As Nigeria prepares for 2026, multiple institutions have rolled out bullish GDP forecasts, projecting steady growth and macroeconomic stability. But beneath the optimism lies a critical question: is the country realising its full economic potential? In this report, Chima Nwokoji takes a closer look at the country’s growth projections and examines whether the ambitions match its vast resources and demographic advantage.

Nigeria is once again learning how to celebrate modest victories in a country built for monumental success. The latest economic growth projections offer cautious optimism, yet they expose a deeper contradiction: Africa’s most populous nation, rich in resources and entrepreneurial energy, continues to set its ambitions far below its true productive capacity.

EnterpriseNGR, aligning with the World Bank and IMF, projected Nigeria’s GDP growth at 4.4 percent in 2026. The forecast was presented by Omotayo Murtala, Head of Research at EnterpriseNGR, during its 2026 Macroeconomic Outlook, “Reforms-Led Stability: Boosting Confidence, Unlocking Sustainable Growth,” held with EY in Lagos. The Federal Government echoed optimism: Minister of Finance, Wale Edun, projected 4.68 percent growth, citing easing inflation, improved foreign exchange stability, and continued fiscal reforms. The Nigerian Economic Summit Group (NESG) went further, projecting 5.5 percent growth, 16 per cent inflation, and foreign reserves rising to $52 billion—conditional on sustained reforms and policy continuity.

On the surface, this looks like progress.

When stability is mistaken for success

After years of currency volatility, inflation, and investor skepticism, Nigeria is reclaiming macroeconomic credibility. The IMF praised “decisive fiscal and monetary reforms,” revising growth to 3.9 percent for 2025 and 4.2 percent for 2026. These measures stabilise the economy, reduce inflation, and strengthen foreign exchange reserves.

But beneath the applause lies a harsh truth: for a nation like Nigeria, 4–5 percent growth is not triumph. It is maintenance. It barely prevents economic deterioration. With over 200 million people—140 million living in poverty—these growth rates cannot meaningfully transform living standards, generate sufficient employment, or build sustainable prosperity. Economists consistently argue that Nigeria needs at least 8–10 percent annual growth to structurally reduce poverty and absorb its rapidly expanding workforce.

Nigeria’s tragedy is that it celebrates growth numbers considered disappointing in smaller, less-endowed economies. The 2025 GDP rebasing delivered a sobering shock: Nigeria’s economic size was revised downward to roughly $280 billion, falling from Africa’s largest economy to fourth place. Growth in Q3 2025 slowed to 3.98 percent, down from 4.23 percent the previous quarter, exposing the fragility of its recovery.

By comparison, Africa’s combined GDP is projected at $3.32 trillion in 2026. South Africa alone is expected to produce $443.64 billion, Egypt $399.51 billion, and Nigeria $334.34 billion—despite Nigeria’s population exceeding the other two combined. South Africa, with less than 30 percent of Nigeria’s population, maintains a stronger stock market, deeper capital base, and more sophisticated financial ecosystem. Egypt, leveraging the Suez Canal and massive infrastructure investments, is positioning itself as a logistics and trade powerhouse.

Nigeria, by contrast, remains trapped between promise and paralysis. It has Africa’s largest consumer market, one of the youngest populations globally, vast arable land, energy resources, and a vibrant entrepreneurial culture. Yet infrastructure deficits—especially in power, transport, and logistics—continue to choke productivity. Electricity is unreliable, raising production costs and discouraging manufacturing. Transportation bottlenecks weaken internal trade. Policy uncertainty erodes investor confidence.

What Nigeria calls growth is, in reality, economic resilience rather than transformation. Stability has returned, but power has not. Momentum exists, but magnitude is missing. Growth below 5 percent in a high-population economy does little more than manage poverty, not eradicate it.

Nigeria and Indonesia: A tale of divergent choices

To grasp Nigeria’s missed potential, consider Indonesia—a nation that once resembled Nigeria. Tilewa Adebajo, CEO CFC Advisory and economic thinker, frames it clearly:

“In the late 1990s, Nigeria and Indonesia were similar in demographics, resources, and GDP, both under $200 billion. By 2017, Indonesia’s GDP surpassed $1 trillion, while Nigeria’s fell from over $600 billion in 2014 to $400 billion by 2017. By 2025, Indonesia reached $1.4 trillion, Nigeria $280 billion. The $1.2 trillion gap reflects decades of policy inconsistency and unexploited potential.”

This is not just statistical divergence—it is civilisational divergence. Two nations with similar starting points and resource endowments chose different policy paths. Indonesia made stability productive; Nigeria made volatility habitual.

Indonesia invested heavily in manufacturing, export competitiveness, infrastructure, and human capital, transforming from a commodity-based economy into one driven by industrial production and global supply chain integration. Nigeria deepened its dependence on oil revenue while failing to build a strong industrial backbone. Oil price crashes exposed fragility; oil booms masked structural weaknesses. Indonesia turned growth into compounding power. Nigeria turned growth into episodic relief.

By 2025, Indonesia was integrated into Asian manufacturing chains, benefiting from steady capital inflows. Nigeria, once the pride of Africa, had shrunk into a shadow of its potential. The $1.2 trillion gap is the monetary cost of inconsistent policy and missed structural reform.

Africa’s own rankings further expose Nigeria’s stagnation. In 2026, South Africa is projected at $443.64 billion, Egypt at $399.51 billion, Nigeria $334.34 billion, Algeria $284.98 billion, and Morocco $196.12 billion. Yet size alone does not tell the story. Morocco, with a fraction of Nigeria’s population, has thriving automotive and aerospace industries. Egypt dominates logistics via the Suez Canal. South Africa leads in financial architecture. Ethiopia grows over 7 percent, investing in energy and industrial parks. Côte d’Ivoire is becoming West Africa’s financial hub. Nigeria, with unmatched demographic power, remains structurally slower than smaller peers.

The question is not why Nigeria grows, but why it grows so little relative to its potential. The Central Bank Governor, Olayemi Cardoso, projects a trade surplus of about six percent of GDP. Positive, but trade surplus without industrial expansion is fragile. It must be backed by manufacturing depth, technological upgrading, and export diversification—Indonesia understood this early. Nigeria still debates it.

International capital is flowing aggressively into Africa. China alone signed $30.5 billion in African construction contracts in H1 2025—nearly five times the 2024 volume. Railways, ports, power plants, and digital networks are reshaping the continent. Yet Nigeria captures far less than its size suggests, as investors see opportunity but fear execution risk. Capital is allergic to uncertainty; it rewards continuity. Indonesia mastered that discipline; Nigeria repeatedly violated it.

The $1.2 trillion divergence is not money Indonesia gained—it is opportunity Nigeria abandoned. And if Nigeria continues to treat 4–5 per cent growth as success, the gap will only widen.

From money to capital: Nigeria’s path forward

Nigeria’s struggle is not fundamentally about growth rates. It is about the kind of growth, the structures that sustain it, and the economic philosophy guiding decisions. Professor Ndubuisi Ekekwe warns:

“If the country were anywhere near optimal efficiency, its GDP should be closer to $3 trillion. That gap tells a simple story: Nigeria requires at least a 7× economic expansion to approach equilibrium.”

This is a wake-up call. Nigeria is operating at a fraction of its productive capacity. The difference between a $280 billion economy and a potential $3 trillion economy is philosophical: the difference between managing money and building capital.

Ekekwe notes that nearly 90 per cent of Nigerian companies are structurally incapable of scaling:

“Many are anchored to outdated assumptions, weak foundations, and legacy business models that cannot be redesigned for exponential leverage.”

This structural weakness explains shallow growth. The economy circulates money, but rarely compounds capital. Insurance penetration remains below two percent. Power companies deliver more darkness than light. Clean water is inaccessible to millions. Despite deploying 65 percent of the workforce, Nigeria still battles hunger and low productivity. These are not technical failures—they are structural failures.

History shows transformation is possible. In the 1990s, new-generation banks redesigned trust in financial services. Ekekwe argues similar redesigns are needed across insurance, power, water, education, healthcare, and beyond. Indonesia redesigned its industrial base; South Africa leveraged capital markets; Morocco built manufacturing clusters; Egypt invested in logistics and infrastructure. Nigeria repeatedly applies temporary fixes to permanent problems.

IMF praise is welcome but insufficient. Stability without productivity is like building a runway without airplanes: it creates readiness without flight. Trade surpluses must be backed by industrial expansion, energy capacity, logistics systems, and human capital productivity.

Capital expenditure remains chronically underfunded, sacrificed to debt servicing and recurrent spending. Growth sectors remain underfunded while consumption dominates. Ekekwe warns:

“Money is a subset of capital. Nations that allow money to dominate thinking inevitably underperform. Without capital, money only scales poverty.”

Nigeria remains overly focused on monetary indicators—exchange rates, liquidity, inflation, interest rates—tools, not destinations. Capital builds factories, ports, power grids, technology platforms, and globally competitive enterprises. Capital compounds; money circulates. South Africa demonstrates this: with less than 30 per cent of Nigeria’s population, it runs a $100 billion larger national budget and has a stock market over $1 trillion more valuable. That is not magic—it is capital formation and productivity.

Across Africa, other countries are moving faster. Ethiopia grows over seven per cent with energy investments. Côte d’Ivoire is a regional financial hub. Morocco is Europe’s automotive base. Egypt builds a logistics empire. Kenya consolidates as East Africa’s business nerve centre. Nigeria still debates electricity tariffs and fuel subsidies.

This is the core tragedy behind the 4.4 per cent growth celebration. It signals stabilisation but exposes the smallness of Nigeria’s ambition. For a nation whose potential rivals are Indonesia, Brazil, or India, such growth is restraint. Tilewa Adebajo’s $1.2 trillion divergence with Indonesia and Ekekwe’s $3 trillion potential are a financial and moral indictment.

Nigeria stands at a crossroads:

A large consumer economy that grows slowly; A capital-driven production economy that compounds power.

Choosing the second path requires rejecting 4–5 per cent as adequate, seeing 8–10 per cent as the new minimum, and investing decisively in: Power and transport infrastructure; Industrial manufacturing zones; Technology-driven enterprises; Deep capital markets; Policy continuity across political cycles; Export-led growth strategies; Radical improvements in productivity.

This is how Indonesia became Indonesia. This is how South Africa built financial dominance. This is how Morocco built factories. This is how Nigeria can still redeem itself.

The most dangerous idea in Nigeria today is not pessimism—it is satisfaction. Four per cent growth is good news for a small economy. For Nigeria, it is evidence that a giant still refuses to stand.

Conclusion and summary

Nigeria’s 2026 GDP projected at 4.4% growth, despite vast resources and population. Stability is improving (inflation easing, FX more stable), but growth remains insufficient for poverty reduction or job creation. GDP rebasing shows Nigeria smaller than South Africa and Egypt despite a larger population.

Comparison with Indonesia: similar starting point in the 1990s; by 2025, Indonesia’s GDP reached $1.4T vs Nigeria’s $280B.

Nigeria suffers from: infrastructure deficits, policy uncertainty, over-reliance on oil,

and shallow industrialization. “Money vs Capital” gap: Nigeria circulates money but fails to build scalable capital;

industrial, tech, and financial systems remain weak.Africa is moving faster: Ethiopia 7%+, Morocco manufacturing hub, Egypt logistics leader, Côte d’Ivoire regional finance hub.

To realise potential: invest in infrastructure, industrial zones, tech enterprises, deep

capital markets, export-driven growth, and productivity. Current 4-5% growth is stabilisation, not transformation. Ambition must shift to 8-10% minimum annual growth.

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