Why Nigeria’s economy may suffer setback

The Nigerian Economic Summit Group (NESG) has explained why the country’s economy may suffer a serious setback.

NESG raised the concerns during the group’s quarterly media session in Abuja, warning that Nigeria risks slipping back into weak economic growth if current reforms are reversed or abandoned.

The group also warned that such a move could undo the fragile stability achieved in recent months.

There have been calls for the federal government to either change its ongoing economic reforms or abandon them totally in the face of current economic hardships brought upon by the US-Israel war against Iran.

Speaking, the Head of Research, Joseph Ogebe, said the country’s growth outlook could weaken significantly if policy direction changes.

He said projections show that reversing key reforms could push growth down to between two and three per cent, a level associated with periods of economic strain.

Ogebe explained that although recent policy changes have started to produce results, the progress remains delicate. According to him, abandoning the reforms would likely increase fiscal pressure on government, discourage investment and worsen poverty across the country.

He noted that economic growth has picked up compared to 2023, rising to about 3.9 per cent, while inflation has dropped sharply from the high levels recorded in that year to 15.06 per cent as of February 2026. However, he said these improvements have not yet translated into meaningful changes in the daily lives of many Nigerians.

Describing the current period as decisive, Ogebe said the choices made in 2026 would shape the country’s economic direction for years to come.

“This year is critical. The decisions we take now will determine whether the gains we are seeing can be sustained and expanded,” he said.

He added that Nigeria must target stronger growth of at least six per cent to make a real impact on poverty reduction. He pointed out that current expansion is concentrated in a few sectors, including finance, ICT and oil and gas, while key job-creating sectors such as agriculture and manufacturing are yet to perform strongly.

Ogebe also warned against renewed pressure to reintroduce subsidy policies, noting that previous arrangements placed a heavy burden on government finances.

“We got to a point where borrowing was used to sustain subsidies, leaving little room for investment in infrastructure and development. That approach is not sustainable,” he said.

Also speaking, the Chief Economist and Director of Research at NESG, Olusegun Omisakin, said Nigeria is gradually stabilising after a difficult period that brought the economy close to serious disruption.

He said while some reforms have created short-term challenges, reversing them would likely bring back inefficiencies and fiscal constraints that previously limited development spending.

“If such policies are rolled back, we may return to a situation where government struggles to fund capital projects and inefficiencies take over the system again,” Omisakin said.

He stressed that reforms require strong institutions and effective implementation to deliver results, adding that the focus should be on improving governance systems rather than abandoning policy measures prematurely.

Drawing from international experience, he noted that countries such as Ghana have faced setbacks after reversing key economic policies, warning that Nigeria should avoid a similar path.

Omisakin said there are early signs of recovery, including improved access to foreign exchange and increased investor interest, but cautioned that sustaining these gains would depend on consistent policy direction.

In her contribution, the Head of Public Affairs and Public Policy Development at NESG, Seun Ojo, said long-term commitment to reforms is necessary to achieve inclusive growth.

She said discussions at the 31st Nigerian Economic Summit focused on ensuring that improvements in the broader economy translate into better productivity, stronger resilience and fairness for citizens.

According to her, priorities identified include industrial growth, infrastructure development, increased investment, social inclusion and stronger institutions. She added that coordination across government and consistent policy execution would be critical to achieving these outcomes.

Ojo also said public trust would play an important role in sustaining reforms, noting that transparency and active engagement with citizens are necessary to build confidence and support for government policies.