Nigeria’s economic growth may weaken in 2027, AfDB projects

Nigeria's economic growth is projected to decelerate to 3.7 percent in 2027, according to the African Development Bank Group (AfDB). This slowdown is primarily linked to an anticipated easing of global oil prices, which is expected to reduce external revenue inflows into Africa's largest economy. The AfDB's "African Economic Outlook 2026" report indicates a modest improvement in 2026, with growth expected to rise to 4.1 percent from an estimated 4.0 percent in 2025.

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Growth in Nigeria, the region’s largest economy, is projected to increase marginally from an estimated 4.0 per cent in 2025 to 4.1 per cent in 2026, supported by increasing oil prices and production, growth in the services sector, and increased public investment in electricity, transport, and logistics. In 2027, growth is projected to decelerate to 3.7 per cent on account of the anticipated easing of global oil prices and thus reduced external revenue inflows.

The projected growth in 2026 is supported by several factors, including increasing oil prices and production, expansion within the services sector, and heightened public investments in critical areas such as electricity, transport, and logistics. However, the outlook for 2027 anticipates a reversal of these trends as oil prices soften, impacting Nigeria's external revenue streams.

The AfDB also issued a broader warning regarding the medium-term economic outlook for Africa. The continent's economies remain vulnerable to a range of risks, including ongoing supply chain disruptions, persistent inflationary pressures, currency depreciation, and tightening global financial conditions. The report highlights that elevated fuel and fertilizer prices could negatively affect agricultural output, exacerbate food insecurity, and worsen inflation across the continent.

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Africa’s medium-term outlook remains vulnerable to supply chain disruptions, inflationary pressures, exchange rate depreciation, and tightening global financial conditions.

Furthermore, the bank cautioned that sustained global shocks could increase debt vulnerabilities, raise borrowing costs, weaken fiscal balances, and constrain public investments and essential social spending in African nations. To mitigate these impacts, the AfDB urged African countries to implement coordinated fiscal, monetary, and structural reforms. The report also stressed the importance of improving domestic resource mobilization, broadening tax bases, digitizing tax administration, and enhancing transparency in public resource management. Additionally, African economies need to strengthen their capacity to attract and retain external financial flows, particularly in emerging sectors like renewable energy and data centers.

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Addressing the adverse impacts of successive waves of shocks and increasing geopolitical fragmentation on African countries requires a holistic approach, comprehensive policy, and financing. African central banks need to implement prudent monetary and exchange rate policies tailored to anchoring long-term inflation expectations.