CPPE rates Nigerian economy performance for H1 2026, sees stronger growth ahead

The Centre for the Promotion of Private Enterprise (CPPE) has released its half-year economic review and outlook for the second half of 2026, projecting better growth supported by lower inflation and exchange rate stability. The think tank stated that Nigeria entered the latter half of 2026 with its strongest macroeconomic position in years.

Macroeconomic gains and sectoral growth drivers

The CPPE outlook, signed by Chief Executive Officer Muda Yusuf, noted enhanced foreign exchange reserves, stronger government revenues, stable financial markets and a more orderly FX market as key achievements. Yusuf said: "The economy appears firmly on a gradual recovery path."

Growth in the second half is expected to come from financial services, telecommunications, construction, trade, oil refining and other service sectors, though the CPPE noted performance remains below Nigeria's long-term potential. Inflation is anticipated to be lower compared to 2025's high levels, despite risks such as supply chain disruptions, energy price volatility and global commodity market fluctuations.

The think tank added: "Exchange rate stability is expected to be sustained due to increased forex inflows, robust reserves and heightened market confidence. Financial markets should remain resilient thanks to banking sector capitalisation efforts, stronger corporate earnings, enhanced regulatory oversight and ongoing institutional investment."

Business costs remain high despite stability

Despite the improving macroeconomic landscape, the CPPE highlighted continued high production costs for businesses. Elevated interest rates, unreliable power supply, logistics bottlenecks, transportation infrastructure gaps and insecurity remain primary drivers of these costs.

The CPPE stated: "Macroeconomic stabilisation has not yet translated into significant, broad-based improvements in productivity, competitiveness, employment and household welfare." It added: "Manufacturing, agriculture and micro, small and medium-sized enterprises (MSMEs) remain challenged by the high cost of borrowing that dampens private investment and security issues impacting agricultural production and supply chains. Delays in capital projects, funding limitations and increasing debt service expenses have also constrained the efficacy of fiscal policy in stimulating growth."

Election cycle risks and policy recommendations

The think tank cautioned that the impending 2027 general elections pose potential economic risks. Increased political activity could inject excess liquidity into the economy, sparking inflationary pressures and heightening demand for foreign exchange.

Yusuf cautioned: "There is also a risk that growing political activity could distract policymakers from economic governance, reform implementation and the execution of critical fiscal and structural policy initiatives." The CPPE recommends that the next phase of reforms focus on bolstering Nigeria's competitiveness through reducing the cost of doing business, rather than solely relying on macroeconomic stability. Recommendations include improvements in power supply, transportation infrastructure, logistics, port operations, security in farming communities, access to long-term financing, accelerated budget implementation and promotion of domestic value addition.

The CPPE also urged the government to boost revenue through efficiency-enhancing reforms instead of imposing additional tax burdens on businesses, while maintaining policy consistency throughout the election cycle. It concluded that while the macroeconomic recovery is an encouraging step, success will be measured by its impact on private investment, job creation, productivity and living standards.

Separately, Nigeria's external reserves have increased to $51.06 billion, exceeding the Central Bank of Nigeria's year-end target of $51.04 billion. The reserves have gained 32.62% compared to $38.50 billion in the same period in 2025, providing the CBN with a buffer to support the naira and settle international obligations.

For the naira and Nigerian businesses, the CPPE's assessment suggests that sustained exchange rate stability and lower inflation in the second half could ease pressure on the currency and consumer prices, but high borrowing costs and infrastructure deficits will continue to challenge the real economy.