The Nigerian Economic Summit Group (NESG) has cautioned the Federal Government against reversing fuel subsidy reforms, warning that such a move could destabilise the economy and undermine recent gains.
Speaking during a media briefing on Friday, NESG Head of Research, Dr. Joseph Ogebe, described 2026 as a “make-or-break” year for Nigeria, stressing the urgency of consolidating macroeconomic progress and translating it into tangible benefits for citizens.
Growth Too Weak to Reduce Poverty
While noting that the economy has shown signs of recovery, with growth estimated at 3.9 per cent, Ogebe said the rate remains insufficient to significantly reduce poverty. He emphasised that Nigeria must achieve at least 6 per cent growth to drive meaningful improvement in living standards.
According to him, the current growth trajectory is narrow and unsustainable, largely driven by sectors such as finance, ICT and oil and gas, while critical job-creating sectors continue to lag. He pointed out that manufacturing grew by just 1.5 per cent in 2025, while agriculture recorded about 2.2 per cent growth—figures he described as weak, especially against a population growth rate of around 3 per cent.
Also speaking, NESG Chief Economist and Director of Research, Dr. Olusegun Omisakin, called for urgent structural reforms to boost growth in agriculture and manufacturing to between 4 and 5 per cent in the near term, and up to 6–8 per cent over the medium term.
Omisakin raised concerns over mounting fiscal pressures, revealing that debt servicing obligations have surged by about 60.7 per cent, while capital expenditure has declined by roughly 70 per cent. He warned that such trends could constrain growth and limit the government’s ability to invest in critical infrastructure.
On fuel subsidy reforms, he cautioned against any policy reversal, recalling that Nigeria previously relied on borrowing to finance subsidies, leaving little room for development spending. He warned that returning to that path could erode fiscal stability, particularly as political cycles intensify.
Oil Price Windfall Must Be Managed Carefully
The NESG also highlighted global risks and opportunities, particularly tensions in the Middle East involving the United States, Israel and Iran. Omisakin noted that rising global oil prices—currently approaching $100 per barrel, above Nigeria’s budget benchmark of $60–$70—could boost government revenues.
However, he advised that any windfall should be channelled into infrastructure development and social protection, rather than recurrent spending, to cushion vulnerable populations.
He further warned that higher fuel prices could push inflation upward by between one and five percentage points from the current rate of about 15 per cent, describing inflation as a major threat to purchasing power and cost of living.
To address inflation, Omisakin advocated a productivity-driven strategy, alongside reforms to boost domestic production. He also stressed the need to improve electricity supply, recommending an increase in power generation to at least 7,000 megawatts by 2027 to support industrial expansion.
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In addition, he called for stronger institutions, adherence to the rule of law, and effective implementation of tax reforms to enhance revenue mobilisation.
Looking ahead, the NESG projected a more optimistic outlook if reforms are sustained, with growth expected to reach 5.5 per cent in the short term and rise to between 6.5 and 7.5 per cent by 2027–2028. By 2029, the economy could expand by as much as 8.5 per cent, with single-digit inflation and the creation of over three million jobs annually.
However, the group warned that failure to maintain reform momentum could see growth decline to between 2 and 3 per cent, alongside rising fiscal deficits, weakening investor confidence, and worsening poverty levels.
The NESG urged the government to stay the course on reforms and ensure that economic gains are broad-based and inclusive, improving outcomes for ordinary Nigerians.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
