‘Economy on brighter stead in H2’, says Dr. Yusuf

• CPPE hails H1 economic fundamentals

An economist and policy analyst, Dr. Muda Yusuf, said Nigeria is entering the second half of 2026 with its strongest macroeconomic fundamentals in several years than what obtained at the beginning of the year.

Instrumental to this feat are exchange-rate stability, moderating inflation relative to the exceptionally elevated levels of 2025, stronger external reserves, improved oil production and resilient financial markets, which have all contributed to reducing macroeconomic vulnerabilities and strengthening investor confidence.

Given the renewed confidence in the economy, Yusuf, who is also the Chief Executive Officer, Center for the Promotion of Private Enterprise (CPPE), noted that while the body remains remains cautiously optimistic of an improved economy, yet, the economic output performance is expected to remain positive, supported by financial services, telecommunications, construction, trade, oil refining and other service-sector activities. It noted that although growth is likely to remain below Nigeria’s long-term potential, the economy appears firmly on a gradual recovery path.

“Inflation is expected to remain substantially below 2025 levels, although food supply disruptions, energy costs and developments in global commodity markets remain important upside risks. Exchange-rate stability should be sustained by stronger foreign exchange inflows, healthier reserves and improved market confidence,” Yusuf said.

Still, the economist’s optimism of an upscale in the economy is further buoyed by the financial markets which are expected to remain broadly resilient, supported by banking-sector recapitalisation, stronger corporate earnings, improved regulatory oversight and sustained institutional participation.

Importantly, Yusuf said improved domestic refining capacity and stronger crude oil production will also significantly support fiscal revenues, foreign exchange earnings and energy security.

He however cautioned that the second half of the year also presents an important downside risk to the gains recorded in the economy so far owing to the increasing intensity of political and electioneering activities ahead of the 2027 elections.

“Election-related spending could inject additional liquidity into the economy, with possible implications for inflationary pressures, foreign exchange demand and macroeconomic management. There is also a risk that growing political activity could distract policymakers from economic governance, reform implementation and the execution of critical fiscal and structural policy initiatives,” Yusuf cautioned.

The prospects now offered in the second half of the year, the CPPE boss said, are built on the gains recorded during the first half which was characterised the first half of the year. These, he explained, were reflected in the continued progress in macroeconomic stabilisation as economic growth remained positive, the foreign exchange market became more orderly, external reserves improved, crude oil production strengthened modestly and government revenues benefited from improved oil receipts and stronger non-oil tax collections, including the financial markets which also remained resilient, supported by improving investor confidence and policy credibility.

But notwithstanding these encouraging developments, the real economy, he argued, remained under considerable pressure with high interest rates continuing to constrain private-sector investment and access to credit, while elevated energy costs, inadequate electricity supply, logistics inefficiencies and weak transport infrastructure sustained a high-cost operating environment. Manufacturing, agriculture and MSMEs, he said, faced persistent competitiveness challenges despite improvements in macroeconomic stability.

“Insecurity continued to undermine agricultural production, disrupt supply chains and discourage investment across several sectors. Meanwhile, capital expenditure implementation remained below expectations because of procurement delays, funding constraints and debt-service pressures, limiting the growth impact of fiscal policy.

“Overall, H1 2026 was characterised by stronger macroeconomic stability but only modest improvements in real-sector performance and household welfare, underscoring the need for deeper structural reforms,” he said.

While Yusuf explained that the improvement in macroeconomic indicators provides an important foundation for sustainable growth, he nonetheless cautioned that these indicators are not all sufficient.

“The next phase of reform should focus on lowering production costs, improving productivity and strengthening the competitiveness of Nigerian enterprises. Priority should be given to improving electricity supply, transport infrastructure, logistics efficiency, and port operations; strengthening security in farming communities and along transport corridors; expanding access to affordable long-term finance for productive sectors; accelerating budget implementation, strengthening budget process credibility, and improving infrastructure delivery; and deepening domestic value addition.

“Government revenue should increasingly be driven by efficiency-enhancing reforms rather than additional tax burdens, while policy consistency should be preserved despite increasing political activity ahead of the 2027 elections. It is equally important to minimise governance distractions and ensure that electioneering does not weaken the pace of reforms, budget implementation or the quality of economic management,” Dr. Yusuf submitted.