The Centre for the Promotion of Private Enterprise (CPPE) has said Nigeria achieved notable macroeconomic stability in 2025 but warned that deep-seated structural and fiscal risks could temper growth prospects in 2026 if not decisively addressed.
In its Review of the Nigerian Economy in 2025 and Outlook for 2026 released on Sunday, Muda Yusuf, Chief Executive Officer of CPPE, noted that 2025 marked a turning point after the turbulence associated with the early phase of economic reforms.
Exchange-rate stability emerged as a major gain, with the naira trading largely within the N1,440–N1,500 to the US dollar band, restoring predictability to pricing, contracting and investment planning.
Inflation also moderated significantly during the year, decelerating from 24.48 per cent in January to about 14.45 per cent by November 2025. CPPE attributed the slowdown to currency stability, easing logistics pressures and improved supply conditions, noting that prices of several food items and imported consumer goods declined outright, helping to improve consumer sentiment.
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Business confidence strengthened, with the NESG–Stanbic IBTC Business Confidence Index remaining positive for most of the year. According to CPPE, many firms that recorded losses in 2024 returned to profitability in 2025, reflecting the benefits of stabilisation.
However, Yusuf described fiscal performance at the federal level as weak, largely due to persistent revenue shortfalls and rising debt-service obligations.
The organisation said the 2025 Federal Budget was based on optimistic oil assumptions of US$75 per barrel and production of 2.06 million barrels per day, while actual outcomes averaged about US$66 per barrel and 1.66 million barrels per day.
“Despite macroeconomic stabilisation, federal fiscal performance remained weak. Debt-service obligations continued to constrain fiscal space, undermining budget execution. Revenue underperformance persisted, largely reflecting sub-optimal oil sector performance.
“The 2025 Federal Budget was anchored on optimistic assumptions, US$75 per barrel oil price and production of 2.06 million barrels per day (mbpd). Actual outcomes fell materially short, with average oil prices around US$66 per barrel and production closer to 1.66 mbpd.
“Consequently, the projected ₦41 trillion revenue target was significantly missed, leading to weak capital expenditure implementation,” CPPE said, adding that debt servicing continued to constrain fiscal space.
In contrast, sub-national governments recorded relatively stronger fiscal outcomes, supported by improved liquidity, better internally generated revenue performance and enhanced execution of capital projects across several states.
On sectoral performance, Yusuf said the services sector remained the main driver of growth, accounting for about 53 per cent of GDP by the third quarter of 2025. The non-oil sector contributed 96.56 per cent of GDP and grew by 3.91 per cent, underscoring Nigeria’s gradual shift away from oil dependence.
Manufacturing, however, remained fragile, growing by just 1.25 per cent and contributing 7.62 per cent to GDP. CPPE attributed the weak performance to power deficits, high logistics costs, unfair competition from imports, weak access to finance and elevated operating expenses.
Agriculture recorded marginal recovery, growing by 3.79 per cent, but insecurity, low productivity and post-harvest losses continued to limit its impact on exports and revenue.
Looking ahead, CPPE expressed cautious optimism for 2026, projecting GDP growth of between 4.0 and 4.5 per cent, supported by moderating inflation and stronger non-oil sector performance. The organisation said easing inflation could create room for gradual monetary easing, stimulate private investment and strengthen domestic demand.
However, CPPE warned that several risks persist, including insecurity, oil price and production volatility, high energy and logistics costs, rising debt-service burdens, estimated at over N15 trillion in the 2026 appropriation and potential pre-election fiscal pressures. Emerging resistance to tax reforms and external geopolitical headwinds were also identified as downside risks.
Yusuf said sustaining reform momentum and addressing security and structural constraints would be critical to translating stability into inclusive growth.
“Overall, 2025 laid a solid foundation of macroeconomic stability. The outlook for 2026 is reassuring, with expectations of stronger growth, easing inflation, improving investor confidence and a gradual shift toward more inclusive expansion.
“If reform momentum is sustained and security challenges are effectively addressed, 2026 could mark the beginning of a more robust growth phase with tangible improvements in living standards,” Yusuf said.
