By Anthony Otaru
Three years after sweeping economic reforms reshaped Nigeria’s fiscal landscape, the country’s economy is showing unmistakable signs of recovery. Growth is strengthening, inflation is easing, investor confidence is returning, and the capital market is posting record gains.
Yet, beneath the encouraging macroeconomic indicators lies a stubborn reality: unless longstanding structural challenges in power, agriculture, transportation and security are resolved, the gains may prove difficult to sustain.
Economic analysts say President Bola Tinubu’s reforms have stabilised the economy and averted fiscal distress. However, they insist that the next phase must focus on translating macroeconomic stability into jobs, industrial expansion and improved living standards.
For much of the past three years, discussions about Nigeria’s economy have been dominated by the painful consequences of bold reforms, particularly the removal of the petrol subsidy and the liberalisation of the foreign exchange market.
Those policies initially triggered soaring inflation, weakened purchasing power and increased the cost of living, prompting widespread criticism from households and businesses.
Midway into 2026, however, emerging economic data suggest that the difficult adjustment period may finally be giving way to recovery.
With Gross Domestic Product (GDP) growth projections ranging from 4.0 to 4.4 per cent, inflation easing below the 15 per cent threshold, and the stock market reaching historic highs, analysts are asking whether Nigeria has reached a genuine economic turning point.
The broad consensus among regulators, economists and international financial institutions is cautiously optimistic.
They argue that while the government has succeeded in restoring macroeconomic stability, sustainable and inclusive growth will largely depend on removing structural bottlenecks that continue to constrain productivity in key sectors.
The International Monetary Fund (IMF) raised Nigeria’s 2026 growth forecast to 4.4 per cent, a projection matched by the World Bank, while PwC Nigeria estimates growth at 4.3 per cent.
Those forecasts place Nigeria ahead of the projected global growth average of 3.1 per cent.
The National Bureau of Statistics (NBS) also reported a significant moderation in inflation, which declined to about 15 per cent in early 2026 after reaching historic highs in previous years.
Reviewing the administration’s economic performance during his nationwide broadcast marking three years in office, President Tinubu defended the difficult reforms.
“Nigeria has successfully avoided a total fiscal collapse. We have navigated three years of difficult but necessary decisions. Today, our economy is showing undeniable signs of recovery, stabilisation and restored investor confidence,” he said.
The corporate sector appears to be responding positively.
The Nigerian Exchange All-Share Index has climbed from about 53,000 basis points in 2023 to more than 250,000 points in 2026, while market capitalisation has expanded to approximately N160 trillion.
Analysts describe the performance as remarkable for an economy that only a few years ago faced severe fiscal and foreign exchange pressures.
Perhaps the strongest endorsement of the government’s reform programme came on May 15, 2026, when S&P Global Ratings upgraded Nigeria’s sovereign credit rating for the first time in 14 years.
The agency attributed the upgrade to sustained structural reforms, particularly exchange rate liberalisation, improved foreign exchange liquidity and stronger investor confidence.
Nigeria’s external reserves have also improved significantly, rising from about $33 billion in 2023 to nearly $50 billion by March 2026.
The increase has been supported by stronger current account performance, subsidy removal, reduced import pressures and increased domestic refining capacity following the commencement of large-scale operations at the Dangote Petroleum Refinery.
Foreign exchange market liquidity has equally improved.
Average monthly FX turnover reached about $8.6 billion in 2025, while April 2026 alone recorded approximately $10 billion in market supply.
Inflation has also moderated considerably.
After peaking at 34.8 per cent in December 2024, headline inflation declined to 15.15 per cent by December 2025 before edging slightly higher to 15.69 per cent in April 2026.
The improvement has largely been attributed to tighter monetary policy, exchange rate stability and broader macroeconomic reforms.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, described the S&P upgrade as further evidence that Nigeria’s economic reforms are gaining international credibility.
According to him, the government remains committed to policies that will strengthen competitiveness, attract investment and sustain long-term economic stability.
Political economist Adefolarin Olamilekan believes the benefits of the reforms are only beginning to emerge.
He argued that the banking recapitalisation exercise, alongside ongoing reforms in the insurance and capital market sectors, would stimulate stronger economic growth.
“In this regard, several key sectors possess significant potential to drive economic growth, including banking, the capital market, oil and gas, telecommunications, real estate, construction, agriculture, manufacturing, mining, the creative industry and diaspora remittances,” he said.
He added that implementation of the 2026 budget, particularly capital expenditure and infrastructure investment, would provide additional fiscal stimulus.
According to him, campaign spending ahead of the 2027 elections could also boost activities in sectors such as printing, advertising, transportation, hospitality and event management.
Recovery is yet to reach ordinary Nigerians
Not all analysts, however, share the prevailing optimism.
Economist Dr Aliyu Ilias argued that while macroeconomic indicators have improved, the benefits have yet to translate into better living conditions for ordinary Nigerians.
According to him, global shocks, particularly the tensions involving Iran, Israel and the United States, have weakened many of the gains recorded through domestic reforms.
“The reforms are good, but they have not translated into a better life for Nigerians. Things remain more expensive.
“We would have enjoyed greater stability, but external shocks have eroded some of the gains,” he said.
Growth is returning, but unevenly. Nigeria’s first-quarter GDP report appears to support the recovery narrative.
According to the National Bureau of Statistics, the economy expanded by 3.89 per cent during the first quarter of 2026, broadly in line with analysts’ projections.
Agriculture recorded one of the strongest recoveries, growing by 3.15 per cent, while the industrial sector expanded by 3.50 per cent, reflecting modest improvements in manufacturing and construction.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, acknowledged the progress but urged caution.
“The period marked a significant turning point, with key macroeconomic indicators improving through foreign exchange reforms, tighter monetary policy and gradual normalisation of economic conditions,” he said.
“However, these gains remain constrained by structural challenges, including high energy costs, weak consumer demand and insecurity.”
Despite improvements across several sectors, economists say Nigeria’s electricity crisis remains the single greatest threat to long-term economic growth.
According to the CPPE, the electricity and gas sector contracted by 15.3 per cent during the first quarter of 2026, its weakest performance in recent years.
Yusuf described the development as a major warning signal.
“The sharp contraction underscores the deepening fragility of Nigeria’s power sector and raises serious concerns about the sustainability of economic growth and industrial productivity,” he warned.
He noted that the sector currently carries an estimated N4 trillion debt burden, calling for comprehensive reforms to improve market liquidity, transmission infrastructure, metering and governance.
He also observed that heavy dependence on diesel and petrol generators continues to erode profitability across manufacturing, hospitality, agriculture, SMEs and digital businesses.
For manufacturers, he said, improved macroeconomic indicators alone cannot offset the persistent challenges posed by unreliable electricity, poor logistics and inefficient ports.
Olamilekan agreed, describing stable electricity as the foundation of industrialisation and economic competitiveness.
“Steady power generation and efficient utilisation remain central to modern economic development. Unfortunately, Nigeria is still grappling with persistent electricity challenges. For sustainable growth, we must significantly improve power generation, transmission and distribution.
“The ongoing reforms are critical, particularly in addressing cost-reflective tariffs and the country’s persistent metering challenges,” he said.
Whether 2026 ultimately becomes Nigeria’s defining economic turning point will depend on what happens next.
The Tinubu administration has largely succeeded in steering the economy away from fiscal instability and restoring investor confidence.
But stabilisation alone will not deliver broad-based prosperity.
To sustain current growth and improve living standards, analysts say the government must channel the benefits of its reforms into addressing insecurity, fixing the power sector, modernising agriculture and expanding infrastructure.
Only then, they argue, will the impressive macroeconomic indicators translate into meaningful improvements in the daily lives of ordinary Nigerians.
