Nigeria’s Economy Shows Signs of Recovery After Painful Reforms, Says The Economist

Task Manager
January 30, 2026

Nigeria’s economy may be showing early signs of recovery after years of stagnation and decline, according to an analysis by The Economist, which suggests that President Bola Tinubu’s sweeping economic reforms are beginning to yield measurable results. However, the publication notes that the gains remain fragile and that the social costs of reform continue to weigh heavily on millions of Nigerians.

When Nigeria returned to democratic rule in 1999, former President Olusegun Obasanjo embarked on an ambitious programme of economic liberalisation following decades of military mismanagement. Although initially criticised, those reforms eventually stabilised inflation, attracted foreign investment, and lifted annual GDP growth to around 7 percent by the end of Obasanjo’s second term in 2007. That momentum, however, was not sustained. Over the past decade, economic performance deteriorated, with GDP per capita declining and macroeconomic instability becoming entrenched.

In recent years, evidence has emerged that Nigeria could be approaching another potential turning point. Since assuming office in 2023, President Tinubu has introduced a series of far-reaching structural reforms aimed at stabilising the economy. As he prepares for a possible second-term bid in 2027, The Economist argues that these policies may be starting to pay off.

The scale of the challenge Tinubu inherited was considerable. By the time he took office, Nigeria’s central bank was burdened with approximately $7 billion in unmet obligations, eroding investor confidence and triggering capital flight. Years of loose monetary policy, mismanagement of foreign-exchange reserves, and an unsustainable multi-tiered exchange-rate regime had undermined the credibility of monetary authorities. Compounding these problems was the fuel subsidy, which cost the government an estimated $10 billion in 2022 alone, despite mounting fiscal pressures.

To address these issues, the Tinubu administration moved quickly to dismantle long-standing economic distortions. The government abolished the fuel subsidy and unified the exchange-rate system, allowing the naira to float more freely. The central bank tightened monetary policy aggressively to rein in inflation, while authorities sought to improve security in the Niger Delta and introduced tax incentives to revive oil production.

Nearly three years into the reform programme, the economic pain remains acute for many Nigerians. Fuel and food prices surged, pushing more households into poverty and straining the middle class. Nevertheless, The Economist notes that key indicators suggest progress. Inflation, which reached a near 30-year high of 34.8 percent in December 2024, fell sharply to 15.2 percent by December 2025. The International Monetary Fund projects economic growth of 4.4 percent in 2026, signalling renewed momentum.

Following sharp currency devaluations in 2023, the naira has stabilised, and foreign-exchange reserves have climbed to $46 billion, their highest level in seven years. Improved macroeconomic stability has also helped restore investor confidence. In January, Shell announced plans to finalise a $20 billion offshore oil development by 2027, while Exxon Mobil committed $1.5 billion to deepwater projects over the same period.

Domestic business leaders have also grown more optimistic. Oil and gas output is rising, driven largely by local firms improving operations in the Niger Delta, where enhanced security has reduced disruptions. A weaker naira has begun to improve the competitiveness of non-oil exports such as cocoa and cashew nuts, potentially diversifying revenue sources.

Despite these improvements, significant risks remain. Savings from subsidy removal have largely been absorbed by debt servicing, which currently consumes about 60 percent of government revenues. Although officials have expressed a desire to reduce borrowing, budget projections suggest continued reliance on debt. Analysts warn that without cuts to public-sector wages or debt restructuring, increased revenues may not translate into better infrastructure or public services.

The Economist concludes that while Tinubu’s reforms may have pulled Nigeria back from the edge of economic collapse, it will take time before ordinary citizens experience tangible benefits. Falling inflation may ease pressure gradually, but high food prices and stagnant wages continue to erode living standards. To usher in a new era of broad-based growth, the publication argues, the government must move beyond stabilisation and focus on long-term investment and economic diversification.

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