…Sovereign credit rating upgrades, improved market access, and the prospect of index re-inclusion will strengthen credibility with global investors
MON DEC 15 2025-theGBJournal| Nigeria, the 2026 outlook reflects a shift from a rebound to a measured economic renewal.
The difficult reforms of the last few years, including currency realignment, fuel price liberalization, tighter monetary policy and renewed efforts to strengthen public finances, have begun to bear fruit in the form of firmer confidence, improving macro stability and a broader base of growth.
In 2026, Nigeria’s economy is expected to gradually move beyond shock absorption and begin rebuilding around emerging drivers of expansion.
On the real side, growth is expected to be anchored by three reinforcing pillars – a more reliable energy sector, a slow but steady industrial growth, and an expanding services economy.
In oil and gas, the transfer of onshore and shallow-water assets to domestic operators, the construction of new evacuation and storage infrastructure, and improved security in producing areas are laying the groundwork for more stable output and fewer supply disruptions.
Improved farmer access to mechanized farm tools is expected to spur farm output, though security and climate risks will remain binding constraints. Manufacturing stands to benefit from easier access to credit, a more stable exchange rate and improved availability of fuel and feedstocks as large private refineries ramp up operations.
At the same time, incremental reforms in logistics, digital infrastructure, housing finance, and public–private partnerships are poised to drive growth in the services sector – particularly trade, real estate, ICT, finance, and transport – thereby reinforcing its position as the main driver of non-oil activity.
The 2025 tax reform Acts seeks to broaden the base, close leakages, and raise compliance while using carefully designed incentives to encourage investment in priority sectors such as manufacturing, agro-processing, gas, power, technology and exports.
If implemented transparently, with clear rules and effective digital platforms, these measures can deepen formalization and crowd in private capital rather than simply raising the tax burden on existing payers. In parallel, disinflation driven by a firmer naira, softer fuel costs, and improved food supply is expected to create room for sustained monetary policy easing.
A gradual reduction in policy rates and reserve requirements are expected to lower funding costs, support credit growth and reinforce the recovery in business investment.
External conditions are also expected to remain favourable for a firmer currency. Rising refined oil production and exports should partially cushion a potential drop in crude oil exports caused by lower oil prices and aid a steady decline in petroleum imports, sustaining a trade surplus.
Sovereign credit rating upgrades, improved market access, and the prospect of index re-inclusion will strengthen credibility with global investors, even as better carry trade opportunities buoy foreign portfolio interest in naira assets.
Long-term capital will remain concentrated in energy and associated infrastructure, but gradual improvements in the business environment may create an opportunity to broaden the pipeline over time.
Even so, 2026 is not without significant risks. The main vulnerabilities lie in the execution of reforms rather than their framework.
If tax implementation tilts too heavily toward short-term revenue mobilization, with complex rules and inconsistent enforcement, it could raise compliance costs, push activity back into informality and dampen investment appetite.
Security setbacks in oil- and food-producing regions, growing insurgency, climate-related disruptions, gaps in administrative capacity, and pre-election policy drift could all slow the pace of gains and pose a downside risk to growth.
Nigerian financial markets should remain resilient in 2026. Generally, we expect the fixed income market to be shaped by the expected disinflationary trend, slowly easing monetary policy stance, improving foreign exchange conditions, and continued fiscal improvements.
While we believe the directional bias is clearly downward, we cite that certain factors could disrupt the trajectory. Factors such as, elevated fiscal deficits, renewed FX inadequacies, reversal in disinflation which could force the monetary authority to delay or moderate rate cuts. All in, We see NTB and bond yields trending toward c.12.5% and c.12.9% by end-2026.
For equities, while risks remain present, the balance of probabilities remains favourable. All told, 2026 is positioned to extend the market’s recovery cycle as a progressively easing policy environment, firmer macro stability and deepening investor confidence reinforce both earnings resilience and valuation expansion across key sectors.
Essentially, we believe a firmer macro backdrop, earnings growth and attractive valuations should continue to underpin equity performance. We forecast the NGX All-Share index to return 34.9% by 2026 year end.-Analysis provided by Cordros Research
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