Nigeria’s economy recorded a year-on-year real GDP growth of 3.89 per cent in the first quarter of 2026, reflecting continued macroeconomic stabilization and resilience in key non-oil sectors.
However, economic experts have warned that the encouraging growth figures conceal deep structural weaknesses capable of undermining long-term economic transformation.
This was contained in a policy brief issued by the Centre for the Promotion of Private Enterprise (CPPE) following the release of the Q1 2026 GDP report by the National Bureau of Statistics (NBS).
According to Muda Yusuf, chief executive officer of CPPE, although the GDP performance represents an improvement from the 3.13 per cent growth recorded in Q1 2025, the economy still faces serious structural constraints, particularly in electricity supply, manufacturing productivity and export competitiveness.
“The implications for businesses are severe. At a time when firms are already burdened by high interest rates, logistics costs and weak consumer purchasing power, deteriorating electricity supply further escalates production costs and weakens competitiveness.
“Heavy dependence on diesel and petrol-powered self-generation continues to erode profitability across the manufacturing, SME, hospitality, agro-processing and digital sectors,” he said
Yusuf noted that while the growth rate was marginally lower than the 4.0 per cent recorded in Q4 2025, the moderation was not unusual due to seasonal and business cycle factors associated with the first quarter of the year.
He explained that the services sector remained the principal driver of growth, contributing 57.73 per cent to GDP and expanding by 4.31 per cent, with ICT, financial services, entertainment, trade and construction posting impressive performances.
“The ICT sector grew by 10.98 per cent, financial services expanded by 8.54 per cent, while entertainment recorded 11.25 per cent growth, demonstrating the resilience of the digital and services economy despite prevailing macroeconomic challenges,” he said.
The CPPE boss also highlighted the emergence of the trade sector as the largest contributor to GDP at 17.89 per cent, attributing the performance to improved exchange rate stability, better foreign exchange liquidity conditions and easing inflationary pressures.
However, he stressed that sustainable economic transformation cannot rely solely on commerce, warning that stronger productive capacity, industrialization and domestic value addition are necessary for durable growth.
According to the report, the manufacturing sector recorded a modest growth of 3.29 per cent, an improvement from the 1.13 per cent growth posted in Q4 2025. Yusuf said the recovery was largely supported by petroleum refining, food and beverages, cement, chemicals and pharmaceuticals.
Despite the improvement, he observed that manufacturing’s contribution to GDP remains below 10 per cent, reflecting persistent structural challenges including high energy costs, elevated interest rates, weak infrastructure, logistics bottlenecks and policy uncertainties.
He described industrialization as the most sustainable pathway to large-scale job creation, export competitiveness and inclusive economic growth.
The CPPE further identified the electricity and gas sector as the weakest-performing segment of the economy after it contracted by 15.30 per cent during the quarter.
Yusuf described the development as a major red flag for economic sustainability, noting that electricity remains the foundation of productivity, industrialization and competitiveness.