CPPE Director Highlights Fragile Economic Conditions Despite Q1 Gains
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has issued a policy brief indicating that Nigeria's economy in the first quarter of 2026 demonstrated some level of macroeconomic stability. However, this progress is significantly overshadowed by persistent structural challenges, mounting welfare pressures, and considerable headwinds that continue to plague the real economy.
Macroeconomic Stability Versus Microeconomic Fragility
Dr. Yusuf noted that while key macroeconomic indicators showed improvement during Q1, including a downward trajectory in inflation and strengthened foreign exchange conditions, the microeconomic landscape remains fragile. External reserves have strengthened considerably, and growth momentum has remained positive, with business activity indicators such as the Purchasing Managers' Index consistently above the 50-point expansion threshold. Monetary policy has also begun to reflect these improvements, yet the overall economic environment is far from robust.
The most pressing challenges include a pronounced cost-of-living crisis, elevated energy costs, persistent insecurity concerns, and deep-seated structural rigidities that constrain productivity and investment. Energy costs, in particular, remain a major burden for businesses, as firms heavily rely on gas, diesel, or petrol generators due to unreliable grid electricity. With fuel prices still elevated and further pressured by ongoing geopolitical tensions in the Middle East, energy has become one of the largest components of production and logistics costs across various sectors.
Insecurity and High Cost of Capital
Insecurity continues to pose serious economic risks, disrupting key agricultural zones and constraining food supply, which sustains inflationary pressures and weakens rural economic activity. This insecurity also undermines logistics efficiency, investment flows, and overall economic confidence. Additionally, the cost of capital remains high, with lending rates to the real sector staying elevated despite recent policy rate moderation. This constrains access to credit, particularly for Small and Medium-sized Enterprises (SMEs), hindering their growth and contribution to the economy.
Cautiously Optimistic Outlook for Q2 with Considerable Risks
Looking ahead to the second quarter of 2026, Dr. Yusuf expressed a cautiously optimistic outlook but warned of considerable risks. The trajectory of macroeconomic stability is vulnerable to external shocks, especially evolving geopolitical tensions. Furthermore, the intensifying political cycle ahead of the 2027 elections could pose risks to policy focus and reform momentum. Fiscal execution constraints remain a critical concern, with implications for budget implementation, infrastructure delivery, and overall economic performance. The current disinflation trajectory is fragile and susceptible to reversal, highlighting the need for sustained efforts to address underlying issues.
Peter Obi Calls for Resilience Amid Economic Hardship
In a related development, the 2023 presidential candidate of the Labour Party, Peter Obi, has called for collective sacrifice and responsible leadership to build a better Nigeria. In his Easter message shared via social media, Obi urged Nigerians to remain steadfast in hope despite the country's challenges. He acknowledged the heavy burden many families are carrying due to economic hardship and encouraged resilience, stating that these difficult moments are temporary trials that can lead to renewal if people remain committed to the common good.
Obi emphasized that the economic hardship faced by many requires a collective effort and a focus on long-term solutions rather than short-term fixes. His message resonates with the CPPE's findings, underscoring the need for comprehensive strategies to tackle structural issues and improve welfare conditions for all Nigerians.
