By Grace Alegba, Lagos – December 28, 2025 – Nigeria’s economic landscape in 2025 laid a critical foundation for a potential growth acceleration in 2026, according to a comprehensive review by the Centre for the Promotion of Private Enterprise (CPPE). The private sector advocacy group highlights a year of hard-won macroeconomic stability that could finally translate into tangible improvements in living standards, provided key reforms and security gains are sustained.
In a detailed statement presented by its Chief Executive Officer, Dr. Muda Yusuf, the CPPE outlined a narrative of 2025 defined by significant gains in exchange rate management, inflation control, and a resurgence of business confidence. This stability, Yusuf argues, is the essential precursor to the stronger growth projected for the coming year.
The Pillars of Stability Achieved in 2025
1. Naira Stability: A Game-Changer for Business Planning
The most transformative achievement, according to the CPPE, was the dramatic stabilization of the Nigerian Naira. After a period of intense volatility, the currency traded within a remarkably narrow band of ₦1,440 to ₦1,500 per US dollar throughout much of the year.
Why this matters: For businesses, this predictability is invaluable. It reduces the “currency risk premium” embedded in every investment decision and import contract. Companies can plan expansion, set prices, and manage costs without the constant fear of a sudden, devastating devaluation. This stability directly curbed imported inflation—the inflation caused by the rising cost of foreign goods and raw materials—providing relief across the supply chain.
2. The Sharp Disinflation Trend
Inflation followed a steep downward trajectory, plunging from 24.48% in January to approximately 14.45% by November. This was not merely a statistical win. The CPPE attributes this to improved supply conditions—likely from better harvests and eased port congestion—and reduced logistics pressures. The result was a tangible decrease in the prices of many food items and imported goods, directly boosting consumer purchasing power and sentiment.
3. A Resurgence in Corporate Profitability
The confluence of currency stability and lower inflation breathed life back into the corporate sector. Dr. Yusuf noted a critical turnaround: “Many companies which recorded losses in 2024 returned to profitability in 2025.” This restoration of business confidence is a leading indicator for future job creation, tax generation, and capital investment.
Persistent Challenges: The Fiscal and Sectoral Headwinds
Despite these gains, the review struck a note of realism, highlighting areas of persistent weakness.
The Federal Fiscal Squeeze: Government revenues fell significantly short of projections. The 2025 budget was built on optimistic assumptions of oil production at 2.06 million barrels per day (mbpd) and a price of $75 per barrel. Reality proved harsh: production averaged just 1.66 mbpd, and prices hovered around $66. This created a major revenue shortfall from the projected ₦41 trillion, severely constraining the government’s ability to fund critical capital projects for infrastructure and development.
A Tale of Two Economies: Services vs. Production
The sectoral performance data reveals a stark dichotomy in Nigeria’s growth engine:
- The Service Sector Dynamo: Accounting for 53% of GDP, this sector was the undisputed growth leader. Telecommunications, finance, construction, real estate, and trade drove the expansion, showcasing the resilience and adaptability of Nigeria’s non-oil, knowledge, and transaction-based economy.
- The Struggling Productive Core: In contrast, manufacturing remained anemic, contributing a mere 7.62% to GDP and growing at just 1.25%. The CPPE pinpointed the classic constraints: chronic power shortages, high logistics costs, unfair competition from smuggled imports, and rising operating expenses. Agriculture, while showing a modest recovery (3.79% growth), continued to be held back by insecurity and low productivity.
The 2026 Outlook: Cautious Optimism with Clear Catalysts and Risks
Looking ahead, Dr. Yusuf projects a GDP growth of 4% to 4.5% for 2026, underpinned by a “cautious optimism.” The growth is expected to be fueled by:
- Sustained lower inflation.
- Stronger consumer demand stemming from improved purchasing power.
- Potential monetary easing (interest rate cuts) by the Central Bank, which would lower borrowing costs for businesses and individuals.
- A continued dominant role for the service sector.
- A potential blockbuster boost for capital markets: the anticipated listing of the Dangote Refinery, which could attract massive domestic and foreign portfolio investment.
However, the path is fraught with identifiable risks:
- Security: Persistent insecurity in food-producing and oil-producing regions.
- Oil Volatility: Fluctuations in global oil prices and production levels.
- Cost Pressures: High energy and operational costs for businesses.
- Fiscal Pressures: Government’s limited financial capacity.
- Geopolitical & Political Uncertainty: Global tensions and domestic political dynamics.
- Tax Reform Resistance: Public and corporate pushback against new tax measures, which could derail revenue mobilization efforts.
In conclusion, the CPPE analysis presents 2025 as a year where Nigeria managed to “stop the bleeding” and establish a platform of stability. The forecast for 2026 is brighter, but it is a conditional brightness. The stronger growth and better living standards are not automatic; they are directly contingent on the authorities’ ability to sustain reforms, decisively tackle insecurity, and navigate the complex web of global and domestic risks. The opportunity is clear, but its realization remains a policy-dependent outcome.
Edited by Sandra Umeh. Source: NAN News.
