The Central Bank of Nigeria’s decision to reduce the Monetary Policy Rate from 26.5% to 23% is more than a monetary policy adjustment. It is a signal that the conversation may be shifting from stabilisation to growth.
For many of the last few years, policymakers have been preoccupied with restoring macroeconomic stability. Inflationary pressures, exchange rate distortions, foreign exchange reforms and declining investor confidence demanded a firm policy response. In that environment, restrictive monetary policy was both necessary and inevitable.
Today, the economic landscape is beginning to change.
Inflation has moderated from 24.48% in January 2025 to 15.39% in August 2026.
External reserves have strengthened from approximately $39.7 billion to over $54 billion, while confidence in the direction of economic policy has gradually improved. These developments do not suggest that Nigeria’s challenges have disappeared, but they do indicate that a foundation of stability is being rebuilt.
The question now is whether that stability can be translated into growth.
Lower interest rates alone do not create economic expansion. Economies grow when businesses invest, when entrepreneurs expand capacity, and when capital flows into productive sectors. This is why the next phase of Nigeria’s economic journey must focus on capital formation.
Nigeria requires deeper investment across manufacturing, infrastructure, agriculture, technology, energy and housing. While gross fixed capital formation stood at approximately ?60.5 trillion in 2024, significantly greater levels of investment will be required to unlock the country’s growth potential and accelerate job creation. Achieving this will require more than public spending. It will require private capital operating within efficient and trusted financial markets.
This is where the capital market becomes critical.
The Nigerian capital market has demonstrated its ability to mobilise long-term capital. The market has delivered approximately 60% year-to-date growth, with total market capitalisation expanding to about ?163 trillion. Beyond the numbers, this reflects increasing investor confidence in the market’s ability to finance enterprise, support business expansion and create wealth.
The significance of the current moment is further highlighted by landmark transactions such as the Dangote Petroleum Refinery IPO, which has the potential to raise approximately ?2.15 trillion. Transactions of this scale demonstrate what is possible when capital markets function effectively, connecting savings with productive investment opportunities while broadening economic participation.
For investors, this is not simply a period to react to changing interest rates. It is a period to reassess long-term strategy, diversification and portfolio positioning. For businesses, it is an opportunity to prepare for a potentially more supportive financing environment. For policymakers, it is a reminder that monetary easing alone is insufficient. Sustainable growth will require fiscal discipline, regulatory certainty, infrastructure development and continued policy consistency.
Ultimately, Nigeria’s future will not be determined by the level of interest rates alone. It will be determined by our ability to convert improving macroeconomic conditions into investment, productivity, enterprise growth and job creation.
Encouragingly, the economy expanded by 3.89% in the first quarter of 2026, suggesting that the foundations for the next phase of growth are already being laid.