Nigeria has emerged from a period of intense volatility to record its most consistent year of business expansion since 2022. According to a strategic analysis of the S&P Global Purchasing Managers’ Index (PMI), Nigeria was the only major African economy to maintain uninterrupted expansion for all 12 months of 2025, signaling a robust foundation for the 4.1% GDP growth projected for 2026.
1. The Stabilization Dividend: Inflation and FX
The primary drivers of this resurgence are the cooling of headline inflation and the newfound stability of the Naira.
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Inflation Deceleration: Headline inflation plummeted from a peak of 24.48% in January to 14.45% by November 2025. This easing has directly boosted household spending and reduced the cost of raw materials for manufacturers.
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Currency Firming: After a turbulent 2024, the Naira stabilized below the N1,500/$ mark in the final quarter of 2025. This move effectively removed Nigeria from the list of Africa’s 10 worst-performing currencies, a position it had held for nearly two years.
2. Nigeria vs. African Peers: A Comparative Edge
While the continent faced varied headwinds, Nigeria’s private sector outpaced its largest rivals in consistency:
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Nigeria (PMI 53.3): Second-highest average PMI on the continent with zero months of contraction.
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Uganda (PMI 53.7): The continental leader in growth momentum, supported by ultra-low inflation (3.1%).
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South Africa (PMI 49.3): Africa’s largest economy slipped into contraction, recording six months of decline due to weak household demand and export softeners.
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Egypt (PMI 49.6): Despite marginal improvements, Egypt struggled with eight months of contraction throughout the year.
3. Sectoral Drivers and the “Dangote Effect”
The Stanbic IBTC and CBN reports both indicate that the non-oil sector is now the primary engine of growth.
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Manufacturing & Services: These sectors are expected to lead the 2026 charge, supported by forward linkages from the Dangote Refinery, which has helped stabilize domestic fuel costs and supply chains.
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Infrastructure & Trade: Ongoing government investment in livestock development and trade facilitation is expected to bridge the productivity gap in rural economies.
4. The 2026 Forecast
Financial analysts at Stanbic IBTC and Meristem are optimistic, projecting GDP growth to strengthen to 4.1% in 2026. This optimism is rooted in:
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Positive Business Confidence: The NESG Business Confidence Index has remained positive for 12 consecutive months, encouraging the return of foreign direct investment (FDI).
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Interest Rate Normalization: As inflation cools, a potential reduction in the benchmark repo rate is expected to lower the cost of borrowing for SMEs and large-scale manufacturers.
The Bottom Line
Nigeria’s 2025 performance proves that macroeconomic stabilization measures—when sustained—can restore private-sector profitability even after a “lost year” of currency shocks. As the only major African economy to avoid a single month of contraction last year, Nigeria enters 2026 as the continent’s most compelling case for a resilient, non-oil-driven recovery.
