Fitch: Despite Nigeria, Africa’s Bright Economic Outlook, AGOA Expiry Poses Challenge

•Predicts sub-Saharan Africa’s GDP to rise to 4.2% in 2026

Emmanuel Addeh in Abuja

The expiry of the African Growth and Opportunity Act (AGOA) duty-free access window presents an immediate challenge to Nigeria and Africa, particularly for African apparel exporters, a report by BMI, a Fitch Solutions Company, has said.

Now that AGOA preferences have lapsed in September 2025, several countries will be forced onto Most-Favoured Nation (MFN) tariff schedules, raising their effective costs of access to the United States market, the report added.

Added to this are Donald Trump-era protectionist tariffs, which continue to weigh heavily on African textile-dependent economies.

In the event that AGOA is not renewed or re-engineered into a more flexible framework, apparel-exporting nations could experience sharper contractions in their US-bound shipments, Fitch said in the report tagged: “ Sub-Saharan Africa Monthly Outlook: Regional Resilience Despite Global Uncertainties”.

With a one-year extension unlikely, the report indicated that near-term demand constraints will persist, and African exporters will have limited room for manoeuvre until governments diversify their trade strategies or the African Continental Free Trade Area (AfCFTA) implementation accelerates.

Despite these structural hurdles, the continent’s broader macroeconomic picture appears increasingly optimistic. This is most evident in Nigeria, where easing inflation is already reshaping economic expectations.

After a turbulent period marked by soaring prices, currency reforms and tight monetary conditions, the Nigerian economy is projected to regain firmer footing from the second half of 2025.

Real Gross Domestic Product (GDP) growth, which dipped earlier due to inflationary pressures and restricted consumer demand, edged up from 4.1 per cent year-on-year in Q2 to 4.2 per cent in Q3, buoyed by stronger gains in hydrocarbons and improved industrial output driven by the Dangote refinery.

BMI forecasts that Nigeria will experience an even more decisive lift in 2026, with domestic trade and real estate, two sectors previously strained by high inflation, expected to stabilise as price pressures retreat. Consumer spending, which had weakened significantly, is set to recover as households regain purchasing power.

The improvement is tied directly to Nigeria’s inflation profile. Headline inflation, which had surged above 24 per cent at the beginning of 2025, fell back to 14.6 per cent by September. BMI expects disinflation to continue well into 2026, with inflation projected to average 14.2 per cent for the year.

This shift, it said, gives the Central Bank of Nigeria (CBN) significant room to further ease its monetary stance, lowering interest rates to stimulate credit growth and household consumption.

The anticipated rate cuts could become one of the strongest tailwinds for Nigeria’s growth in 2026, it said, with lower borrowing costs supporting small businesses, expanding access to financing, and reviving segments of the retail and service sectors that were suffocated by expensive credit.

Rising consumer confidence, paired with a gradually stabilising macroeconomic environment, positions Nigeria for a more balanced and broad-based recovery compared to the volatility of previous years, the report said.

However, downside risks remain, as structural challenges, including power supply constraints, foreign exchange liquidity concerns and security pressures could still moderate the pace of recovery if reforms falter.

Nevertheless, BMI’s outlook leans towards a steady improvement, arguing that Nigeria’s medium-term fundamentals will strengthen as inflation cools and investment environments improve.

Regionally, the story is similar, with Kenya expected to post slightly stronger growth in 2026, aided by improvements in agriculture and services. Ghana’s economic outlook also brightens as inflation recedes and interest rates begin to fall, restoring confidence in the country’s financial markets., the report said.

Tanzania remains on course for policy continuity, which should maintain investor interest in the medium term. South Africa, though still muted, is projected to benefit modestly from global commodity trends and incremental energy reforms.

Taken together, Africa’s economic map for 2026 sketches a more promising horizon. Faster regional growth, easing monetary conditions, stabilising inflation and renewed investor appetite signal a notable shift from the turbulence of recent years.

If reforms deepen and global conditions remain broadly supportive, the region may be on the cusp of a multi-year recovery cycle—led by agile medium-sized markets and anchored by improving fundamentals in Nigeria, Africa’s largest economy.

Africa’s economic trajectory is set for a more upbeat turn in 2026, with fresh forecasts indicating a broad-based recovery across Sub-Saharan markets and a significantly improved outlook for Nigeria as inflation begins to cool, it added.

The latest projections from BMI suggested that regional growth momentum, weakened by global shocks and domestic policy pressures over the last two years, will gather pace, especially among medium-sized African economies that are primed to outperform.

The report anticipates that real GDP across Sub-Saharan Africa, excluding Sudan, will rise from 3.4 per cent in 2024 to 3.9 per cent in 2025 and a robust 4.2 per cent in 2026.

This, it said, would mark the fastest acceleration the region has seen in over a decade, reinforcing expectations that Africa will remain one of the world’s most promising growth frontiers.

A notable element in next year’s outlook is the expected resurgence of several medium-sized economies. Markets such as Botswana, Zambia and Mozambique are projected to anchor the rebound, supported by renewed investment flows, improvements in mining output and gradually stabilising macroeconomic conditions.

Larger markets including South Africa, Nigeria, Kenya and Ghana are also set to benefit from the region-wide uplift, though differing domestic pressures will shape the scale and pace of their recoveries, the report said.