The Centre for the Promotion of Private Enterprise has flagged the projected N15tn debt service bill for the 2026 financial year, saying that it would affect the growth anticipated for the year.
This was disclosed in CPPE’s Review of the Nigerian Economy in 2025 and Outlook for 2026, made available to The PUNCH on Sunday.
The PUNCH reported that President Bola Tinubu has presented the 2026 Appropriation Bill to the National Assembly. The proposed budget includes expected total revenue for the 2026 fiscal year of N34.33tn, while total expenditure is projected at N58.18tn, including N15.52tn earmarked for debt servicing.
In this CPPE outlook, signed by its Chief Executive Officer, Dr Muda Yusuf, Nigeria’s rising debt-service bill is set to remain a major constraint on fiscal performance.
“Debt service, estimated at over N15tn in the 2026 appropriation (about 50 per cent of projected revenue), continues to constrain fiscal space,” said Yusuf, noting that the situation limits the government’s capacity to fund capital expenditure and deliver growth-enhancing projects.
Other factors that could harm the cautious optimism projected for the New Year include security challenges, which other analysts have flagged too.
“Insecurity continues to constrain agriculture, logistics and investment. Oil price and production volatility: Fiscal performance remains sensitive to oil shocks. Structural constraints: High power, energy and logistics costs will continue to weigh on real-sector productivity. External headwinds: geopolitical tensions could affect trade flows, commodity prices and capital movements. Pre-election pressures: Fiscal and political uncertainties in the pre-election year could heighten risks,” said the CPPE boss.
Still on the outlook for 2026, Yusuf said, “The CPPE’s 2026 economic outlook is that of cautious optimism. With reform momentum sustained, Nigeria is expected to transition more decisively from stabilisation to growth. GDP growth is projected between 4.0 and 4.5 per cent, supported by continued moderation in inflation and stronger non-oil sector performance. Moderating inflation should strengthen domestic demand and create room for gradual monetary easing, potentially lowering interest rates and stimulating private investment. Services, especially telecommunications, finance, construction, real estate and trade, will remain the primary growth engine.
“Capital-market prospects are positive, supported by the potential listing of Dangote Refinery, which could deepen market liquidity and attract domestic and foreign portfolio inflows. Policy credibility remains strong, reinforcing investor confidence and capital inflows.”
In its assessment of the outgoing year, the CPPE echoed the view of World Trade Organisation Director-General Ngozi Okonjo-Iweala that Nigeria’s economy had achieved stability and was now positioned for the next phase of growth.
“The year 2025 marked a significant turning point in Nigeria’s macroeconomic trajectory following the turbulence associated with the early phase of reforms. Exchange-rate stability emerged as the most visible achievement, with the naira largely trading within the N1,440–N1,500/US$ band. Periodic marginal appreciation strengthened business confidence, eased imported inflation and restored predictability to pricing, contracting and investment planning.
“Inflation decelerated sharply from 24.48 per cent in January to about 14.45 per cent by November 2025. The slowdown was supported by currency stability, easing logistics pressures and improving supply conditions. Several food items and imported consumer goods recorded outright price declines, contributing to improved consumer sentiment and reduced price volatility. Business confidence strengthened materially. The NESG–Stanbic IBTC Business Confidence Index remained positive for most of the year, reflecting improved investor perception and a gradual recovery in corporate profitability. Many firms that posted losses in 2024 returned to profit in 2025, underscoring the stabilisation gains,” he said.
The results from the fiscal side were, however, mixed, as debt-service obligations continued to constrain fiscal space, undermining budget execution.
“Revenue underperformance persisted, largely reflecting sub-optimal oil sector performance. The 2025 Federal Budget was anchored on optimistic assumptions: a $75 per barrel oil price and production of 2.06 million barrels per day (mbpd). Actual outcomes fell materially short, with average oil prices around $66 per barrel and production closer to 1.66 mbpd. Consequently, the projected N41tn revenue target was significantly missed, leading to weak capital expenditure implementation,” said Yusuf.
On the sectoral front, the services sector remained the primary driver of growth.
“By Q3 2025, services accounted for about 53 per cent of GDP, compared with 3.44 per cent for oil. The non-oil sector contributed 96.56 per cent of GDP and grew by 3.91 per cent, highlighting Nigeria’s gradual structural shift away from oil dependence.
“Services grew by 4.14 per cent, driven by telecommunications, financial services, trade, construction and real estate. Manufacturing remained fragile, growing by just 1.25 per cent and contributing 7.62 per cent to GDP, reflecting persistent constraints, power deficits, logistics costs, unfair competition from imports, weak access to finance and high operating costs. Agriculture recorded a marginal recovery, growing by 3.79 per cent and contributing 31.21 per cent to GDP. However, insecurity, low productivity and post-harvest losses continued to limit its contribution to exports and fiscal revenues,” he added.
Overall, while the outlook for 2026 is reassuring, with expectations of stronger growth, easing inflation, improving investor confidence and a gradual shift toward more inclusive expansion, sustaining the reform momentum is key, and “if security challenges are effectively addressed, 2026 could mark the beginning of a more robust growth phase with tangible improvements in living standards.”
