Nigeria's Minister of Finance, Professor Taiwo Oyedele, had warned that the country had only "a month or two" left to avoid economic collapse in 2023. At the time, Nigeria's net reserves stood at just $859 million, less than a month of imports. The situation was dire, with manufacturers queuing for scarce foreign exchange, banks rationing access to dollars, and trapped foreign-airline funds climbing to about $850 million.
The economic conditions of 2023 were marked by high inflation, with headline inflation peaking at 34.19% and food inflation reaching 40.8%. The official and parallel exchange rates were more than 60% apart, rewarding round-tripping by the well-connected while the productive economy struggled for dollars. Nigerian letters of credit were increasingly losing credibility with foreign suppliers, and debt-service payments consumed 97% of government revenue.
According to Oyedele, without reform, Nigeria would have faced hyperinflation and a naira well beyond ₦2,000 to the dollar, with little investor confidence and no ability to print foreign currency. Instead, the government has implemented painful reforms to address underlying distortions. The benefits, Oyedele says, are already beginning to accrue, with growth rising from 2.74% to 4.43% in the second quarter of 2026.
Nigeria's economy has expanded by about 17% in nominal U.S. dollar terms in the first half of 2026 compared with the same period in 2025, aided by the appreciation and stabilisation of the naira against the dollar. The International Monetary Fund (IMF) ranked Nigeria among the ten largest contributors to global GDP growth for the year. Inflation has fallen from a peak of 34% to 14.63% in September, and net reserves have risen from $859 million to more than $45 billion.
The government has also made progress in reducing debt service, which has fallen from 97% of revenue to under 60%. Tax-to-GDP has increased from about 7% to about 12.5%, and the capital market has expanded from roughly ₦30 trillion to more than ₦160 trillion. The naira now trades around ₦1,330-₦1,350 to the dollar, and Fitch, Moody’s and S&P have upgraded Nigeria and revised their outlooks to positive.
Oyedele points to several initiatives aimed at supporting ordinary Nigerians, including ₦372.6 billion in NELFUND support for more than 1.5 million students, cash transfers worth over ₦600 billion to more than 10 million households, and single-digit loans to more than 800,000 MSMEs. The government has also proposed a $21.7 billion financing plan, which Oyedele describes as investment rather than borrowing.
While the economic picture is no longer one of imminent crisis, challenges persist, including high food prices and a target of single-digit inflation by the end of 2027. The government has committed to fiscal discipline, and by 2028, the success of the reforms will be judged by four measures: inflation, food prices, debt service as a share of revenue, and the completion of infrastructure projects.
Key points
- Nigeria's economy has shown significant improvement, with growth rising and inflation falling.
- The government has implemented painful reforms to address underlying distortions.
- Challenges persist, including high food prices and a target of single-digit inflation by the end of 2027.
