Nigeria growth to strengthen in 2026 on cooling inflation, says Meristem

Nigeria’s economic outlook is set to improve in 2026 as moderating inflation, easing interest rates and sustained equity market value lay the foundation for stronger growth, according to Saheed Bashir, managing director/CEO, Meristem Stockbrokers.

Speaking at Meristem 2026 Annual Outlook with the theme ‘Stability to Strength: Panning Gems on Firmer Grounds’, Bashir noted that the stability achieved in 2025 is expected to translate into more robust economic performance in the year ahead, supported by fiscal reforms, improving market fundamentals and renewed investor confidence.

He said, “Despite equity market returns of over 50 percent in 2025, and some stocks exceeding 100 percent, fundamentals still point to significant value, indicating that the market is not overvalued and remains well positioned for further growth.

“Inflation data does not suggest an upward reversal. Instead, the disinflation trend observed in the second half of 2025 is expected to continue into 2026, with inflation projected around 15 percent or lower.” As inflation moderates, interest rates are also expected to ease, following early signals from monetary policy actions, he noted.

On fiscal reforms, Bashir said the new tax laws are expected to improve government revenue generation, which is critical given declining oil dependence.

Read also: Meristem seeks investment pathway for youths

“Stronger fiscal performance should enable greater investment in infrastructure, education, healthcare, security, and social services, ultimately improving economic outcomes and quality of life. While concerns around transparency remain, increased tax compliance is expected to be accompanied by improved fiscal accountability over time, he advised.

Market liquidity remains uneven, largely due to limited participation by long-term institutional investors, so Pension funds, insurance firms, and sovereign investors currently allocate a small proportion of assets to equities. “Increased participation from these long-term funds both domestic and foreign will be key to deepening liquidity, stabilising high cap stocks, and strengthening market depth.”

“The most impactful policies in the near term will be fiscal reforms and banking sector recapitalisation. Effective implementation of fiscal reforms will determine their success, while banking recapitalisation is essential for supporting credit growth and enabling the economy to move toward the government’s long-term goal of a $1 trillion economy.”

Dayo Obisan, financial market professional who presented the lead paper at the event gave a an overview of the economy in the past year, noting that Nigeria is moving from uncertainty to stability, with 2025 laying the groundwork for stronger growth in 2026, as inflation eases, FX stability improves, and GDP growth rises above 4 percent.

According to him, “Structural reforms are reducing oil dependence, strengthening resilience through growing non-oil exports, lower imports, and a market-driven exchange rate that helps absorb external shocks.”

“Despite strong equity gains in 2025, markets remain fundamentally undervalued, while well-designed tax policies, continued reforms, and cautious global conditions support further consolidation and upside in 2026, he stated.

The panel discussion discussed Global Macro Outlook, U.S. Dollar, and Implications for Nigeria; Taxation, Investment Strategy, and Capital Market Implications; as well as Sovereign Ratings, Debt Sustainability, and Fiscal Reforms.

Summarily, they agreed that rising global uncertainty and a slowing U.S. economy could weaken the dollar and redirect capital to emerging markets. This could position Nigeria supported by reforms, FX stability, and growing non-oil sectors to benefit from improved trade, lower debt costs, and stronger capital inflows despite oil related risks.

The second session stressed that Nigeria’s evolving tax framework significantly influences investment decisions, requiring long-term planning as incentives fade, with opportunities remaining in tax efficient sectors and a shift away from minimum taxation toward profit based assessments.

Improved sovereign ratings in the other hand reflect key reforms and lower borrowing costs, but weak revenue and high debt servicing burdens make effective tax reforms and disciplined borrowing essential for Nigeria’s long term fiscal sustainability, the analysts said.