Reforms should now focus on lowering production costs, improving productivity, strengthening competitiveness of enterprises—CPPE

Centre for the Promotion of Private Enterprise CPPE has advised the federal government to focus on ensuring that the next phase of reform should focus on lowering production costs, improving productivity and strengthening the competitiveness of Nigerian enterprises.

In its half year report it said “Priority should be given to improving electricity supply, transport infrastructure, logistics efficiency, and port operations; strengthening security in farming communities and along transport corridors; expanding access to affordable long-term finance for productive sectors; accelerating budget implementation, strengthening budget process credibility, and improving infrastructure delivery; and deepening domestic value addition.

“Government revenue should increasingly be driven by efficiency-enhancing reforms rather than additional tax burdens, while policy consistency should be preserved despite increasing political activity ahead of the 2027 elections.

“It is equally important to minimise governance distractions and ensure that electioneering does not weaken the pace of reforms, budget implementation or the quality of economic management.

“The improvement in macroeconomic indicators provides an important foundation for sustainable growth, but it is not sufficient on its own”.

It said as Nigeria “enters the second half of 2026 with its strongest macroeconomic fundamentals in several years this represents an important policy achievement and provides a stronger platform for investment and economic recovery.

“The more fundamental challenge, however, is to ensure that these gains are reflected in stronger business competitiveness, higher private investment, faster job creation and improved living standards.

“The quality of economic management in the remainder of 2026 will therefore be judged less by the stability of macroeconomic indicators than by the extent to which structural reforms improve productivity and reduce the cost of doing business.

“Sustained reform momentum, stronger implementation capacity and continued policy consistency will be critical to translating macroeconomic recovery into durable, broad-based and inclusive economic transformation.

“Nigeria entered the second half of 2026 with markedly stronger macroeconomic fundamentals than at the beginning of the year.

Exchange-rate stability, moderating inflation relative to the exceptionally elevated levels of 2025, stronger external reserves, improved oil production and resilient financial markets have reduced macroeconomic vulnerabilities and strengthened investor confidence.

“However, macroeconomic stabilisation has not yet led to significant, broad-based improvements in productivity, competitiveness, employment and household welfare. Businesses continue to grapple with elevated production costs and structural bottlenecks.

The defining policy challenge for the remainder of 2026 is therefore to convert improved macroeconomic conditions into inclusive, investment-driven and productivity-enhancing growth.

“The first half of 2026 reflected continued progress in macroeconomic stabilisation. Economic growth remained positive, the foreign exchange market became more orderly, external reserves improved, crude oil production strengthened modestly and government revenues benefited from improved oil receipts and stronger non-oil tax collections. Financial markets also remained resilient, supported by improving investor confidence and policy credibility.

“Despite these encouraging developments, the real economy remained under considerable pressure. High interest rates continued to constrain private-sector investment and access to credit, while elevated energy costs, inadequate electricity supply, logistics inefficiencies and weak transport infrastructure sustained a high-cost operating environment.

Manufacturing, agriculture and MSMEs faced persistent competitiveness challenges despite improvements in macroeconomic stability.

“Insecurity continued to undermine agricultural production, disrupt supply chains and discourage investment across several sectors. Meanwhile, capital expenditure implementation remained below expectations because of procurement delays, funding constraints and debt-service pressures, limiting the growth impact of fiscal policy.

“Overall, H1 2026 was characterised by stronger macroeconomic stability but only modest improvements in real-sector performance and household welfare, underscoring the need for deeper structural reforms.

“With respect to the outlook for the second half of 2026, the CPPE remains cautiously optimistic. Economic output performance is expected to remain positive, supported by financial services, telecommunications, construction, trade, oil refining and other service-sector activities.

Although growth is likely to remain below Nigeria’s long-term potential, the economy appears firmly on a gradual recovery path.

“Inflation is expected to remain substantially below 2025 levels, although food supply disruptions, energy costs and developments in global commodity markets remain important upside risks. Exchange-rate stability should be sustained by stronger foreign exchange inflows, healthier reserves and improved market confidence.

“Financial markets are expected to remain broadly resilient, supported by banking-sector recapitalisation, stronger corporate earnings, improved regulatory oversight and sustained institutional participation. Improved domestic refining capacity and stronger crude oil production should also support fiscal revenues, foreign exchange earnings and energy security.

“However, the second half of the year also presents an important downside risk arising from the increasing intensity of political and electioneering activities ahead of the 2027 elections. Election-related spending could inject additional liquidity into the economy, with possible implications for inflationary pressures, foreign exchange demand and macroeconomic management.

“There is also a risk that growing political activity could distract policymakers from economic governance, reform implementation and the execution of critical fiscal and structural policy initiatives.”