Nigeria’s Inclusive Growth Moment

Nigeria’s economy is growing, yet many people feel worse off. This episode takes a closer look at how inclusive that growth really is. The country may post stronger GDP figures, supported by high oil prices, reforms, and improved investor sentiment. At the same time, inflation, rising fuel and transport costs, and high interest rates continue to put pressure on households, manufacturers, and small and medium-sized enterprises. 

According to Dr Opeyemi Agbaje, Chairman PENCOM, Nigeria’s stabilisation has progressed quickly because of swift reforms, but policymakers still need to sustain targeted socioeconomic measures. A more constructive policy debate may now be needed on how these measures can be expanded and improved to reach more people. 

Please share your thoughts in the comments: Is Nigeria’s economic growth becoming more inclusive, and what more should be done for that to happen sooner?

Transcript

Some analysts argue passionately that Nigeria’s growth is leaving most people behind. With higher oil prices, rising transport costs, expensive borrowing as the central bank pauses easing, and inflation edging up again, vulnerable groups face more serious pressure. Today, we’re looking at Nigeria — a country that, on paper, is growing. But for hundreds of millions of people, it doesn’t feel like it. Many call for patience that Nigeria is coming from a very weak position and we are just now getting stabilised. The big question is: why isn’t that growth showing up more in people’s lives outside the more urban Abuja, Lagos, Port-Harcourt and Kano metropolis? And more importantly, what would it take to fix that?

Hello, this is global business insights where we bring perspectives that help to navigate the more challenging context. We look today at the opportunity for more inclusive growth in the Nigerian economy.

Let’s start with the positive headlines: Nigeria’s economy is expected to post strong GDP numbers for Q1. You can also expect the next Q2 GDP figures to be even stronger as a few capital intensive sectors do much better, helped by investment inflows given the better risk ratings, also as government spend spikes spurred by high oil prices and reserves.

Employment intensive sectors like Manufacturing still cannot afford high interest rates and so are at best seeing flat growth. High interest rates tend to benefit less labor intensive banks as interest sensitive funds based incomes rise – also as more technology is assimilated.

But here’s the problem — growth doesn’t automatically mean inclusive growth.  We need to ask what is driving the growth? 

Telecoms. Financial services. Tech startups. Energy. Even high-end real estate. Nigerian High net-worth buyers are back, shopping in London’s luxury property market … a sign that the boom is back.  And at home, construction, cement, and infrastructure are benefiting from government spending. Add election-season activity into the mix — and the boost in industries like advertising, logistics, hospitality, and security — and you’ve got a strong growth story.

Ratings agencies are also taking notice.  Just last week, S&P upgraded Nigeria’s sovereign rating — the first upgrade in 14 years. Fitch and Moody’s had already moved in 2025. So investor confidence is clearly improving.  Why? Reforms such as Fuel subsidy removal, FX liberalisation. Tax adjustments. Exchange rate unification.  Plus, stronger oil output and new refining capacity — especially from Dangote Refineries — are improving Nigeria’s external position. All of this makes the country more attractive for global investors. It also means Nigeria can borrow more cheaply internationally. With the CBN unable to ease further for now, domestic rates will stay high. But Nigeria’s ratings upgrade should lower Eurobond yields and make external borrowing cheaper and debt service less burdensome, extending the trend after Fitch and Moody’s upgrades in 2025. Still, much of the optimism may already be priced in, and yields will also depend on April inflation, MPC decision, Middle East geopolitical risks, fiscal uncertainty, and duration risk.    S&P also flagged some risks including rising fuel prices and inflation ahead of the 2027 elections, projected wider fiscal deficits also due to higher capital spending and inflation expected to average 17.7% in 2026 will also factors that will affect the outlook. But for the Nigeria economy this is good news – however you want to spin it.

But there is another side to the narrative. If you’re an average Nigerian, things don’t feel easier. Inflation is still high — and rising again. Food prices have jumped. Energy costs are up. Transport is more expensive. And high interest rates mean borrowing is tough — especially for smaller businesses.

The growing sectors — finance, telecoms, oil — are not big job creators. They’re capital-intensive and increasingly driven by technology. Meanwhile, the sectors that employ the most people — manufacturing and agriculture — are struggling. Insecurity is disrupting farming. Supply chains are breaking down.

So you get this disconnect: Growth is happening… but jobs aren’t keeping up.  The world bank has drawn attention to the problem calling for maximum fiscal and monetary efforts to tackle inflation , channelling more capital into productive sectors like manufacturing and agriculture and improving infrastructure, public services and targeted support for the vulnerable in rural areas – as well as tackling insecurity to restore agricultural output . 

The numbers are stark.  Poverty is projected to hit 62% of the population in 2026 — that is about 141 million people.  That’s the highest level ever recorded.  Nigeria now accounts for roughly one in five people living in poverty in sub-Saharan Africa. And the divide is widening.  The northern region is seeing more poverty. Of its 86m people … in 2025 75% were poor ie. 64.5 million poor people. The South with 47m people has 35% poverty compared to 13.5% in 2019. Poverty in the South has more than doubled from 6m people to 17m people since 2019.   In the more rural north, poverty is deeply entrenched — driven by insecurity, displacement, and collapsing agricultural systems. But urban poverty is rising too — even in Lagos and other major cities where growth appears strongest.

You can have booming luxury real estate… while the average worker can’t afford rent. You can have strong GDP… while food becomes less affordable and many are skipping meals. That’s what non-inclusive growth looks like. Why is this happening?

First, inflation is eroding incomes faster than wages are rising, especially as energy costs bite. In latest April 2026 data, headline inflation rose to 15.69%, or 2.13% month on month, while food inflation reached 16.06% year on year.   With many central banks on hold, the CBN is also expected to keep rates steady on May 20. Finance Minister Taiwo Oyedele has ruled out restoring fuel subsidies, while the government is cutting levies on some food and pharmaceutical imports to ease pressure.  Energy prices rose nearly 5% year on year. Core inflation eased slightly to 15.9% from 16.2%.  The hardest hit are the poorest with no savings buffers and limited safety nets.

Second, growth is concentrated in sectors that don’t employ many people. And  third, investment flows are skewed. A lot of money coming into Nigeria is portfolio investment — short-term, quick in and out. That doesn’t build factories or create long-term jobs.  What you really need is foreign direct investment — the kind that builds industries, hires workers, and stays for the long haul. FDI inflow we admit requires a longer period of economic stabilisation.

Fourth, government spending — while boosting GDP — often doesn’t translate efficiently into productivity or jobs, especially when there are leakages, corruption and inefficiencies. And finally, insecurity. In some areas, farming has simply collapsed. That pushes up food prices and deepens poverty.

Are things improving at all?  To be fair — yes.  Analysts point out that Nigeria has come from a very difficult place. Before 2023, the country had gone through two recessions, bad policies, weak growth for years, declining investments, and extremely low reserves. The last couple of years have been about stabilisation which is only the first step. Reforms are rebuilding credibility, investment is returning, and the economy is steadier. Measures to support vulnerable groups are also underway: NELFUND is helping students pay fees and giving universities more predictable funding; federal investment in roads and transport is creating jobs and improving productivity; CNG bus programmes may be easing transport costs and should be expanded; and education reforms, including free tuition in federal technical schools, are widening access. Other support includes cash transfers, youth and women’s empowerment and skills programmes, minimum pensions, gratuity payments, and pension protection. But many of these interventions need to be scaled up and better targeted.

Dr Opeyemi Agbaje (Chairman Pencom) in his recent Research Advisory note on the economy agrees that more targeted programmes to create employment and employability, and increase prosperity are needed… and the more useful policy conversation should be about identifying policies and programmes that may help in increasing employment and prosperity for the broader population.

So What needs to happen next?  There’s growing agreement on what would make growth more inclusive. They include bringing inflation down — sustainably – curtailing fiscal excess typical in preelection periods, supporting manufacturing and agriculture — the real job creators, investing in infrastructure — especially where it supports economic activity in the poorer rural north region, improving security — to get farms and supply chains working again …and expanding still limited  social safety nets. More capital also needs to be channelled into long-term investment

Here’s the bottom line. Higher revenue inflows thanks to oil prices going up present an opportunity to identify and move faster with targeted interventions which should focus more on support for Small and medium enterprises, employment sensitive sectors like manufacturing and  infrastructure with high impact on poverty in the rural northern region. Another must is curbing inflation by arresting leakages funding a familiar political extravaganza. Debt can be reduced to create fiscal space for more interventions to boost skills and well-being interventions.

Nigeria’s growth story and reforms are real. The improving investor sentiment is real. But so is the hardship. Over 100 million people are still being left behind. Ignoring that gap would be risky. But ignoring the progress that’s been made would be just as wrong. The opportunity now – with the stronger external sector – helped by higher oil prices, is to build faster on the gains — with more urgency toward accelerating policies that actually improve lives in a way hundreds of millions of Nigerians can feel.

It is also important to appreciate the need to vastly upgrade welfare safety nets to match in Nigeria say what obtains in South Africa but this will be hugely expensive.  The case for privatisation and monetisation of government assets is not just about enhancing productivity and efficient access to private capital, but also to fund more extensive and impactful interventions that alleviate poverty and hunger. 

Insecurity is also undermining sustainable, inclusive growth. In north-east Nigeria, Abu-Bilal al-Minuki, a senior Islamic State leader, was killed in a joint Nigerian-American operation. He had been described as one of the world’s most active terrorists and was linked to extremist operations across the Sahel and West Africa, as well as the mass abduction of Nigerian schoolgirls in 2018.

The Improved fiscal position is an opportunity to also improve inclusiveness in economic growth not just tout better GDP data.

That’s it for today’s episode of Global Business Insights.  We’re now on Spotify, Apple Podcasts, and all major podcast platforms — so be sure to follow and share. This is Bode ososami — thanks for listening, and we’ll see you next time. Do not forget to please follow and hit the notification button. Bye Bye.