Omome Abu looks at the data underpinning an apparent economic revival since President Bola Tinubu assumed power.
Upon taking office, President Bola Tinubu wasted little time in confronting one of the most contentious pillars of Nigeria's fiscal architecture.
The president announced that the fuel subsidy regime would be discontinued, signalling a decisive shift away from a system that had long strained public finances, distorted energy pricing and clouded transparency in Africa's largest economy.
At the time, the question was not whether there would be pain. The pain was certain. The real question was whether Nigeria could endure enough of it to arrive at something more stable and sustainable on the other side.
At the inception of the Tinubu administration, the macroeconomic picture was dire. Headline inflation was high, steadily eroding purchasing power. The Monetary Policy Rate was moderate by local standards but insufficient to tame excess liquidity and speculative pressures.
There was a huge gap between the official exchange rate and the parallel market rate, creating a vast arbitrage gap that rewarded rent-seeking and discouraged long-term capital. Economic growth, at 2.51%, was too weak to meaningfully outpace population growth.
The bitter pill of reform
The early months of reform were bruising. The removal of subsidies and the decision in June 2023 to allow the naira to find its market value triggered sweeping price adjustments. By July 2023, inflation had climbed to 24.08%, eventually rising above 33% in early 2024 as exchange-rate pass-through effects filtered through supply chains. Energy costs surged, input prices spiked, and real incomes thinned.
But the policy response was unusually firm. The Central Bank of Nigeria moved aggressively, lifting the Monetary Policy Rate from 18.75% to above 26% within a year; one of the sharpest tightening cycles in recent history. The signal was unmistakable: price stability would take precedence over short-term political comfort.
Monetary tightening was matched by structural reform in the foreign exchange market. Multiple exchange-rate windows were unified. Liquidity conditions tightened, speculative demand for foreign exchange eased, and confidence - fragile at first - began to inch back.
By mid-February 2026, the impact of that reset was visible in the external accounts. External reserves climbed to over $50.45bn, the strongest level in 13 years. At the Monetary Policy Committee briefing, CBN Governor Olayemi Cardoso underscored the significance of the milestone: "As at middle of February, it is about $50.4bn, which, as I had said in the communiqué, is the highest figure that we've had in 13 years."
Reforms yield positive outcome
By early 2026, cumulative policy effects began to crystallise. Headline inflation declined to 15.10% in January 2026. While statistical rebasing of the Consumer Price Index played a role, easing food pressures and improved currency stability reinforced the disinflationary trend. In February 2026, the CBN cut the policy rate by 50 basis points to 26.5%, a subtle but important signal that the most intense phase of tightening had likely run its course.
Perhaps more symbolic than the inflation figures were the convergence in the foreign exchange market. The once-yawning gap between official and parallel market rates narrowed to about 2.2%, effectively closing the arbitrage corridor that had distorted capital allocation for years. For investors long wary of trapped funds and opaque pricing, that alignment mattered.
Fiscal dynamics also shifted. Subsidy removal and improved tax administration strengthened federal revenues, reducing reliance on central bank overdrafts and easing inflationary pressures associated with deficit monetisation. The long-standing tension between fiscal expansion and monetary restraint began to soften, replaced by a more coherent macroeconomic stance.
Capital flows tell their own story. In 2023, total capital importation was just $3.91bn, reflecting deep investor reticence. Foreign direct investment was particularly anaemic at only $47.6m in the first quarter of that year as multinational firms scaled back or exited amid currency restrictions and policy uncertainty.
By contrast, within the first ten months of 2025, capital inflows rose to about $21bn, a 428% increase compared with 2023. Portfolio flows accounted for much of the rebound, but foreign direct investment also strengthened, rising to $720m by the third quarter of 2025 from $90m in the preceding quarter. The narrative shifted from retreat to re-engagement.
Growth data reinforced the shift in sentiment. Fourth-quarter GDP growth in 2025 reached 4.07%, bringing full-year expansion to 3.87%, outperforming earlier projections in the 3% range. Services and ICT remained resilient, while improved crude production supported by enhanced security in the Niger Delta bolstered output.
Looking ahead
The minister of finance, Wale Edun, welcomed the figures. "This marks the second time in a decade excluding the immediate post-pandemic rebound that quarterly growth has exceeded 4%. It follows the 4.23% growth recorded in Q2 2025 and represents a clear improvement from 3.76% in Q3 2024," he said.
For the full year, Nigeria's real GDP grew by 3.87%, up from 3.38% in 2024. The size of the economy expanded to N441.5 trillion, compared with N372.8 trillion in 2024.
"This performance reflects improved fiscal coordination, disciplined expenditure management, stronger revenue mobilisation, and continued structural reforms aimed at restoring macroeconomic credibility," Edun added.
Nigeria remains vulnerable to global commodity volatility and domestic structural bottlenecks. Poverty and unemployment pressures endure, and reform fatigue is a real political risk. Yet the direction of travel has changed. Inflation is moderating. Exchange-rate distortions have narrowed. Capital is returning. Growth is broadening.
For the first time in years, fiscal and monetary authorities appear aligned rather than at cross purposes. The economy is not merely expanding; it is recalibrating. Nigeria's resurgence may still be unfinished business, but compared with where it stood in May 2023, the foundations of stability are firmer and the growth trajectory more assured.
This special report was produced with the support of the Central Bank of Nigeria. The editorial was produced independently of the CBN or the government.