Nigeria’s persistent battle against inflation appears to be yielding results, with financial expert Bismarck Rewane predicting that the pace of price increases will slow further to 15.3 per cent in November. This anticipated eighth consecutive monthly decline comes as the economy, despite showing signs of disinflation, remains challenged, with Gross Domestic Product (GDP) expected to contract to 3.96 per cent in the third quarter.
Speaking at the 18th Alpha Morgan economic review, Mr Rewane, the Chief Executive Officer of Financial Derivatives Company, highlighted that inflationary pressures, while easing across Africa, are set to remain in double digits across several major economies, including Nigeria, Egypt, and Zimbabwe. Nigeria’s average inflation is forecast to hit 14.9 per cent in 2026.
The economy received a boost in October when inflation registered its biggest single-month drop since the re-basing exercise at the beginning of the year, falling to 16 per cent. However, the economist cautioned that this relief may be temporary. “Inflation is expected to reverse upward in December as the base year gains fade,” Mr Rewane noted, signalling potential turbulence as the year concludes.
A key economic angle underpinning the improved outlook is the decisive pivot by the Central Bank of Nigeria (CBN) towards an orthodox monetary policy framework. This shift, away from unconventional methods, is widely expected to anchor price stability and bolster investor confidence. Indeed, Nigeria, as Africa’s largest oil producer, currently enjoys an advantage, with positive interest rate differentials likely to spur essential capital inflows compared to its continental peers. Analysts point out that recent currency devaluations have allowed the CBN to build up foreign-reserve buffers, providing a necessary layer of protection against emerging-market shocks.
Yet, this position is not without risk. Mr Rewane warned that Nigeria remains vulnerable to sudden capital flight. “The markets most exposed to outflows are Egypt, South Africa, Nigeria and Zambia. Currencies in these markets appear heavily undervalued in relation to fundamentals,” he stated.
The national currency, the naira, has shown volatility, appreciating by 12 per cent against the US dollar year-to-date in the parallel market. Despite this modest recovery, the currency remains heavily undervalued, according to the economist, noting discrepancies of over 60 per cent when measured against EIU global comparisons.
Looking ahead to 2026, the success of the disinflationary process is strongly tied to the implementation of structural and financial reforms. Mr Rewane highlighted five critical policy expectations for the coming year, including the enactment of tax reform bills, a reduction in capital gains tax, and institutional overhauls. Crucially, the plan for bank recapitalisation and the potential for credit sector forbearance are seen as vital steps towards ensuring the financial system is robust enough to support medium-term growth and solidify the commitment to market-driven policies.
