Nigeria’s economic reforms have delivered stronger macroeconomic indicators, but the gains are yet to translate into broad-based prosperity, with capital inflows rising 83.8 per cent to $10.37 billion in the first quarter of 2026, even as foreign direct investment accounted for only 1.3 per cent of the inflows and poverty is projected at 63 per cent this year.
The latest PwC H2 2026 Nigeria Economic Outlook showed that the country’s macroeconomic stabilisation had produced significant improvements in foreign exchange liquidity, reserves, inflation and economic growth, but structural constraints, high financing costs and weak household purchasing power were limiting the conversion of these gains into inclusive growth.
The report showed that real Gross Domestic Product grew by 3.89 per cent year-on-year in Q1 2026, up from 3.13 per cent in Q1 2025, while headline inflation moderated to 15.91 per cent in June.
The naira also strengthened to ₦1,379.68/$ in June from ₦1,529.70/$ previously, while foreign exchange reserves climbed 38.3 per cent year-on-year to $51.46 billion. Market capitalisation rose 93.8 per cent year-on-year to ₦147.2 trillion.
However, the report warned that improved macroeconomic stability had not yet translated into stronger household welfare.
Food inflation rose to 17.52 per cent in June from 16.96 per cent in May, while the cost of a healthy diet increased by 4.68 per cent year-on-year to ₦1,589 per adult per day in April. Buying conditions for consumer durables, motor vehicles and property also remained weak in June.
The sharp increase in capital importation was largely driven by foreign portfolio investors rather than long-term investors.
Of the $10.37 billion in capital imported in Q1, portfolio investment accounted for $9.86 billion, representing 95.1 per cent of total inflows, while FDI stood at just $135.08 million, or 1.3 per cent.
The report noted that the opportunity for Nigeria was to convert the strong investor interest into long-term capital by improving policy certainty, developing a pipeline of bankable projects and creating a more competitive operating environment.
It also identified limited access to affordable finance as a major obstacle to private-sector expansion.
Private-sector credit stood at 21.3 per cent of GDP, below the 33 per cent Sub-Saharan African average and the 47 per cent average for lower-middle-income economies.
PwC identified a financing gap between ₦500,000 and ₦30 million, noting that most microfinance institutions lend up to ₦500,000, while commercial banks tend to focus on facilities of ₦30 million and above.
It recommended targeted credit windows, partial credit guarantees and blended finance to close the gap and support MSME expansion.
Nigeria’s weak infrastructure remains another major barrier to translating reforms into productive growth.
The country ranked 68th out of 70 economies in the 2026 IMD competitiveness ranking, with an overall score of 38.8. Its infrastructure score was only 5.21, ranking 70th.
In the power sector, 5.06 million of 12.38 million active electricity customers remained unmetered as of March 2026, while aggregate technical, commercial and collection losses stood at 37.44 per cent.
Looking ahead, PwC projected that Nigeria’s economy would grow by 4.2 per cent in H2 2026, supported by higher crude oil production and stronger performance in dominant sectors.
It expects inflation to moderate further and the naira to remain broadly stable, although both could face pressure from supply shocks, pre-election spending, global oil prices and capital-flow movements.
The Central Bank of Nigeria is expected to retain a tight monetary policy stance, with room for gradual rate cuts if disinflation is sustained.
PwC said the immediate policy priority should be to move beyond macroeconomic stabilisation towards inclusive growth by protecting household purchasing power, expanding affordable credit, improving infrastructure and security, accelerating investment projects, and converting foreign investor interest into productive assets and jobs.
SOURCE: tribuneonlineng.com
