E-Financial
Nigeria’s economic recovery poised to build momentum in Q2
by Lukman Otunuga
Market optimism over the recovery of Africa’s largest economy has increased steadily throughout the first trading quarter of 2018.
The combination of appreciating oil prices, foreign exchange stability and easing inflationary pressure has boosted confidence in Nigeria’s economy. With the nation’s GDP hitting 0.82% in 2017 and predicted to register a positive trajectory amid strengthening domestic demand, the outlook continues to look highly encouraging. The improving macroeconomic conditions and ongoing efforts to diversify away from oil reliance are likely to attract foreign investors, further fueling economic growth.
It is fair to suggest that Nigeria’s stabilizing fundamentals may encourage the Central Bank of Nigeria to cut interest rates sooner than anticipated. With oil prices appreciating, domestic production improving and foreign exchange reserves rising to $46 billion, most of the ingredients are in place for the CBN to act. There is a strong suspicion that inflationary pressures need to ease further into the realm of single digits before the central bank loosens its monetary policy. An interest rate cut has the ability to stimulate the current recovery because it encourages consumer borrowing and businesses to increase investments. While an interest rate cut in April may be slightly premature, the CBN could surprise markets near at the end of Q3 if inflation continues to decline.
Although domestic economic conditions continue to improve, investors must not overlook external risks that may impact Nigeria’s current recovery. Oil price volatility remains a key risk for Nigeria despite the nation’s ongoing efforts to diversifying to other sustainable sources of growth. With Oil accounting for roughly 90% of exports and 80% of public revenues, a sharp depreciation in prices could easily spell trouble for Nigeria. While WTI Crude has followed a positive trajectory in recent months amid expectations of demand increasing and optimism over OPEC’s production cuts, the upside may face headwinds. It must be kept in mind that soaring production from U.S Shale remains a threat to higher oil prices and is likely to result in a selloff medium to longer term. While Nigeria could continue enjoying the benefits of oil trading around $64, the clock is ticking as oversupply remains a market theme.
In addition to oil prices, attention should also be focused towards the Dollar’s performance and US rate hike expectations. Higher US interest rates have the ability to trigger capital outflows from Emerging markets and weaken EM currencies with the Naira falling into the category. While the Naira may be slightly bruised by capital flight in the event of higher US interest rates, Nigeria’s rising foreign exchange reserves and rising oil prices could cushion the impact. The Naira witnessed stability against the Dollar in March with prices trading around 360N on the parallel markets and 304N on the official market. While the local currency’s appreciation may be attributed to intervention by the CBN, the improving sentiment towards Nigeria has also played a leading role.
The ongoing trade drama between the United States and China is unlikely to have a direct impact on Nigeria’s economy. Indirectly, the uncertainty and anxiety over a potential global trade war could spark risk aversion consequently impacting Emerging markets like Nigeria. A scenario where foreign investors remain guarded and maintain a safe distance from risk, could weigh on Nigeria in the recovery stages.
As we enter the second quarter of 2018, much focus will be directed towards domestic monetary policy, inflation and external risks that could impact Nigeria’s positive momentum. Easing inflationary pressures remain one of the most encouraging aspects for Nigeria as consumer prices hit $14.33 in February. Not only will falling inflation boost the rate of return for savers and increase disposable income in Nigeria, it creates an opportunity for the CBN to cut interest rates- ultimately stimulating economic growth.
Central Bank of Nigeria (CBN) has debunked rumours suggesting that Polaris Bank is undergoing liquidation, assuring the public that the country’s banking system remains stable and secure.
Polaris Bank
The apex bank disclosed this in a post on X, where it shared a screenshot of a viral claim and flagged it as false.
It clarified that the claims, suggesting Polaris Bank had failed to meet recapitalisation requirements and was set for liquidation, are entirely false and do not reflect the current state of the Nigerian banking sector
“The Central Bank of Nigeria has noticed reports, in certain media outlets, about a recommendation for the Federal Government to take over some CBN-supervised financial institutions,” said Hakama Sidi-Ali, apex bank’s acting Director, Corporate Communications, in a statement.
“To avoid any doubt, Nigerian banks are still safe and sound. The CBN advises the public to go about their daily lives without getting disturbed by reports regarding the health of Nigerian banks that have not come from the CBN.
“The CBN is fully equipped to carry out its statutory duty of ensuring the stability of Nigeria’s financial system. “We assure the general public and depositors that their funds are safe in Nigerian financial institutions. “Bank customers are therefore advised to proceed with their banking transactions as u
The clarification was after a viral post, claiming that Polaris Bank was facing liquidation for failing to meet the Bank’s recapitalisation requirements, and could soon lose its operating licence, with the Nigeria Deposit Insurance Corporation set to take over the process.
It further alleged that founder of the Eleganza Group, Razaq Okoya, had made a bid to acquire and revive the bank, pending approval from regulators and shareholders.
Sharing a screenshot of the viral claim, however, the apex bank flagged it as “fake content.”
It clarified that the claims, suggesting Polaris Bank had failed to meet recapitalisation requirements and was set for liquidation did not reflect the current state of the Nigerian banking sector.
“This content is fake. Let the public be guided. The Nigerian Banking System is Safe and Secure,” the bank said.
On April 1, the CBN confirmed that 33 banks successfully met the revised minimum capital requirements under its recapitalisation programme, marking a significant milestone in strengthening the financial system.
African Development Bank Group (AfDB) has approved a $200 million loan to Nigeria to support a landmark digital infrastructure initiative aimed at expanding broadband access, developing digital skills and driving large‑scale job creation.
The financing will support the Digital Value Chain Infrastructure for Boosting Employment project, known as D‑VIBE or Project BRIDGE. The initiative seeks to deploy about 90 000 kilometres of new open‑access fibre optic cable across Nigeria, extending the national fibre backbone from roughly 30 000 km to about 120 000 km.
The expanded network will connect all 774 local government areas, including schools, hospitals, agro‑industrial zones, rural communities and commercial centres. It will also establish cross‑border digital links with Benin, Cameroon, Niger and Chad, strengthening regional integration.
Nigeria is Africa’s most populous country and West Africa’s largest economy, with the digital sector increasingly contributing to gross domestic product growth. The project is expected to close major connectivity gaps, raise productivity and unlock job opportunities for young people.
D‑VIBE is structured as a public‑private partnership through a special purpose vehicle, with public ownership capped at between 25% and 49% and private sector participation ranging from 51% to 75%.
This structure is intended to address high fibre rollout costs, including construction and right‑of‑way challenges.
The African Development Bank loan forms part of an $800 million sovereign financing package, alongside $500 million from the World Bank and $100 million from the European Bank for Reconstruction and Development.
Total project financing is estimated at $2 billion, including a $25.79 million European Union grant, a $2.6 million Multilateral Cooperation Centre for Development Finance preparation grant and at least $1.2 billion in private sector investment.
“Nigeria has the talent, the market and the ambition, but lacked the backbone infrastructure to connect opportunity with potential,” said Abdul Kamara, Director General of the African Development Bank Group’s Nigeria Office.
“This project will deliver high‑speed connectivity nationwide and equip young people to build digital careers.”
Beyond physical infrastructure, the project will support affordable devices, large‑scale digital skills training and digital platforms in priority sectors. It also includes cybersecurity, competition reforms and resilience measures, including greater use of renewable and hybrid power.
D‑VIBE is expected to help create up to 2.8 million jobs and raise broadband penetration from 45% to around 70% by 2030. The project aligns with Nigeria’s Vision 2050 and continental development priorities.
World Bank has warned that Nigeria faces a deepening early childhood development crisis in health, nutrition, and learning, threatening long-term productivity and economic growth amid persistent poverty.
World Bank
In its April 2026 Nigeria Development Update, “Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development,” the bank noted moderate 2026 growth driven by services like ICT, financial services, and real estate, following 4.0 per cent GDP expansion in 2025. Inflation eased to double digits via tight policy, stable exchange rates, and better food supply, while reserves hit $45.5 billion gross by end-2025, covering 8.7 months of imports.
Fiscal deficit widened slightly as non-oil revenues rose to 8.5 per cent of GDP from improved tax administration, e-filing, and VAT e-invoicing, though wage growth lagged inflation, leaving real incomes strained and poverty unchanged.
The bank highlighted poor outcomes with 110 of 1,000 children dying before age five, 40 per cent stunted, and 52 per cent developmentally off-track at school entry—gaps three times wider in poor households and exceeding 40 points between rich and poor. It urged investment in the first 2,000 days for better education, earnings, health, and cohesion.
Regionally, Sub-Saharan Africa’s 2026 growth forecast dipped to 4.1 per cent from 4.4 per cent due to Middle East conflict inflating fuel and fertiliser costs.
Finance Minister Wale Edun countered with recovery signs: falling inflation, rising non-oil revenues, declining debt-to-GDP, and stabilising naira via digital tracking, audits, and PPP shifts. Budget Director Tanimu Yakubu described reforms as correcting imbalances from subsidies and multiple rates, boosting FAAC revenues 40 per cent and reserves over $40 billion, with debt under 30 per cent of GDP.
NACCIMA President Jani Ibrahim called for data-driven strategies amid tax changes, inflation, and global tensions, eyeing AfCFTA, digital economy, and green investments for growth.
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