ABUJA, Nigeria — Nigeria’s economy is showing signs of stronger and more stable growth following a series of major government reforms, officials and international partners say, although the policies continue to put pressure on households and businesses through higher living costs and other short-term challenges.
The reforms introduced by President Bola Tinubu’s administration include the removal of petrol subsidies, foreign-exchange changes and a major overhaul of the tax system.
Outgoing British High Commissioner Richard Montgomery said the reforms were difficult but necessary to place Africa’s most populous country on a stronger economic footing over the long term.
Speaking during a farewell visit to the Nigeria Revenue Service in Abuja, Montgomery acknowledged that devaluation and inflation had created hardship for ordinary Nigerians.
“I know that a lot of the economic reforms are tough, and they can cause short-term pain for ordinary people,” Montgomery said. He nevertheless described the reforms as fundamental to restoring Nigeria’s economic vitality.
Recent data shows that Nigeria’s real gross domestic product grew by 3.89% in the first quarter of 2026, up from 3.13% in the same period of 2025, although below the 4.07% recorded in the final quarter of last year.
The services sector remained the biggest contributor to economic activity, accounting for 57.73% of real GDP. Agriculture also performed more strongly, while the industrial sector recorded moderate growth.
The non-oil economy accounted for more than 96% of real GDP during the quarter, highlighting the country’s effort to reduce its dependence on crude oil.
Revenue collection has also improved. The Nigeria Revenue Service collected 21.6 trillion naira in tax revenue between January and June 2026, about 49% higher than the 14.27 trillion naira recorded during the same period in 2025.
The increase is important for Nigeria, which has historically struggled to generate enough domestic revenue to finance public services and infrastructure. A narrow tax base has left successive governments heavily dependent on oil earnings and borrowing.
The government says stronger domestic revenue is essential to reducing dependence on volatile oil income and providing more reliable funding for roads, schools, health care and other public services.
But the economic transition has come with significant costs.
Tinubu’s decision to remove the petrol subsidy in May 2023 pushed up fuel and transportation costs. The government also changed the foreign-exchange system, leading to a sharp adjustment in the value of the naira.
Supporters of the reforms argue that delaying the changes would have left Nigeria facing even greater fiscal difficulties.
There have also been signs of improving economic confidence. S&P Global Ratings upgraded Nigeria’s long-term sovereign credit rating from B- to B in May, citing higher oil production and prices, increased domestic refining capacity and the effects of exchange-rate reforms. The agency also noted progress in broadening the tax base and improving Nigeria’s debt-to-revenue outlook.
The World Bank has projected that Nigeria’s economy will grow by about 4.2% in 2026, while warning that continued fiscal discipline and deeper structural reforms will be needed to sustain the recovery and make growth more inclusive.
The central challenge now is whether improved revenue collection and greater economic stability can translate into better wages, more jobs, lower poverty and stronger public services.
For now, Nigeria’s economic picture remains mixed. Growth and fiscal indicators are improving, but many households continue to feel the cost of the adjustment. The long-term success of the reforms will ultimately depend on whether their benefits reach ordinary Nigerians.
Nigeria’s current reform programme began with the May 2023 removal of the petrol subsidy, followed by foreign-exchange reforms. The latest tax overhaul represents another major phase of the effort to strengthen domestic revenue and reduce dependence on oil.
