How devalued currency, debt pressures weigh on improvements in Nigeria’s economy

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…