit its development ambitions.
The African Development Bank (AfDB), in its ‘African Economic Outlook 2026’, paints a picture of a continent that continues to outperform expectations despite a fragmented global environment. Africa’s economy expanded by an estimated 4.4 percent in 2025, making it one of the world’s fastest-growing regions. Growth is projected to moderate slightly to 4.2 percent in 2026 before recovering to 4.4 percent in 2027.
Against this continental backdrop, Nigeria occupies a distinctive position. Unlike many African economies grappling with widening fiscal deficits, external imbalances and slowing growth, Africa’s largest economy is projected to record GDP growth of 4.1 percent in 2026, higher than South Africa’s 1.2 percent and broadly comparable with Morocco’s 4.2 percent. Nigeria is also expected to remain among the few major oil-producing African economies capable of sustaining growth above 4 percent despite global uncertainties.
Growth Driven by Services and Energy
According to the report, Nigeria’s economic outlook is anchored by continued expansion in the services sector, improved performance in oil and gas activities, as well as public consumption and investment spending. The AfDB projects growth of 4.1 percent in 2026 before a slight moderation to 3.7 percent in 2027.
The report highlights Nigeria’s improving business environment, reflected in the Purchasing Managers’ Index (PMI), which remained consistently above the critical 50-point benchmark throughout 2025. Nigeria recorded one of the strongest PMI improvements among Africa’s leading economies, supported by rising purchasing activity, inventory accumulation and resilient consumer demand.
For the AfDB, this improvement signals an opportunity for deeper structural transformation if supported by sustained macroeconomic reforms, lower logistics and energy costs, expanded credit access and greater foreign exchange market efficiency.
A Stronger External Position Than Most Peers
One of Nigeria’s strongest comparative advantages in the outlook is its external position.
While many African economies are projected to post sizeable current account deficits in 2026, Nigeria is forecast to maintain a current account surplus of 5.8 percent of GDP in 2026 and 4.1 percent in 2027. The surplus is expected to be supported by oil export earnings and remittance inflows.
This places Nigeria among a relatively small group of African countries expected to sustain positive external balances during a period when rising energy and fertilizer prices are projected to worsen import bills across much of the continent.
The fiscal outlook is similarly more favourable than many peers. Nigeria’s fiscal deficit is projected at 2.3 percent of GDP in 2026 and 2.5 percent in 2027, remaining below the levels projected for several major African economies. The AfDB attributes this to fiscal consolidation measures and stronger tax revenue mobilisation efforts.
The Inflation Challenge Remains
Despite these strengths, Nigeria continues to face one of the continent’s most persistent inflation challenges.
Consumer inflation is projected at 16.2 percent in 2026 and 13 percent in 2027, significantly above the continental average and well above levels projected for countries such as Morocco, Algeria and Côte d’Ivoire. Rising food prices, global commodity market pressures and supply chain disruptions remain key drivers.
The AfDB warns that inflation remains one of the principal threats to sustaining economic momentum and improving living standards, despite stronger headline growth figures.
Nigeria’s Real Challenge Is Financing Development
Beyond growth projections, the report identifies Nigeria’s biggest challenge as mobilising development finance at the scale required to close its infrastructure gap and sustain social investments.
The Bank notes that domestic revenue mobilisation remains weak, the informal economy remains extensive, and the country’s economic base is still too narrow to generate sufficient resources for long-term development needs. External financing inflows, while improving, are also not keeping pace with investment requirements.
The report further observes that Nigeria’s financial system remains relatively shallow. Stock market capitalisation averaged just 11.8 percent of GDP between 2020 and 2024, among the lowest levels on the continent. Cross-border payment costs and structural rigidities continue to limit productive capital inflows.
To address these gaps, the AfDB recommends deeper financial market reforms, stronger domestic revenue mobilisation, enhanced public-private partnerships, wider use of green bonds and blended finance structures, and improved security conditions to strengthen investor confidence.
Nigeria’s Position in Africa’s Next Growth Phase
The broader message from the African Economic Outlook is that Africa’s future growth will increasingly depend on domestic resource mobilisation rather than external assistance. The continent could unlock up to $1.43 trillion annually through better tax administration, improved public investment efficiency and stronger financial systems.
For Nigeria, the implication is clear. The country enters the next phase of Africa’s economic evolution from a position of relative macroeconomic strength compared with many peers. Growth remains positive, fiscal deficits are manageable and external balances are favourable. Yet sustaining that advantage will depend less on oil revenues and more on whether reforms can unlock domestic capital, deepen financial markets and convert economic resilience into broad-based development.
