Nigeria has recorded significant progress in macroeconomic stability in the first half of 2026, but the recovery is yet to translate into better living standards or improved business conditions, the Centre for the Promotion of Private Enterprise (CPPE) has said.

In its half-year economic review and outlook released on Sunday, the Centre said improvements in exchange rate stability, moderating inflation, stronger external reserves, higher crude oil production and resilient financial markets have strengthened macroeconomic stability and boosted investor confidence.

However, it noted that the gains have yet to deliver broad-based improvements in productivity, employment, business competitiveness and household welfare.

“The defining policy challenge for the remainder of 2026 is therefore to convert improved macroeconomic conditions into inclusive, investment-driven and productivity-enhancing growth,” the report stated.

Recovery yet to ease pressure on businesses

According to the report, economic growth remains positive in the first half of the year, while the foreign exchange market becomes more orderly and government revenues improve on the back of higher oil receipts and stronger non-oil tax collections.

Despite these gains, the report says the real economy continues to struggle with structural challenges that persist despite the improving macroeconomic environment.

It notes that high interest rates continue to constrain private sector investment and access to credit, while elevated energy costs, inadequate electricity supply, poor transport infrastructure and inefficient logistics sustain a high-cost operating environment for businesses.

The report adds that manufacturers, farmers and micro, small and medium-sized enterprises (MSMEs) continue to face competitiveness challenges despite the improvement in macroeconomic conditions.

It also identifies insecurity as a major obstacle to agricultural production, saying it disrupts supply chains and discourages investment across several sectors.

According to the report, slower-than-expected implementation of capital projects, resulting from procurement delays, funding constraints and debt service obligations, also limits the growth impact of fiscal policy on economic growth.

Cautious outlook for second half

Despite the challenges, the report expresses cautious optimism about Nigeria’s economic outlook for the second half of 2026.

It projects that economic growth will remain positive, driven by financial services, telecommunications, construction, trade, oil refining and other service-sector activities, although growth is expected to remain below the country’s long-term potential.

The report also expects inflation to remain substantially below the exceptionally high levels recorded in 2025, while exchange rate stability is likely to be sustained by stronger foreign exchange inflows, healthier external reserves and improved market confidence.

It further projects that financial markets will remain resilient, supported by banking sector recapitalisation, stronger corporate earnings, improved regulatory oversight and sustained institutional participation.

According to the report, improved domestic refining capacity and higher crude oil production should also strengthen government revenues, boost foreign exchange earnings and enhance the country’s energy security.

Politics could threaten reforms

The CPPE, however, warns that increasing political activities ahead of the 2027 general elections could pose fresh risks to economic management.

It says election-related spending could inject additional liquidity into the economy, potentially fuelling inflationary pressures and increasing demand for foreign exchange.

The report also expresses concern that heightened political activity could divert policymakers’ attention from economic governance and delay the implementation of critical fiscal and structural reforms.

“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 report says.

Competitiveness takes centre stage

Beyond sustaining macroeconomic stability, the report argues that the next phase of economic reforms should focus on making Nigerian businesses more competitive by reducing production costs and improving productivity.

It recommends prioritising improvements in electricity supply, transport infrastructure, logistics efficiency and port operations, while strengthening security in farming communities and along major transport corridors.

The report also calls for expanded access to affordable long-term financing for productive sectors, faster budget implementation, improved infrastructure delivery and greater domestic value addition.

It further urges the government to boost revenue through efficiency-enhancing reforms rather than imposing additional tax burdens, while maintaining policy consistency despite growing political activities ahead of the 2027 general elections.

According to the report, the success of Nigeria’s economic management in the months ahead will be measured not only by stable macroeconomic indicators but by the extent to which ongoing reforms lower production costs, attract private investment, create jobs and improve the living standards of Nigerians.