Global geo-economic risks threats to Nigeria’s outlook, says NESG
Chief Executive Officer, Nigerian Economic Summit Group (NESG), Tayo Aduloju, has warned that while Nigeria has exited its worst phase of macroeconomic instability, the country now faces a “make-or-break” year
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Chief Executive Officer, Nigerian Economic Summit Group (NESG), Tayo Aduloju, has warned that while Nigeria has exited its worst phase of macroeconomic instability, the country now faces a “make-or-break” year in 2026 as global geo-economic tensions, domestic reform fatigue and rising political risks test the durability of recent gains.
Resident Representative, International Monetary Fund (IMF) in Nigeria, Christian Ebeke, also at the weekend, said Nigeria may be entering a new phase of economic resilience, but the country is not yet immune to global and domestic shocks, according to the
Speaking during the Nigerian-American Chamber of Commerce (NACC), Annual Roundtable on Economic Outlook for Nigeria, 2026 Presentation on the Economic and Commercial Outlook Between the US and Nigeria, in Lagos, framed Nigeria’s outlook within an increasingly volatile global context, he noted that the World Economic Forum (WEF) has identified geo-economic confrontation as the top global risk over the next two years, followed closely by misinformation and disinformation.
According to him, these risks define the environment in which national economic outlooks must now be assessed. “This remains the biggest trigger for a potential global crisis in 2026 if things do not go as planned,” he said, stressing that Nigeria’s recovery cannot be divorced from shifting global power dynamics and trade realignments led by the U.S.
Aduloju observed a paradox in Nigeria’s economic narrative: improving business sentiment alongside persistently weak household conditions. While managers’ confidence indicators suggest a more favourable outlook, performance has yet to match optimism. Inflation may be easing, he noted, but cost-of-living pressures remain elevated, and poverty levels have not stabilised.
“From a macro perspective, we are in a better place, but from a micro perspective, instability remains high,” he warned, adding that this gap could be exploited in the build-up to elections, undermining public support for difficult but necessary reforms.
Tracing Nigeria’s recent economic journey, the NESG chief recalled that the country emerged from a period of severe instability driven by inflationary pressures, foreign exchange (forex) controls, border closures and disruptive policy actions between 2022 and 2023. These pressures culminated in fiscal unsustainability, forcing the government to embark on far-reaching reforms that have since delivered measurable macroeconomic gains.
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According to Aduloju, Nigeria is now transitioning through three phases—stabilisation, consolidation and acceleration—but the process remains fragile, particularly as global disruptions intensify.
He pointed to recent shifts in U.S trade policy, including tariff actions and reciprocal trade assessments, as both a challenge and an opportunity. Nigeria, he said, has made tangible progress over the past year in addressing structural barriers to trade—ranging from customs reforms to sanitary, technical and intellectual property issues—positioning the country for renewed engagement with Washington. He also urged Nigeria to develop a focused national utilisation strategy for the African Growth and Opportunity Act (AGOA), following its short-term renewal, to demonstrate scale and unlock deeper trade and investment flows.
Despite these positives, Aduloju cautioned that the year carries elevated risks. Fiscal stress, though manageable, is crowding out growth-enhancing investments, while structural weaknesses persist across manufacturing, agriculture and export diversification. With the country entering a pre-election cycle, he warned that policy reversal risks are rising, particularly around tax and fiscal reforms. “This is typically the period when reform momentum is lost,” he said, calling for firm guardrails to prevent backsliding.
To navigate the period ahead, the NESG outlined a four-pillar consolidation framework centred on macroeconomic anchoring, structural transformation, institutional deepening, and social protection with job creation. If successfully implemented, Aduloju said Nigeria could achieve Gross Domestic Product (GDP) growth of about 5.5 per cent in 2026, moderate inflation to around 16 per cent and maintain FX stability, setting the stage for faster growth and poverty reduction toward the end of the decade.
He insisted on closer coordination between governments, the private sector and international partners—particularly the United States—to move beyond dialogue to concrete “deal books” that unlock large-scale investments across energy, infrastructure, manufacturing and technology. “Stabilisation has bought Nigeria time. What we do with that time in 2026 will determine whether we consolidate the gains or slip backwards,” Aduloju said.
Speaking on Nigeria’s economic outlook in Lagos, Ebeke noted that while much has been said about the country’s “newfound resilience” amid global uncertainty, the risks confronting Africa’s largest economy have merely evolved rather than disappeared. He explained that the IMF is currently finalising its annual Article IV consultation on Nigeria—one of the Fund’s most closely read and most debated country reports—reflecting Nigeria’s status as a systemic and globally significant economy.
A major shift, Ebeke observed, is Nigeria’s gradual decoupling from the traditional dependence of foreign exchange reserves on crude oil prices. In a striking contrast to historical trends, Nigeria is now accumulating FX reserves at a pace typically associated with oil prices near $100 per barrel—even as global oil prices remain relatively subdued. This, he said, marks a real and encouraging structural change in macroeconomic management.
However, Ebeke warned that the risks from oil and commodity price shocks have not vanished; they have merely become more indirect. Nigeria’s growing openness to foreign portfolio investment has created a new transmission channel for volatility. While oil price declines may no longer immediately drain reserves, sudden shifts in oil market dynamics or global sentiment could spook short-term investors and trigger capital outflows, putting renewed pressure on the FX market.
Beyond commodities, the IMF sees tightening global financial conditions and fragile investor sentiment as another key external risk. Since 2023, Nigeria has attracted large inflows of short-term capital to stabilise its foreign exchange market and clear a backlog of unmet FX obligations. When Ebeke assumed office, the Central Bank of Nigeria (CBN) was grappling with an FX backlog of about $6.7 billion—a constraint that significantly impaired market confidence. That backlog has since been cleared, helping to restore liquidity and improve price discovery in the FX market.
Yet the IMF cautions that reliance on volatile portfolio inflows is not a sustainable long-term strategy. Ebeke stressed the importance of gradually shifting toward more stable foreign direct investment (FDI), which provides longer-term capital, technology transfer, and job creation, while reducing exposure to sudden reversals in global risk appetite.
On the domestic front, election cycles remain a potential source of macroeconomic pressure, but Ebeke argued that Nigeria’s policy framework has changed meaningfully. In the past, election-related fiscal expansion was often financed through deficit monetisation by the central bank. That channel, he said, has effectively been closed. The Central Bank is no longer an “open tab” for deficit financing, forcing the federal government to fund spending through more orthodox and transparent means.
While this shift reduces concerns around federal-level election spending, Ebeke advised close monitoring of subnational governments, which now enjoy greater fiscal space. How states deploy this space during election periods could introduce new fiscal risks if not carefully managed.
Overall, the IMF sees Nigeria making tangible progress toward macroeconomic stability, but the path ahead remains narrow. Building buffers, attracting durable investment, and sustaining policy discipline will determine whether Nigeria can truly weather the next round of global and domestic shocks.