Flooding, insecurity threaten agriculture, food supply, non-oil growth
Stronger oil recovery, capital inflows may push growth above projections
Emmanuel Addeh in Abuja
The Nigerian Economic Summit Group (NESG) has warned that Nigeria’s economic growth outlook for the second half of 2026 could be threatened by global economic and geopolitical shocks, rising political activities ahead of the 2027 general elections, persistent insecurity and climate-related disruptions.
In its H1 2026 State of the Economy report titled: “Turning Potential into Progress: Accelerating Nigeria’s Industrialisation for Economic Transformation”, the NESG identified a combination of domestic and external factors capable of weakening the country’s macroeconomic stability, slowing non-oil sector expansion and undermining investor confidence.
The group, however, noted that stronger-than-projected recovery in the oil sector, increased foreign capital inflows and faster implementation of structural reforms could provide significant upside to the country’s growth outlook. Oil prices have hovered between $80 to $120 this year. The projection for 2026 was $64.85 per barrel.
The NESG warned that a sharper-than-expected slowdown in global economic growth, renewed trade tensions and tighter global financial conditions could adversely affect Nigeria’s economy by weakening export earnings, reducing foreign exchange inflows and constraining fiscal revenues.
According to the report, an abrupt easing of geopolitical tensions could also lead to lower crude oil prices, with implications for Nigeria’s export earnings and government revenues, while increasing pressure on the exchange rate.
Conversely, it said a further escalation of geopolitical conflicts could worsen global inflationary pressures and result in tighter external financing conditions, creating additional challenges for the Nigerian economy.
On domestic political risks, the NESG cautioned that intensifying political activities ahead of the 2027 general elections could weaken the momentum of ongoing economic reforms and place fiscal discipline under considerable pressure.
It noted that increased pre-election spending could undermine macroeconomic stability, delay critical structural reforms and weaken investor confidence at a period when the country is seeking to consolidate recent gains in economic stabilisation.
“As political activities intensify ahead of the 2027 General Elections, reform momentum. could weaken while fiscal discipline comes under pressure from increased pre-election spending. This could undermine macroeconomic stability, delay structural reforms, and reduce investor confidence,” it added.
The report also identified persistent insecurity, particularly in the North-central and North-west regions, as a major threat to economic growth.
According to the NESG, continued security challenges could disrupt agricultural production and mining activities, while also affecting the movement of goods and services across the country.
It stated that the situation could discourage both domestic and foreign investment and ultimately weaken the growth of Nigeria’s non-oil economy.
The policy think tank further warned that flooding, extreme weather events and other climate-related disruptions posed additional risks to growth, particularly through their impact on agriculture, food supply chains and infrastructure.
It said such disruptions could worsen food inflation and constrain economic expansion, especially if they lead to significant losses in agricultural production and further pressure on already fragile supply systems.
Despite the downside risks, the NESG identified a number of factors that could cause economic growth to outperform current projections.
One of such factors, it said, was a stronger-than-expected recovery in the oil sector, driven by higher crude oil production, improved security around oil-producing areas and critical pipeline infrastructure, reduced crude theft and increased upstream investment.
The group added that stronger global oil prices could further improve Nigeria’s fiscal revenues and external reserves, potentially accelerating economic growth beyond current projections. The NESG also identified higher foreign capital inflows as another major upside risk to the outlook.
It said continued macroeconomic reforms, stronger policy credibility, improved foreign exchange market liquidity, favourable sovereign credit rating actions and greater exchange rate stability could strengthen investor confidence.
According to the report, these developments could attract larger portfolio and foreign direct investment inflows, improve foreign exchange liquidity and stimulate increased private sector investment.
In addition, the group said faster implementation of structural reforms could significantly strengthen productivity and support more sustainable growth.
It noted that accelerated reforms in the tax and power sectors, infrastructure development and the broader business environment could lower the cost of doing business and crowd in private investment.
Such reforms, the NESG said, could also accelerate manufacturing-led industrialisation and support stronger growth in Nigeria’s non-oil economy.
The warning comes as the NESG projected that Nigeria’s economy will grow by about 4.2 per cent in 2026, with growth expected to strengthen further in the second half of the year.