Nigeria’s economy is forecast to grow by 4.2 percent in 2026, up from 4.0 percent in 2025, marking its strongest expansion since 2022. However, the country ranks 23rd among sub-Saharan African economies, according to BusinessDay’s analysis of the International Monetary Fund’s forecasts.
The IMF projects Nigeria’s growth to accelerate slightly to 4.3 percent in 2027, but both forecasts remain below the 4.5 percent expansion projected for sub-Saharan Africa in 2026.
Despite having a population of about 240 million, Africa’s most populous country is expected to grow more slowly than several regional peers. Ethiopia, with slightly more than half Nigeria’s population, is projected to be the region’s fastest-growing economy, expanding by 9.2 percent in 2026 and 7.8 percent in 2027.
Kehinde Jones, head of research and strategy at Anchoria Capital Group, said the lower growth outlook compared to its peers reflects structural challenges, including unreliable electricity, high production costs, insecurity, and limited access to affordable credit, adding that despite the nation’s large population, high inflation and low purchasing power continue to weaken consumer demand.
While both the IMF and World Bank have advocated for increased cash transfer programmes to ease pressure on the most vulnerable, the scheme has yet to deliver measurable outcomes.
‘The government should use available fiscal resources, including gains from higher commodity export revenues, to fund these interventions cushioning the impact of inflation on household welfare without placing excessive pressure on public finances or undermining long-term economic stability,’ Jones said.
African peers record higher projection
Several African economies are expected to expand more rapidly than Nigeria in 2026, according to the projections cited in the IMF report.
Rwanda is forecast to expand by 7.4 percent in 2026 and 7.2 percent in 2027. Benin is expected to grow by 7.0 percent in 2026 and 6.8 percent in 2027, and Uganda is projected to expand by 6.2 percent in 2026 before accelerating to 9.9 percent in 2027.
Côte d’Ivoire and Tanzania are both projected to grow by 6.0 percent in 2026, with the cocoa-rich nation forecast at 6.1 percent in 2027 and the gold-rich country at 5.9 percent.
Ghana is expected to grow by 5.7 percent in 2026 and 5.2 percent in 2027, while Kenya is projected to expand by 4.5 percent in 2026 and 4.7 percent in 2027.
Nigeria grows considerably faster than South Africa, whose economy is forecast to expand by 1.0 percent in 2026 and 1.3 percent in 2027. Within the report’s sub-Saharan African oil-exporter group, Nigeria matches the 4.2 percent aggregate forecast for 2026 and exceeds the group’s 4.1 percent forecast in 2027.
IMF attributes Nigeria’s growth outlook to improved macroeconomic stability and favourable terms-of-trade effects, an improvement in the relationship between export and import prices. However, it warns that higher prices for essential goods could further aggravate poverty and food insecurity.
That contrast runs through Nigeria’s outlook: stronger headline economic indicators do not necessarily translate into immediate relief for households.
Nigeria’s slowing inflation still above sub-Saharan African average of 8.6%
The report projects Nigeria’s annual average inflation to decline from 23.0 percent in 2025 to 15.6 percent in 2026, then to 14.7 percent in 2027. But it remains substantially above the sub-Saharan African average of 8.6 percent in both forecast years.
Its projected 2026 rate exceeds those of Ghana at 4.8 percent, Kenya at 6.0 percent, and South Africa at 4.4 percent. Improving price stability would therefore coexist with comparatively intense pressure on purchasing power.
The domestic outlook contrasts with the global picture. While Nigerian inflation is projected to ease, global inflation is expected to rise from 4.1 percent in 2025 to 4.7 percent in 2026, before returning to 4.1 percent in 2027. The report links the global increase primarily to higher energy and food prices.
Stronger external surplus to help naira stability
Nigeria’s current account surplus is projected to rise from 4.8 percent of GDP in 2025 to 7.0 percent in 2026, before narrowing to 4.4 percent in 202, helping the naira to remain firmer.
Its projected surplus exceeds the sub-Saharan African oil-exporter aggregate of 5.3 percent in 2026 and 2.8 percent in 2027.
‘The surplus lowers the probability of disorderly depreciation, but the currency’s durability depends on oil prices, portfolio flows and domestic policy discipline,’ Fashiku Taiwo, credit portfolio analyst at Koins Micro Finance Bank.
The current account covers trade in goods and services, primary income and transfers. A surplus indicates that the country’s receipts across these transactions exceed its payments. For financial market readers, the projected increase is a favourable external-sector signal.
Real per capita GDP to grow roughly half the pace of total output
Nigeria’s real GDP per capita is projected to grow by 2.1 percent in 2026 and 2.2 percent in 2027, compared with headline GDP growth of 4.2 percent and 4.3 percent. In other words, economic output per person is expected to improve, but at roughly half the pace of total output.
Nigeria’s projected per capita growth matches the global rate of 2.1 percent in 2026 but falls below the global forecast of 2.5 percent in 2027. It remains slightly above sub-Saharan Africa’s projected 2.0 percent in both years.
These figures help explain why stronger GDP growth may not feel like a rapid improvement in living standards.
Per capita output is an average, not a measure of how gains are distributed, and the report separately highlights continuing risks to poor households.
Emeka Soludo, advisory analyst at Leonine Investment Services, said that addressing the gap between headline economic growth and household reality emphasises that high potential structural policies must be matched by effective execution on the ground.
Soludo noted that focus should be directed towards seeing through policy execution, calling for targeted investments to ‘reduce the cost of transportation and logistics for food and people, perhaps through a more interconnected interstate railway system and boost agricultural output to lower food costs.’