A GLANCE AT THE PROSPECTS OF NIGERIA’S FISCAL AND ECONOMIC STANCE FOR 2026: IS THERE HOPE FOR THE AVERAGE NIGERIAN?
The year 2025 has indeed come to an end and Nigerians have once again survived another year of economic strife.
Undoubtedly a tough year, it ends with some glimmer of hope in view of some notable fiscal and economic stabilities and positive outlook on fiscal policies that seem to present signs of good things to come for the average Nigerian if sustained in the year 2026.
As the Corporate, Commercial and Industrial Law Practice Group of Law Corridor, we take stock of some of the notable fiscal and socio-economic policies and activities to consider how they present a glimmer of hope for the populace in 2026.
EXCHANGE RATE
While Nigerians have become accustomed to the impact of an unstable forex in recent years, with the downside of same affecting exports, imports and balance of trade, the trend for 2025 was a stable exchange rate floating within a predictable range of ₦1,449–₦1,454 per US dollar, and indicating some improvement when compared with late 2024.
Although, parallel market rates remained slightly higher, with black market quotes around ₦1,475 to ₦1,485 per US dollar, comparing the official end‑of‑period rates from December 2024 (₦1,535) to December 2025 (about ₦1,452 on average) suggests a naira strengthening of roughly 5.4% against the dollar in the official market through the year.
What the foregoing represented is that there was less volatility and if the exchange rate is sustained in ways to further strengthen the naira, market behaviour will naturally become predictable while consumers can be certain that there will be no price hike for commodities produced locally and imported during the year 2026.
INFLATION
When President Bola Ahmed Tinubu made the address for the year 2025, he was particularly concerned about inflation being at 34.80% in December, 2024 and the target was to bring it down to 15% by the end of 2025.
Rightly so, this was achieved by November 2025 when inflation dropped to 14.45% showing a clear improvement in the cost of living over the year.
Without a doubt, the fall in the rate is economically impressive, however, its impact on cost of living is yet to be felt as the price of basic commodities and energy are still on the high side. Attributable to the removal of fuel subsidy at the commencement of the Tinubu administration, there has since been increase in rent, cost of transportation and cost of basic services which remain high despite the drop in inflation.
Although there has been a slight fall in prices of some foodstuff including rice, while some basic groceries maintain a steady price without a hike. The hope is that with the steady inflation and increase in local production, the cost of living would get better in 2026.
PETROLEUM RETAIL CONSUMPTION
Retail petrol prices in Nigeria in 2025 was shaped largely by downstream deregulation under the oversight of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and increased competition in fuel supply. Following the removal of subsidy and price controls, pump prices of PMS initially rose sharply due to import dependence and Forex pressures to about ₦1,214.
However, the entry of locally refined supply, particularly from the Dangote Refinery, introduced competitive pricing into the market. According to official data, the average national retail price of petrol stood at about ₦1,061 per litre in November 2025, reflecting variations across states based on logistics and supply costs.
The announcement by Aliko Dangote of the slash in price of petrol in December shows that a healthy competition will further crash the price of PMS which is largely responsible for high cost of transportation and supply of energy for the common man and his Small-Medium Business. The impact of the price war hasn’t done so much at the moment as it merely led some retail stations to sell petrol between ₦739 and ₦840 per litre, offering measurable relief to consumers. The impact of that slash is yet to tell much for commuters but it can increase revenue for commercial drivers and also save some fund for household spending.
What the government in this regard need to do is to increase the competition by making other local refineries function while putting an end to importation of refined product. The hope is that in 2026, the price of petroleum products would further decrease so as to have meaningful impact on the cost of living for the populace.
NEW TAX REGIME
There is no gainsaying that there is so much apprehension over the new tax regime which came into force in January 2026. Understandably so, the common man would be perplexed that the government would take from his hard-earned money, leaving him with less in an already stifling economy.
While Mr. Taiwo Oyedele has done quite a lot of media outreach in demystifying issues arising from the tax regime, particularly highlighting the exemption of low income earners, minimum wage earners and other incentives available to the common man, what is most ideal to note is that with the understanding of how the tax regime would work, more corporate entities would be registered so as to benefit from the exemption available for small companies under the regime. For clarity, small companies are companies whose annual turnover is N50,000,000.00 or less with a total asset of not more than N250,000,000.00. Any company other than company of professionals who fall within such category will be chargeable to 0% tax.
Furthermore, in view of the broader provisions on what used to be personal income tax, which is simply taxation of individuals under the tax regime, individuals would undergo financial behavioral adjustments which would at the onset impact the economy and that makes 2026 an exciting year to look forward to fiscal wise.
GROSS DOMESTIC PRODUCT (GDP)
The foregoing narrative on inflation, exchange rate, petroleum prices and the little or no impact on the cost of living shows that there are still prevailing microeconomic concerns and challenges. However, Nigeria’s GDP for 2025 ended on a gradual, but meaningful, expansion. At the close of the 4th Quarter of 2024, Nigeria’s GDP closed at 3.84%. In the 4th Quarter of 2025, the GDP closed at 3.9%.
Although a high GDP naturally translates to strong economy, which can, of course, attract investment and create more jobs and make for better opportunities for the citizens. With Nigeria’s GDP usually driven by oil export, it is encouraging that the recent growth in Nigeria’s real GDP is attributable largely to non-oil sector, particularly services, agriculture, and trade.
The hope is that there will be more diversification of the economy in 2026 while more SMEs are encouraged through ease of doing business, lower interest rates and supply of energy at lower cost.
The coming into force of the new tax regime may also play a role in improving the GDP in 2026 if the citizens understand the new tax system and if properly implemented by government.
CAPITAL MARKET
At the end of December 2024, the Nigerian equities market delivered a strong performance, with the benchmark All‑Share Index (ASI) rising by about 37.6 % in 2024, which was driven by corporate earnings, new listings and investor interest across sectors, especially oil & gas, insurance and financial services. This resulted in broad market gains and growing participation, marking a positive year for the capital market.
Entering 2025, the bullish trend continued, with sustained gains in market activity and rising valuations. By mid‑year, the ASI had climbed significantly, and market capitalisation crossed key milestones (for example, exceeding ₦70 trillion by May 2025 as investor demand grew).
In the second half of the year, the market reached new record peak levels, with the ASI hitting above 150,000 points in late 2025 and market capitalisation expanding further.
Even though market conditions experienced some volatility, including contractions in late November 2025 with ASI and capitalisation dipping, the broader 2025 performance shows sustained expansion relative to the end of 2024, with an approximate 34.6% increase in market capitalisation over the year. The dip seem to be attributable to the apprehension in relation to Capital Gains Assessment under the new tax regime.
That notwithstanding, the hint is that investment in 2026 will improve in the face of the steady economic stance of the country in 2025.
“There is no gainsaying that there is so much apprehension over the new tax regime which came into force in January 2026. Understandably so, the common man would be perplexed that the government would take from his hard-earned money, leaving him with less in an already stifling economy”
POVERTY RATE
Despite the encouraging economic trend for 2025, the number of persons living below the poverty line increased in 2025 compared to 2024. As at December, 2024, 133Million people were estimated to live below the poverty line in Nigeria according to the Nigerian Bureau of Statistics. By December 2025, the number increased to 139 million people. Of course there will be increase in population, however, as it has been earlier noted, the microeconomic challenges are still very much in plain sight despite the statistical improvement in the economic metrics.
There is no gainsaying that the majority of poor Nigerians remain concentrated in rural areas, where extreme poverty is most prevalent, and many households continue to struggle with basic needs amid persistent economic hardship, but the hope is that 2026 will bring about improved social amenities and grassroot development, particularly in the light of the legitimacy of local government autonomy on funds.
THE 2026 BUDGET
President Bola Ahmed Tinubu presented the 2026 Appropriation Bill to the National Assembly, titled the “Budget of Consolidation, Renewed Resilience and Shared Prosperity.” The total budget size is approximately ₦58.18 trillion, with projected revenue at ₦34.33 trillion and a significant deficit financed partly through borrowing. Of this, about ₦15.52 trillion is allocated to debt servicing, while capital expenditure is set at about ₦26.08 trillion to support infrastructure and development needs.
The budget is built on key macroeconomic assumptions, including a crude oil benchmark around $64.85 per barrel, exchange rate assumptions near ₦1,400 to the US dollar, and efforts to sustain economic growth and stability.
The government’s message emphasized that the budget builds on reforms of recent years and aims to consolidate macroeconomic stability, boost competitiveness, and translate economic growth into broader improvements in living standards for Nigerians.
To directly address hardship faced by ordinary Nigerians including inflation, unemployment, and poverty, the budget prioritises funding for essential sectors and policies that drive employment, productivity, and social outcomes. Key allocations include funds for infrastructure development to stimulate economic activity, security to improve stability, support for education (₦3.52 trillion), and health (₦2.48 trillion) to build human capital. The budget also aims to enhance agricultural markets, food security, and value chains, acknowledging that strengthening agriculture is critical for reducing food costs and rural poverty.
President Tinubu linked the budget to ongoing economic reforms designed to sustain inflation moderation, improve foreign exchange stability, and expand non‑oil revenues. However, critics and civil society groups warn that the heavy reliance on borrowing and relatively limited allocations to social services may constrain the budget’s ability to meaningfully reduce poverty and hardship unless implementation is disciplined and revenue growth accelerates.
The common and average Nigerian seem to have lowered their expectation of budget transforming their lives, hence, it is difficult to assuage a common man that there is hope through the budget. However, one positive to be taken from the 2026 budget as a hanger for the consolidation of the 2025 economic stability is that the executive, led by the President, undertook to be more disciplined in the budget execution, ensuring strict implementation in line with appropriated details and timelines.
GENERAL REMARK
The notion that the law of gravity does not operate under the Nigerian economy would be put to test in 2026. The push and pull effect of the gains of 2025, including the stable forex, decreased inflation rate and slash in price of petroleum product will be under scrutiny as the average Nigerian would be keen on seeing the impact of the economic indices on the daily cost of living. This would be more practicable if business progress in a viable atmosphere with lower interest rate and overhead.
Authored by:
Ajibola Bello, Deputy Managing Partner and Head of Corporate Department, Law Corridor.