REFORM TALKS with Enam Obiosio
Nigeria’s economy is beginning to show clearer signs of macroeconomic stabilisation after nearly two years of intense policy shocks, currency volatility, inflationary pressure and fiscal adjustment. Yet beneath improving headline indicators lies a more difficult reality: many businesses are still struggling to convert those reforms into real productivity, lower costs, stronger hiring and industrial expansion.
That contradiction sits at the centre of the Nigeria Private Sector Outlook 2026 report, published by the Nigerian Economic Summit Group (NESG), which portrays the country as an economy moving from emergency stabilisation into a more delicate phase of structural rebuilding.
The report suggests that reforms introduced under the administration of President Bola Ahmed Tinubu, particularly exchange rate liberalisation, tighter monetary policy and broader fiscal adjustments, have succeeded in calming some of the instability that defined the immediate post-reform period. Real Gross Domestic Product (GDP) growth improved to 3.9 percent in 2025 from 3.4 percent in 2024, while inflation moderated from 33.2 percent to 23.3 per cent. Foreign reserves also strengthened to US$45.5 billion, while the naira traded within a relatively narrower band of about N1,500 to N1,580 per dollar for much of the year.
For the federal government, those figures represent evidence that difficult reforms are beginning to restore macroeconomic credibility after years of distortion, subsidy pressures and exchange rate fragmentation.
The reforms have also improved investor sentiment in segments of the financial markets. The Nigerian Exchange All-Share Index rose by 37.7 percent in 2025, supported partly by banking recapitalisation expectations and increased portfolio inflows. But the report argues that stabilisation alone is not enough.
A recurring theme across the analysis is that the benefits of macroeconomic reforms have not yet sufficiently reached the productive sectors of the economy. Manufacturing growth remained subdued at 1.4 percent, while agriculture expanded modestly at 2.9 percent despite its importance to employment and food security.
This divergence between improving macroeconomic indicators and weak industrial productivity increasingly defines Nigeria’s current economic transition.
According to the report, one major reason is that businesses continue to face deep structural constraints that reforms alone cannot immediately resolve. Energy shortages, infrastructure gaps, insecurity, high borrowing costs and logistics inefficiencies still weigh heavily on production and investment decisions.
Many firms reportedly operated at only 55 to 65 percent of installed capacity during the year because of unstable electricity supply and rising diesel costs. About 82 percent of Nigerian firms experienced frequent power outages, forcing many businesses to depend on generators for routine operations.
The report suggests that Nigeria’s reform challenge is therefore evolving. The first phase focused on stabilising fiscal and monetary conditions. The next phase may require more targeted productivity reforms capable of lowering production costs and improving industrial competitiveness.
This is particularly important because monetary tightening, while helping to moderate inflation and stabilise the foreign exchange market, also tightened access to productive credit. Private sector credit reportedly contracted from N78 trillion in 2024 to N75.8 trillion in 2025 as borrowing costs rose and banks adopted stricter lending standards.
For many small and medium-sized enterprises, the combination of high interest rates, rising rents, expensive energy and weak consumer demand created a difficult operating environment even as broader economic indicators improved. Yet the report also identifies important areas of resilience within the economy.
The services sector remained the strongest driver of growth, supported by Information and Communications Technology, finance, transportation and insurance. Transportation and storage grew by 16.9 percent, while finance and insurance expanded by 14.5 percent.
The oil and gas sector also recorded stronger performance as improved security reduced crude theft and supported higher production levels. Domestic refining activity improved significantly following the operational ramp-up of the Dangote Refinery, helping reduce petrol import dependence.
Still, the broader concern within the report is that Nigeria’s recovery remains uneven and insufficiently employment-intensive.
While some sectors linked to finance, technology and oil are expanding, large labour-absorbing sectors such as manufacturing, trade and agriculture remain constrained. This limits the ability of growth to translate into widespread income expansion and stronger household demand.
The NESG therefore argues that the next stage of reform must focus more aggressively on productivity enhancement rather than stabilisation alone.
That would require reforms aimed at reducing energy costs, improving transport logistics, expanding productive financing, supporting local value chains, deepening industrial capacity and strengthening technology adoption.
The report also warns that businesses are increasingly confronting newer forms of risk beyond inflation and exchange rate instability. Talent shortages, cybersecurity threats, weak consumer purchasing power and rising competition from more agile firms are becoming major operational concerns.
For the federal government, the implication is clear. Stabilisation may have prevented deeper economic deterioration, but sustaining growth will likely depend on whether reforms can now move beyond macroeconomic correction into broad-based productive transformation.
Nigeria’s economy, the report suggests, is no longer merely trying to recover from instability. It is now being tested on whether it can convert reform momentum into durable competitiveness, industrial expansion and inclusive growth.
