DESPITE pockets of improvement in key economic indicators and non-oil exports, Nigeria’s recovery in 2026 is being blunted by an already devalued naira and mounting debt-servicing costs. The currency’s slide drove up the price of imported inputs, fuelling inflation and eroding household purchasing power, while a large share of federal revenue is now absorbed by debt repayments.

This leaves limited fiscal room for infrastructure and social programmes, preventing gains in GDP growth and revenue collection from translating into tangible relief for businesses and consumers.

Nigeria’s economy has shown clear signs of stabilisation over the past three years. Real GDP growth accelerated from 2.51 percent year-on-year in the second quarter of 2023 to 3.89 percent in the first quarter of 2026.

Headline inflation eased from 24.08 percent in July 2023 to 15.91 percent in June 2026, with food inflation falling from 26.98 per cent to 17.52 percent. Foreign-exchange reserves rose from $33.31 billion to about $52 billion, while crude oil production recovered from 1.08 million barrels per day to approximately 1.56 million barrels per day in June 2026 (1.735 million including condensates).

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The Purchasing Managers’ Index strengthened from 51.7 in July 2023 to 53.4 in July 2026, and capital inflows hit a six-year high of $23 billion in 2025.

Yet these advances have been constrained by structural pressures. The naira depreciated sharply in nominal terms, with the average official rate moving from around N770 to the dollar in 2023 to roughly N1,419–1,550 in early 2026. Although the exchange rate stabilised between N1,360 and N1,365 per dollar in recent months and the foreign-exchange market became less distorted, the weaker currency continues to raise import costs.

The Central Bank of Nigeria has maintained a tight stance, raising the Monetary Policy Rate from 18.75 percent in mid-2023 to 26.50 per cent by July 2026.

Public debt has also risen substantially in naira terms, from about N87 trillion in June 2023 to roughly N152 trillion by the end of 2025 and about N159.28 trillion ($110.97 billion) by mid-2026. After the 2025 GDP rebasing, the debt-to-GDP ratio has remained around 40 per cent or lower. Debt-service costs, however, remain a significant vulnerability.

The Federal Government spent N3.14 trillion on domestic debt servicing in the first quarter of 2026, a 20.3 per cent increase from N2.61 trillion in the corresponding period of 2025.

Nothing illustrates the impact of the weaker naira more clearly than fuel prices. In 2023, N4 billion equated to about $8.7 million and could purchase roughly 22.3 million litres of petrol at N180 per litre. In 2026, N16 billion is worth about $11.6 million yet buys only about 12.3 million litres at N1,300 per litre. The combined effect of fuel subsidy removal and currency devaluation has further eroded purchasing power.

Taken together, the data show an economy that has moved from acute stress in 2023 toward greater external resilience and modestly stronger growth by mid-2026. Inflation has moderated, reserves have been rebuilt and oil production has recovered. At the same time, high interest rates, a much weaker naira in nominal terms and elevated debt-service pressures continue to constrain broader recovery. Policymakers face the challenge of consolidating these gains while addressing the structural weaknesses that still limit faster, more inclusive growth.