CBN: Steering Nigeria’s Economy Through Challenges

Omolabake Fasogbon

As Nigeria enters 2026, the Central Bank of Nigeria (CBN) has set the stage for a cautiously optimistic economic trajectory, reflecting both the resilience of the domestic economy and the bank’s proactive policy measures.

While unanticipated headwinds may affect the inflation outlook, the institution’s approach emphasises preparedness, monitoring, and strategic interventions to ensure macroeconomic stability and sustainable growth.

In its recently released ‘Macroeconomic Outlook for Nigeria, 2026, titled: ‘Consolidating Macroeconomic Stability Amid Global Uncertainty,’ the apex bank pointed out that global commodity markets remain a key determinant of domestic prices, and recent geopolitical tensions in America, Europe and the Middle East have underscored the interconnectedness of economies.

Fluctuating oil and gas prices, while posing potential inflationary pressures, also present opportunities for increased export earnings and fiscal revenue. The CBN’s forward-looking policies are designed to mitigate risks to domestic prices, including targeted interventions in the foreign exchange and monetary sectors, ensuring that any global shocks are absorbed without destabilizing the economy.

Trade dynamics, too, are evolving. Rising protectionism in some parts of the world may increase costs and disrupt supply chains, but Nigeria’s growing focus on local production, import substitution, and strategic partnerships positions the economy to weather these challenges. By encouraging domestic manufacturing and agricultural development, the CBN is not only safeguarding the nation from external price shocks but also stimulating job creation and economic diversification.

Domestic fiscal activity, particularly pre-election spending and extra-budgetary outlays, has historically influenced inflation.

The CBN remains vigilant, coordinating with the Ministry of Finance and other regulatory agencies to monitor expenditure patterns and prevent destabilizing excesses. By promoting prudent fiscal-monetary collaboration, the bank aims to support economic growth while maintaining price stability, a balance critical to sustaining consumer confidence and investor interest.

Food security, a major determinant of inflation in Nigeria, is also a key focus area. Security challenges in food-producing regions, as well as potential adverse weather conditions, could impact food supply and prices.

The CBN, however, has partnered with stakeholders across agriculture, transport, and trade to strengthen supply chains, improve storage facilities, and provide financial support to farmers. Such measures not only mitigate potential price shocks but also enhance the resilience of the food sector, reinforcing the nation’s long-term economic stability.

The CBN’s 2026 outlook highlights a commitment to sustained disinflation, even in the face of unpredictable headwinds.

By leveraging data-driven monitoring tools, advanced modeling, and international best practices, the bank is able to anticipate risks and respond effectively. This proactive approach ensures that inflationary pressures remain manageable, preserving purchasing power for households and stability for businesses. Investment climate and market confidence are central to the bank’s strategy. The CBN continues to foster an environment conducive to both local and foreign investment, emphasizing transparency, predictable policy frameworks, and financial sector reforms. Such measures strengthen the resilience of the economy, encourage capital inflows, and support job creation across key sectors.

Nigeria’s banking sector, under the guidance of the CBN, remains a pillar of economic stability. With strengthened regulatory oversight, improved risk management practices, and innovative financial instruments, banks are well-positioned to support credit growth and liquidity in the economy. These developments ensure that businesses and households have access to the financial resources necessary to thrive, even amid external and domestic pressures.

The CBN’s economic outlook also underscores the importance of technological adoption. By embracing digital finance, data analytics, and fintech innovations, the bank is enhancing efficiency, reducing transaction costs, and improving financial inclusion. These efforts not only support monetary policy implementation but also empower citizens and businesses to participate fully in the modern economy.

Importantly, the 2026 projections recognise that challenges, while real, are manageable and provide opportunities for strategic growth.

Elevated commodity prices, pre-election spending, and supply disruptions, if addressed proactively, can catalyse reforms, strengthen local production, and encourage investment in critical sectors such as agriculture, energy, and manufacturing.

For 2026, the Olayemi Cardoso-led CBN has said it will prioritise four strategic pillars to achieve monetary and price stability, financial sector resilience, and external sector strengthening, to sustain a market-determined exchange rate, reserves, and support stable and predictable growth this year and next. Additionally, the central bank would partner with fiscal authorities to ensure fiscal sustainability and structural transformation of the Nigerian economy.

The first Pillar is Strengthening Monetary Policy. According to the CBN, under this Pillar, it will focus on effectiveness communication for price stability, sustain commitment to price stability by continued deployment of orthodox monetary policy measures, enhance forward guidance and policy transparency through improved monetary policy communication to anchor market expectations and strengthen monetary–fiscal coordination to foster a predictable economic climate, ensure price stability and engender sustainable growth.

The expected outcomes under this Pillar include sustained disinflation as it anticipates headline and core inflation would decelerate steadily as policy tightening transmits more effectively; inflation expectations would be more anchored, with reduced volatility in food and energy price dynamics, more credible and better understood Monetary policy signals, improved investor confidence and capital inflows., and greater clarity in communication and stronger policy coherence, among others.

Under the second Pillar, the CBN plans to focus on safeguarding financial stability and deepening domestic financial markets. It intends to achieve this through real-time monitoring of FSIs by sector, geography, and institution to support early warning systems and policy response; automation of comprehensive stress-testing and asset quality reviews across banks to enhance the identification of hidden impairments and sectoral vulnerabilities, deepen the operational integration of the GSI framework across all financial institutions to enhance loan recovery efficiency and credit discipline, and strengthen adherence to data privacy laws across banks and fintech operators to safeguard digital financial ecosystems from breaches and systemic risks, among others.

Part of the expected outcomes under this Pillar include enhanced resilience of banks and financial institutions, stress-testing and automated asset reviews to allow early detection and mitigation of latent impairments, among others.

Pillar three focuses on enhancing external sector stability and international competitiveness. Here, the apex bank will sustain enforcement of the Nigerian FX Code (2025) to maintain price discovery and discourage illicit FX trades, strengthen local-currency settlement in intra-African trade through improved documentation and PAPSS initiative to reduce dependence on the dollar, fast-track harmonisation of documentation standards in collaboration with the Nigerian Customs Service, Nigerian Ports Authority and Nigerian Maritime Administration and Safety Agency after the launch of the National Single Window this quarter, among others.

This is expected to deliver a more stable and transparent FX market, a narrower FX premium between the NFEM and BDC rates, and lower speculative attacks on the naira; market-determined exchange rates reflect fundamentals more closely and improve price discovery, among others.

Pillar four of the CBN’s policy priorities focuses on supporting sustainable growth and structural transformation. It will achieve this by ensure effective implementation of the Nigeria Tax Act, 2025, to deliver sustainable fiscal outcomes supporting productive activity and social services; sustain security surveillance and deepen community engagement (PIA, 2021) to stabilise crude oil production, boost revenues, and strengthen fiscal buffers, implement cost control measures and prioritise capital expenditure that supports growth (infrastructure, energy, transport), accelerate investment in roads, rail, and inland waterways through PPPs to reduce logistics bottlenecks, amongst others.

These are expected to lead to improved fiscal sustainability and revenue mobilization, effective implementation of the Nigeria Tax Act, 2025, increase non-oil revenues and reduce fiscal deficits, and enhanced capacity for social spending and capital investment, boosting inclusive growth, among others.

Clearly, the CBN’s outlook reflects a forward-thinking approach that balances vigilance with optimism. By monitoring risks, reinforcing domestic production, and coordinating closely with fiscal authorities, the bank is ensuring that Nigeria’s economic fundamentals remain robust. The 2026 economic strategy embodies resilience, inclusivity, and stability. These are qualities that will underpin sustainable growth and improve the welfare of all Nigerians.

In conclusion, while uncertainties in global markets, domestic security, and fiscal policy may create temporary pressures, the CBN’s proactive policies, strategic foresight, and commitment to collaboration position the nation for a positive and resilient economic performance in 2026. Through strengthened monetary management, support for domestic production, and encouragement of investment and innovation, the CBN is laying the groundwork for a stable economy capable of weathering external shocks, delivering growth, and improving the lives of Nigerians across the country.