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Professional services firm PwC has cautioned Nigerian businesses against expecting rapid relief from high interest rates, even as macroeconomic conditions improve and inflation continues to ease.
The warning was issued at PwC’s Executive Roundtable on Nigeria’s 2026 Budget and Economic Outlook, held in Lagos in partnership with BusinessDay. The session brought together PwC partners, economists, and private sector leaders to assess Nigeria’s recovery prospects ahead of 2026.
According to PwC, while economic stability is gradually returning, monetary policy easing is likely to be cautious. The Central Bank of Nigeria’s Monetary Policy Committee reduced the Monetary Policy Rate (MPR) by just 50 basis points in 2025, leaving the benchmark rate at 27 per cent — a level manufacturers and other businesses say continues to constrain growth.
Speaking at the event, PwC’s Chief Economist, Olusegun Zaccheaus, said falling inflation creates room for lower rates but warned against expectations of sharp or accelerated cuts.
“Interest rates were raised to manage inflation, and as inflation slowed, some central banks began easing,” he said, citing Ghana’s recent rate reductions. “Nigeria has also adjusted, but the pace of reduction may not be as fast as businesses desire. The naira has been relatively stable, and sustaining that stability comes at a cost — interest rates will not fall as quickly as many hope.”
Zaccheaus added that Nigeria’s election cycle in 2026 would further limit the scope for aggressive easing. He explained that pre-election periods typically come with liquidity expansion, which requires tighter monetary management to prevent inflation from rebounding.
Despite a generally positive outlook for 2026, he warned that external risks remain significant. “The global environment is becoming increasingly unstable,” Zaccheaus said, pointing to geopolitical tensions, oil market disruptions, and policy shifts in major economies as potential threats to Nigeria’s recovery.
He noted that oil revenues and foreign exchange inflows remain key vulnerabilities, adding that any shock to global oil prices or production could undermine Nigeria’s budget assumptions and fiscal stability.
In his opening remarks, PwC Nigeria’s Regional Senior Partner for the West Market Area, Sam Abu, said business confidence in Nigeria is now stronger than global averages. He cited PwC’s CEO Survey, which shows that 90 per cent of Nigerian CEOs expect economic improvement over the next 12 months, compared with significantly lower optimism globally.
However, Abu cautioned that confidence alone is not enough. “Improved macroeconomic stability reflects disciplined monetary and FX reforms, but stability is not the end goal,” he said. “Business leaders must manage near-term risks such as geopolitical and cyber threats, while investing for long-term opportunities in technology, data, and AI.”
Also speaking at the event, BusinessDay publisher Frank Aigbogun argued that Nigeria’s fiscal challenge is rooted more in weak revenue generation than excessive spending. “Nigeria has a top-line problem,” he said, noting that the country can currently afford only about 30 per cent of what is required for development.
He emphasised the link between taxation and accountability, stating that stronger tax compliance would increase citizens’ demand for effective governance.
On the 2026 budget, PwC Partner and Tax Reporting and Strategy Lead, Kenneth Erikume, warned that delays in capital expenditure are undermining economic growth. He said persistent dominance of recurrent spending and slow release of capital funds weaken infrastructure development and dampen long-term growth prospects.
“You cannot build a sustainable economy when capital spending is consistently delayed,” Erikume said, adding that execution gaps risk derailing Nigeria’s ambition to build a $1 trillion economy.
The roundtable featured a panel discussion moderated by PwC Partner and Africa Family Business Leader, Esiri Agbeyi, with contributions from leaders across the energy, manufacturing, investment, and technology sectors.
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