Economic reforms, investment activity and improved external balances are expected to cushion Nigeria’s economic growth as the European Bank for Reconstruction and Development (EBRD) lowered its growth forecast for sub-Saharan Africa (SSA) in its latest Regional Economic Prospects report.
The EBRD forecast Nigeria’s economy to grow by 4.2 per cent in 2026, unchanged from its previous projection, before moderating slightly to 4.0 per cent in 2027.
The unchanged forecast for Nigeria contrasts with the bank’s broader downgrade of its outlook for SSA economies, with regional growth now projected at 4.8 per cent in 2026, down from 5.1 per cent previously, before moderating slightly to 4.7 per cent in 2027.
According to the EBRD, economic activity across SSA remained resilient in the first half of 2026, supported by services, agriculture and commodity exports. However, the external environment has become more challenging, with higher oil prices and disruptions to global trade routes linked to the conflict in the Middle East increasing costs across the region.
For Nigeria, the EBRD said growth is expected to be sustained by economic reforms, investment activity and improved external balances.
The bank, however, warned that higher energy prices, trade disruptions and climate-related risks could weigh on the country’s outlook and moderate the pace of economic expansion.
The EBRD said growth across the region is expected to remain supported in the near term by agriculture, manufacturing, services and commodity production, although momentum is projected to soften as commodity windfalls fade.
The report noted that progress on reforms has strengthened confidence in a number of African economies. Benin, Côte d’Ivoire and Ghana completed International Monetary Fund-supported programmes in 2026, while Benin, Kenya, Ghana and Nigeria received sovereign rating upgrades during the year.
Despite these improvements, high debt-servicing costs continue to constrain fiscal space in several countries, creating additional pressure on governments as they respond to higher energy and other external costs.
The regional outlook has also been affected by weaker cocoa prices, El Niño-related risks and disruptions to global trade routes, which the EBRD said would continue to weigh on prospects in several markets.
Among the major economies covered in the report, Benin is forecast to grow by 7.0 per cent in 2026 and 6.7 per cent in 2027, while Côte d’Ivoire is expected to expand by 6.1 per cent this year before accelerating to 6.5 per cent next year.
Ghana’s growth is projected at 5.0 per cent in both 2026 and 2027, down from 6.4 per cent in the first half of 2026. Kenya’s economy is expected to grow by 4.7 per cent in 2026 and 4.6 per cent in 2027.
The EBRD said higher freight costs linked to trade disruptions have affected Kenya’s exports and contributed to renewed inflationary pressures, while rising oil prices and El Niño-related risks remain concerns.
Senegal presents a sharper example of the fading commodity boost, with real GDP growth projected at 2.5 per cent in 2026 after the initial boost from the start of production at the Sangomar oil field faded. Growth is expected to pick up slightly to 2.7 per cent in 2027.
The EBRD said non-hydrocarbon sectors, particularly services, have strengthened in Senegal, while inflation has remained low and external balances have improved. However, significant fiscal vulnerabilities remain, with central government debt at around 120 per cent of GDP at the end of 2025.
Overall, the EBRD said the near-term outlook for SSA remains resilient but faces increasing pressure from external shocks, fiscal vulnerabilities and climate-related risks.
For Nigeria, the bank’s 4.2 per cent growth projection for 2026 indicates that reforms and improving external balances are providing some support to economic activity, although the moderation to 4.0 per cent growth in 2027 points to the challenges posed by a less favourable global environment and fading commodity-related momentum.