Nigeria’s economy is tracking toward roughly 4.5% growth in the second quarter of 2026, according to nowcast estimates cited by analysts including the Centre for the Promotion of Private Enterprise (CPPE), a pace that, if confirmed, would mark the fastest quarterly expansion in five years. Stronger oil export earnings, rising refined-product exports, improving capital inflows and firmer macroeconomic conditions are the cited drivers. It’s an encouraging headline. It’s also, by the CPPE’s own account, an incomplete one.
The optimism follows a first quarter that already told a two-track story. GDP grew 3.89% year-on-year in Q1 2026, up from 3.13% a year earlier, according to National Bureau of Statistics data reviewed by the CPPE. But in the policy brief accompanying that release, CPPE chief executive Muda Yusuf was explicit that the improvement sat on top of what he called deep structural weaknesses in electricity supply, manufacturing productivity and export competitiveness, weaknesses that a stronger Q2 print would not, on their own, resolve.
The pattern is consistent across recent quarters: services do the heavy lifting. In Q1, the services sector contributed 57.73% of GDP and expanded 4.31%, with ICT growing 10.98%, financial services 8.54% and entertainment 11.25%. Trade emerged as the single largest contributor to GDP at 17.89%, helped by better exchange-rate stability and easing inflation. Oil refining, driven largely by Dangote Refinery’s ramp-up, posted the fastest sectoral growth of all at 37.46%, reshaping the energy import bill and adding a genuinely new source of value addition to the non-oil economy.
Non-oil activity overall accounted for more than 96% of GDP in Q1, underscoring how far Nigeria’s growth story has shifted away from crude production alone. Improving oil export earnings and refined-product exports are expected to add further support in Q2, alongside stronger capital markets liquidity and foreign exchange reserves that analysts say are boosting investor confidence.
The CPPE’s concern is less about the headline number than what sits underneath it. Manufacturing grew 3.29% in Q1, an improvement on the 1.13% recorded the previous quarter, aided by petroleum refining, food and beverages, cement, chemicals and pharmaceuticals, but its overall contribution to GDP remains below 10%. High energy costs, elevated interest rates, weak infrastructure and logistics bottlenecks were cited as the persistent constraints keeping the sector from scaling.
The sharpest warning sign was the electricity and gas sector, which contracted 15.30% in the quarter, a contraction Yusuf described as a major red flag, given that reliable power underpins productivity and industrialisation across every other sector. Businesses’ growing reliance on diesel- and petrol-powered self-generation, he noted, continues to erode profitability in manufacturing, SMEs, hospitality, agro-processing and the digital economy alike, the same dynamic now compounded by Dangote Refinery’s periodic shift to dollar-denominated fuel pricing.
Export competitiveness tells a similar story. Although the non-oil economy now dominates GDP, it contributes less than 15% of Nigeria’s foreign exchange earnings, a gap the CPPE points to as evidence of weak integration into global value chains despite years of non-oil sector growth. Agriculture, meanwhile, grew but remained constrained: insecurity, low productivity and limited value-chain development kept the sector from converting its 31%-plus GDP contribution into stronger export performance.
If Q2 growth does come in near 4.5%, it will likely be for the same reasons Q1 grew: resilient services, a fast-scaling refining sector, and improving macro conditions, trade, ICT and finance carrying an economy where power, manufacturing and export capacity have yet to catch up. The CPPE’s own framing of the Q1 data set the terms for how Q2 should be read: a strong topline is a necessary condition for Nigeria’s recovery, not a sufficient one. Whether growth becomes durable and inclusive, rather than a services-and-refining story riding alongside a contracting power sector, is likely to depend on the same reforms CPPE has been calling for since Q1: power sector investment, industrial policy support, and a genuine push on export competitiveness, rather than a rate of expansion on its own.
