Nigeria's economy expanded by 3.89 percent year-on-year in the first quarter of 2026. The growth reflects ongoing macroeconomic stabilization and strength in non-oil sectors.
But experts warn the figures hide troubling structural flaws. These weaknesses could derail long-term economic progress, they caution.
The Centre for the Promotion of Private Enterprise released the warning in a policy brief this week. It followed the National Bureau of Statistics' Q1 GDP report.
Muda Yusuf heads CPPE. He noted the 3.89 percent rate beats the 3.13 percent recorded a year earlier.
Yet serious constraints threaten the economy's future, according to him. Power supply, manufacturing output, and export capacity all remain fragile.
"Businesses face severe consequences," Yusuf told reporters. Rising interest rates, transport costs, and low consumer spending already squeeze firms hard.
Power shortages make it worse. Companies burning diesel and petrol for electricity eat deeper into profits across sectors.
Manufacturing, small businesses, hotels, food processors, and tech firms all suffer, he explained. Self-generation costs drain resources they badly need.
Growth slipped slightly from 4.0 percent in the final quarter of 2025. Yusuf said seasonal patterns usually cause such Q1 slowdowns.
Services remain the economy's backbone. This sector contributed 57.73 percent of GDP and grew 4.31 percent.
Technology services led the charge. ICT expanded 10.98 percent, financial services jumped 8.54 percent, and entertainment grew 11.25 percent.
Trade emerged as the single biggest contributor to overall GDP. It now accounts for 17.89 percent of economic output.
Better naira stability helped trade flourish. Foreign exchange conditions improved and inflation began easing, Yusuf noted.
But commerce alone cannot drive lasting prosperity. Nigeria needs stronger manufacturing and domestic production capacity, he warned.
Manufacturing did improve to 3.29 percent growth from 1.13 percent last quarter. Oil refining, food and drinks, cement, chemicals and drugs led the bounce.
Still, manufacturing represents less than 10 percent of GDP. Energy costs, borrowing expenses, poor infrastructure and policy confusion keep the sector weak.
Industrialization offers the best path forward. It creates jobs at scale, builds export strength, and spreads prosperity widely, Yusuf insisted.
One sector collapsed entirely in the quarter. Power and gas contracted 15.30 percent.
Yusuf called this a grave danger sign. Economic sustainability depends on fixing electricity generation immediately, he stressed.
