Navigating Nigeria’s Economic Reforms: Experts Urge Caution Amidst Political Pressures
Economic analysts are lending their support to the International Monetary Fund’s (IMF) cautious outlook on Nigeria’s reform agenda. They are strongly advising the Federal Government to maintain the momentum of ongoing economic reforms and resist any temptation to backtrack, particularly as political maneuvering intensifies in the lead-up to the election cycle. Experts warn that any deviation from the reform path could jeopardize recent progress in curbing inflation, erode investor confidence, and place further strain on an economy already facing vulnerabilities due to limited fiscal reserves.
The IMF’s Country Representative for Nigeria, Dr. Christian Ebeke, recently articulated these concerns during a panel discussion at the 2026 Macroeconomic Outlook event hosted by the Nigerian Economic Summit Group in Lagos. He cautioned Nigeria against reversing its recent economic reforms, emphasizing that such actions would negate hard-won macroeconomic achievements.
Dr. Ebeke acknowledged that while progress has been made, Nigeria’s reform agenda remains far from complete. He highlighted that inflation continues to persist in double digits, thereby constraining policy flexibility. “Government intervention in controlling prices and volumes is no longer sustainable for Nigeria,” he stated. “The objective going forward must be to stay the course on both fiscal and monetary policy.”
A significant immediate risk identified by Dr. Ebeke is complacency, especially at the subnational level, where states have experienced an improvement in their fiscal space following recent reforms. He warned that the allure of pro-cyclical spending by state governments, particularly in the pre-election period, could undo the gains achieved by the Federal Government and key economic managers.
“The risk of believing that the job is already done is more evident at the subnational level,” Dr. Ebeke explained. “Fiscal space has increased significantly for states, and in a pre-election year, pro-cyclical fiscal policy becomes a very acute risk.” He underscored that such spending patterns could easily undermine the efforts of the Minister of Finance, the Governor of the Central Bank of Nigeria, and other members of the economic team.
Furthermore, Dr. Ebeke cautioned against what he termed “home-grown volatility,” which can arise from policy missteps that inflict unnecessary pressure on the economy. “A return to exchange rate controls, for example, would be a major mistake at this point. It would deplete reserves, distort market signals, and negatively affect market confidence,” he advised. He stressed that Nigeria is currently navigating difficult policy trade-offs and must avoid decisions that could jeopardize macroeconomic stability.
Consolidating Gains for Durable Growth
These sentiments were echoed by the Chairman of the Nigerian Economic Summit Group, Niyi Yusuf. He warned that Nigeria must not falter in its reform process, as doing so could lead to a worse economic outcome.
“The picture that emerges suggests that the economy has moved away from acute macroeconomic dislocation toward a more predictable environment,” Mr. Yusuf observed. “The key question before us is no longer whether reform is necessary, but how we consolidate the gains already achieved and convert them into durable, inclusive growth.”
He elaborated on the distinction between stabilization and prosperity: “However, stabilisation alone does not equate to prosperity. Growth remained modest and uneven. It was driven by a narrow set of sectors, with weak transmission to employment and household incomes. Real purchasing power remained under pressure, and welfare outcomes continued to lag behind macro indicators. These realities underscore a critical point — stability is a necessary condition for growth, but it is not sufficient.”
Mr. Yusuf outlined the crucial “consolidation” phase: “Consolidation is the medium-term transition stage where achieved stability must be fortified and translated into productivity gains across the economy. It is the structural bridge between reform and results. In this phase, the reduction in macroeconomic disruption must be deliberately leveraged to remove bottlenecks that constrain output, investment, and competitiveness.”
He concluded by emphasizing the necessary shift in policy focus for Nigeria: “For Nigeria, consolidation requires a shift in emphasis. Policy must move from inconsistency across sectors to one of coherence. From firefighting to system-building. From short-term fixes to institutional strengthening.”
The Private Sector’s Pivotal Role
Investment banker and economist, Tilewa Adebajo, concurred with the IMF’s concerns, stating that they are “quite valid.” He highlighted the delicate balance Nigeria faces: “Basically, the challenge we’re facing now is that after two very difficult years of reforms to reposition the economy for growth, reform reversal is one of the things that we should be very careful about because of politics.”
Mr. Adebajo believes that with inflation showing signs of moderation, the government needs to articulate clear growth strategies. “That’s the only way forward,” he asserted. “We need to start growing the economy on a sustainable basis. We need to start growing this economy at 8 to 10 per cent, drop inflation to about 11 or 12 per cent to restore purchasing power. That is the only way forward. If we don’t do that, then we’re going to be in trouble, and this has to be private sector-driven because the government cannot fund its capital budget. It’s struggling to do so and, at the end of the day, these are the challenges that we need to overcome.”
He further cautioned about the impact of external factors: “If we compromise on politics, for us to get back on that path of sustainability, it’s just going to become more and more difficult. And don’t forget that we don’t have any external buffers. Oil prices dropping significantly are going to impact us.”
Regarding the private sector’s involvement, Mr. Adebajo stressed the importance of government policy: “We have a lot of companies here; companies have come into the telecom sector and the banking sector. So the government needs to put up the right policies in the various sectors and create the right incentives for people to invest in those sectors.”
He reiterated the need for private capital, explaining, “If you put up the right policies and the right incentives, people will come and invest. And, like I’ve told you, the government cannot fund its capital budgets. If the government has not been able to fund its capital budget last year and the year before, and it’s not likely it will fund it this year, you need to start bringing alternative levels of capital. Because if you don’t make investments, you can’t grow the economy.”
Confidence in Leadership
In contrast to some of the cautious pronouncements, former president of the Chartered Institute of Bankers of Nigeria, Okechukwu Unegbu, expressed strong confidence in the current economic leadership. He dismissed the notion that pre-election pressures would derail the reforms.
“My thoughts have always been the same. They should advise themselves and not us,” Mr. Unegbu stated. “I have very high confidence in the person of the Central Bank governor, Yemi Cardoso. He is someone that I know has all it takes, and he listens to people and agrees to carry out reforms. The reforms he has initiated, he is not going to back down.”
He also praised the Finance Minister: “Wale (Finance Minister) is also a reformist. I don’t think that because it is an election year, we will close our eyes to the good things that are happening to us. Even though there was no discussion about the removal of the fuel subsidy or the flotation of the currency, after these were done, these two people, Cardoso and Edun, have been up to the task. We should rather encourage them to continue their jobs. I don’t think they are people who are in government to be president or governor.”
