2026: DISSECTING NIGERIA’S BOOM YEAR
Introduction
Nigeria’s New Economic Paradigm
We recall our instant rebuttal of the International Monetary Fund’s (IMF) forecast of Nigeria’s economic growth in April 2025 when it first projected that the economy in 2026 would grow at a miserly 2.7 per cent. We were righteously riled by that projection which was justified by the global lender on projected lower global oil prices.
We made it clear in that statement that the Nigerian economy under the current Federal Administration’s management had engendered a paradigm shift from perennial resource dependency on crude oil earnings to policy-driven economic facilitation. This refers to the deliberate use of government policies, regulations, and institutional frameworks to reduce obstacles, lower costs, and speed up economic activities, particularly in trade and investment. The facilitation aims to foster sustainable, inclusive growth by improving efficiency and reducing red tape.
Seven months after that questionable projection, we have seen a volte-face in the offending projection. The IMF in an epiphany-like realisation of a resurgent Nigerian economy as reflected in the global multilateral institution’s revised Nigeriana economic outlook to a projected 4.4 per cent economic growth for 2026.
This is the highest GDP growth projection by IMF over the last 17 years, a real expression of confidence in the Nigerian economy.
Global and Domestic Consensus Around Nigeria’s Higher Growth Prospects
Beyond the IMF’s new GDP projection, we have observed a consensus around a higher than 4 percent economic growth performance expectation of the Nigerian economy by virtually all known individual and public economic commentators. While the Nigerian Government projected 4.68 percent growth in 2026, the Lagos Chamber of Commerce and Industry (LCCI) projected a massive 7 percent, 1.5 percent higher than the Nigeria Economic Summit Group (NESG) 5.5 percent for the year. PwC sustained the conservative threshold by projecting a 4.3 percent growth conditioned on higher oil price with the World Bank also revising its earlier 3.7 percent projection to 4.4 percent.
The agglomeration of these positive economic growth outlooks by domestic and global institutional players points to an emerging economic paradigm that emphasizes increased production and productivity momentum, foreign exchange stability, dis-inflation, galvanized foreign direct investment and inflow and unobtrusive regulatory environment, pivoted on policy-driven economic facilitation.
Available data indicate that this emerging economic paradigm and the new policy-driven economic facilitation environment are consequences of the economic reforms conceived and implemented by the President Bola Ahmed Tinubu-led federal administration.
2026 GDP Projection
Our analysis of available economic data indicates that all things being equal, the Nigerian economy will grow to a 5.5 percent threshold. This projection is resourced from observed data and economic trends in the Nigerian economy between 2024 and 2025.
To put things in context, in our January 2024 Policy Statement, after an objective analysis of the implementation of the federal government’s flagship reform policies headlined by the removal of fuel subsidy and liberalisation of the foreign exchange window, we declared without reservation that Nigeria will emerge economically and socially prosperous and stronger in the medium to long term on the back of deployment of the policies and other subsidiary policies that were necessary to transform and transit the nation’s old economic order to contemporary market-driven economic management template.
In an exemplification of our predictive analysis, we said: “From the conceptualisation and deployment of policies across multifarious sectors by the federal government, we are convinced that President Tinubu is putting in place new building blocks to serve as the bedrock of a new model for national economic growth and socio-political development.” (IMPI Policy Statement 001 – 30th January, 2024).
So, for us, understanding the background to the current developments and the philosophical underpinning of the economy, we submit that the year 2026 would be Nigeria’s boom year yet. We did not arrive at this projection lightly. First, as now attested to by global and domestic economic leaning entities, the Nigerian economy has been a well-managed affair since the reforms kick started in 2023. We commend the government of the federation for staying the course despite the initial storms of disruption recorded in the economy. It was the economy adapting to the hypodermic impact of the reforms.
Increasing Capital Acquisition by Corporates
A major indicator of an expanding economy is increasing capital acquisition by private sector operators. Nigerian companies, particularly in the oil, gas, telecoms, banking, industrial goods and agricultural sectors, are actively acquiring property, plant, and equipment (PPE) to expand operations and strengthen market positions.
Key 2025 transactions include MTN Nigeria Communications Plc which topped the list with N539.6 billion, Presco Plc’s 10,000-hectare plantation acquisition in Cross River and Ellah Lakes Plc’s purchase of over 11,700 hectares, among others. Large-scale investments are aimed at building capacity to meet consumer demand and reduce reliance on imports. This has direct consequences on production.
More impressively, Nigeria has moved up 15 places to 4th in Africa for foreign exchange (FX) accessibility according to the Absa Africa Financial Markets Index 2025. FX accessibility is a major bulwark in the measure of ease and convenience of doing business especially for foreign direct investors. The country has made one of its biggest improvements in years when it comes to how easy it is for investors to get and use foreign exchange. This jump is credited to sweeping FX reforms by the Central Bank of Nigeria (CBN).
Developments in financial account also supported the overall economic outcome with Foreign direct investment inflows rising to $720 million, while portfolio investment reached $2.51 billion, reflecting stronger non-resident participation in domestic debt and equity markets. We see a surge in foreign direct investment in 2026 along with increased access to FX.
Macroeconomic Stability and Enhanced Manufacturing Output
Macroeconomic stability is the cornerstone of any successful effort to increase private sector development and economic growth. Cross-country regressions using a large sample of countries suggest that growth, investment, and productivity are positively correlated with macroeconomic stability.
Macroeconomic stability exists when key economic relationships are in balance, for example, among domestic demand and output, the balance of payments, fiscal revenues and expenditure, and savings and investment. Nigeria continues to venture near this equilibrium. The impact is reflecting in the manufacturing sector amongst others.
Firms that are backward integrated and better aligned with domestic input sourcing are expected to benefit immensely from the nation’s improving macroeconomic fundamentals. Basic to this is the fact that for Nigeria import dependent manufacturers, FX stability alone offers meaningful relief on input costs and planning certainty.
In line with this, the Manufacturers Association of Nigeria (MAN) forecasts that the country’s manufacturing sector will grow by 3.1 per cent while contribution to real GDP is expected to rise to an impressive 10.2 percent in 2026, underscoring renewed optimism in the domestic manufacturing outlook.
These projected attainments would be accomplished through the incentives being channelled to the manufacturing sector, through the new tax laws, regulatory adjustments, and the operationalisation of the National Council on Industry (NCI) and other policy frameworks.
CBN Re-engineering of its Operations Playbook
The Central Bank of Nigeria’s decision to re-engineer its operations playbook to strict orthodoxy has signalled increased optimism with exchange rate stability and the prospect of easing interest rates. The result has been a huge contraction in the gap between the official and parallel market rates.
Foreign capital inflows are expected to grow further in 2026 as awareness heightens around the Non-Resident BVN and as Nigeria begins to reap the benefits of its exit from the grey list of the Financial Action Task Force (FATF) and the European Union’s removal of the country from its list of high-risk jurisdictions on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).
Nigeria exiting the two global financial restraining bodies’ list has signalled a major restoration of confidence and eases compliance frictions for correspondent banks with tangible benefits of an estimated $30 billion in potential investments in the country in 2026.
NGX Listed Companies Declaring Higher Profit
The country’s biggest firms have been recording strong profit growth. After years of foreign exchange volatility that eroded corporate earnings, a more stable naira in 2025 appears to be restoring profitability across NGX listed firms.
An analysis of NGX 30 listed firms shows that twenty-six (26) of the firms recorded a growth in after-tax profit by 72.7 percent to N7.6 trillion in the nine months of 2025 from N4.4 trillion in the same period of 2024.
This reflects a broad-based profit recovery, particularly among those companies with domestic production bases and moderate import exposure.
The surveyed firms include BUA Foods, MTN, Dangote Cement, BUA Cement, Geregu Power, Transcorp Power, Nigerian Breweries PLC, Lafarge Africa and International Breweries.
Others are Transcorp Hotel, Nestle Nigeria, Presco Plc, Okomu Oil, Dangote Sugar Refinery, Oando Plc, Transnational Corporation, Access Holding Plc, and Fidelity Bank.
The overall data show that as the naira steadied in 2025, corporate Nigeria began to regain balance after years of volatility-induced distortions. Companies’ profit margins are improving, cost management is firmer, financing plans are clearer, and companies yet to resume dividend payments will do so.
For instance, the telecom giant MTN Nigeria rebounded strongly, posting a N750 billion profit in the first nine months of 2025 reversing a N513 billion loss a year earlier. Revenue soared 57 percent year-on-year to N3.73 trillion, driven by data and fintech growth.
In the energy sector, Seplat Energy’s profit rose sharply to N146 billion, up from N52 billion in 2024, while Oando Plc earned N201 billion after several volatile years.
Power companies such as Geregu and Transcorp Power benefited from stable naira-denominated financing and improved energy demand from industries resuming expansion. Agricultural firms, notably Presco and Okomu Oil, posted strong earnings growth of 116 percent on the back of export competitiveness and efficient operations.
The near-profit explosion across listed companies is indicative of prospective performances of listed companies on the NGX with implications for production expansion, employment and wealth creation.
New Tax Laws and Nigeria’s Economic Buoyancy
The tax reforms, which took effect on the first day of January 2026, are projected to improve Nigeria’s tax mobilization. The federation’s revenue is expected to strengthen further, driven by the phased implementation of tax reforms, tighter compliance enforcement, expanded use of digital revenue systems, and improved remittance discipline across revenue-generating agencies.
In addition, Nigeria’s tax reforms will redefine how manufacturers operate, invest, and plan for growth. The law signals a clear policy shift towards a more coordinated and incentive-driven fiscal environment, particularly for the manufacturing sector. At the centre of the reforms are newly introduced Economic Development Tax Incentives targeting priority sectors such as manufacturing.
Under the scheme, eligible companies can obtain an Economic Development Incentive Certificate, granting a five per cent annual tax credit on qualifying capital expenditure for up to five years. Firms that reinvest profits may access longer incentive periods, while some manufacturing-related transactions are exempt from stamp duties.
The incentives are intended to tilt investment decisions in favour of local production and industrial expansion, particularly at a time when manufacturers are under pressure from import costs and foreign exchange volatility. These hold strong momentum potentials for increased production and productivity growth.
Beyond incentives, the Act revises capital allowance rules, providing clearer guidance on how manufacturers can claim deductions on plant, machinery, and industrial buildings. This could ease pressure on cash flow by allowing businesses to recover capital costs more quickly during the early stages of operation or expansion and further encourage increased PPE acquisition across sector.
The Act also introduces research and development deductions. It permits manufacturers to deduct up to 5 percent of turnover from taxable profits where spending is linked to innovation. This provision could encourage product development and technology upgrades, areas where many local manufacturers have historically lagged behind, due to funding constraints.
Another production bolstering factor is the clearer rules on input VAT credits which are expected to reduce disputes and prevent the accumulation of unrecoverable taxes on raw materials and capital equipment with manufacturers operating within the agriculture and agro-processing value chain standing to gain further advantages. These include income tax exemptions for the first five years of operation, zero-rated VAT on selected inputs such as animal feeds and fertilisers, and duty-free importation of machinery for agricultural production. Taken together, the measures could strengthen margins and free up resources for expansion, workforce development, and technology investment, improving the competitiveness of locally-made goods.
Key pro-poor provisions in the tax laws include full exemption from Personal Income Tax (PIT) for individuals earning ₦800,000 or less annually (covering minimum wage earners). Progressive taxation shifting more burden to higher earners. Elimination of numerous “nuisance taxes” that disproportionately affected small businesses and low-income households. Expanded reliefs, such as increased tax-free compensation for job loss or injury (from ₦10 million to ₦50 million) and incentives for agriculture and small enterprises.
These changes will harmonize levies, reduce multiple taxation, boost revenue without borrowing dependency, and stimulate economic growth.
Nigeria’s Emerging Supply Chain Sub-sector
In the realm of global commerce, supply chains are the backbone of economic activities, especially in emerging markets like Nigeria. These networks encompass all stages of production, from raw material sourcing to the final product delivery.
Nigeria’s integration into the global supply chain is advancing through a $2 billion logistics sector, driven by e-commerce, infrastructure investments, and AfCFTA, with growth expected to reach $3 billion by 2029. Key sectors include oil, agriculture, and manufacturing, though challenges remain in infrastructure, with logistics costs exceeding $29 billion annually.
We also see a geographical relocation of industry as a result of cheap labour. Nigeria offers significantly lower labour costs compared to China and other Asian economies, making it an ideal location for cost-conscious manufacturers particularly with AfCFTA providing access to 1.54 billion consumers while approximately 47 percent of Nigerian businesses have adopted digital solutions to optimize supply chain operations.
Nigerian Banks’ Credit to Real Sector to Increase
The challenge for Nigerian banks in the post-recapitalization era starting March 2026, is the operational compulsion to move from defensive balance-sheet positioning to carefully priced lending. At the household level, pressure on consumer wallets should continue to ease, as inflation is expected to fall below the long-run average and the CBN inflation target.
Omoniyi M. Akinsiju, PhD
Chairman,
Independent Media and Policy Initiative (IMPI)
January 2026
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