As Nigeria prepares for the implementation of its 2026 budget, audit committees and corporate boards have been urged to look beyond structural reforms and focus on a more important variable: consumer demand.
At the Audit Committee Seminar 2026 hosted by KPMG Nigeria, speakers said while ongoing reforms are strengthening macroeconomic fundamentals, sustained growth will depend largely on whether household spending and private investment recover.
Nigeria’s growth trajectory has moved in distinct phases over the past two decades.
According to KPMG data, reform-driven expansion pushed average annual growth to about 7.7 percent between 2000 and 2010.
That momentum slowed significantly between 2011 and 2021, when recessionary shocks and weak recovery dragged average growth down to around 2 percent.
Current reforms have nudged growth to approximately 3.6 percent, signalling renewed structural adjustment but not yet acceleration.
“We are in another era of reform, so we can expect growth,” said Wole Adelokun, partner, Strategy & Customer Solutions, KPMG West Africa. “This phase is about growth, so investors should not miss the window of opportunity.”
However, speakers stressed that reforms alone will not deliver a broad-based expansion without stronger domestic demand.
Household consumption accounts for nearly 60 percent of Nigeria’s gross domestic product, making it the single largest driver of economic activity.
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Yet high inflation, elevated energy costs, and currency volatility over the past year have squeezed real incomes, limiting consumers’ ability to spend.
“Consumption drives growth more than any other factor,” Adelokun said. “Even with reforms improving policy and markets, the economy won’t take off without people spending.”
While non-oil exports grew by about 25 percent last year, participants noted that structural constraints including logistics costs, infrastructure gaps and limited industrial capacity mean exports alone cannot sustain high growth rates.
Sector performance reflects the demand divide. Agriculture, trade and ICT have shown relative resilience, supported by strong consumer and service demand.
In contrast, capital-intensive sectors such as real estate and construction remain subdued, awaiting stronger investment flows and improved purchasing power.
For audit committees and boards reviewing strategy under the 2026 budget framework, the message was clear: macro stability is improving, but revenue projections, capital allocation and expansion plans must factor in the pace of demand recovery.
With government spending constrained and fiscal consolidation ongoing, private investment is expected to play a larger role in driving growth.
However, business confidence will depend on regulatory clarity, energy pricing stability and currency predictability.
“Stability is improving, yet momentum in demand remains the key variable,” Adelokun said.
Bottom line: Structural reforms are laying the foundation for growth under the 2026 budget cycle. But unless household consumption and private sector investment accelerate, Nigeria’s expansion is likely to remain steady rather than surge.
Opportunities await those who take advantage as ….
New reforms are reshaping industries and markets, but growth will only stick if Nigerians spend and invest enough to make it real.
That tension was clear at a recent session hosted by KPMG Nigeria, where analysts explored what could drive the economy in the coming year.
“We are in another era of reform, so we can expect growth,” said Wole Adelokun, partner, Strategy & Customer Solutions, KPMG West Africa. “This phase is about growth, so investors should not miss the window of opportunity.”
Nigeria’s growth comes in waves starting from 2000 to 2010 where reforms pushed growth to 7.7 percent on average, then 2011 to 2021 where recession and slow recovery dragged it down to 2 percent. Now current reforms have nudged growth to 3.6 percent.
Not all sectors are moving at the same pace. Agriculture and trade lead, ICT and manufacturing show promise, but real estate and construction lag behind.
The early winners are clear. Sectors with strong demand and low barriers; agriculture, trade, ICT are thriving. Capital-heavy sectors are still waiting for investment to catch up.
Consumption as a big factor….
“Consumption drives growth more than any other factor,” Adelokun said. “Even with reforms improving policy and markets, the economy won’t take off without people spending.”
But size isn’t enough. Growth needs acceleration. Recent slowdowns were caused by inflation, higher energy prices, and currency shifts that squeezed real incomes. Spending may stabilize before it picks up.
Consumers are the engine of growth. If demand stays weak, reforms alone won’t create a boom.
Non-oil exports grew about 25 percent last year, helping Nigeria’s trade balance. But industrial capacity, roads, and costs still limit how far exports can carry growth.
Private investment is also key. With government spending limited, businesses and investors must step up. How quickly they do depends on clear regulations, energy costs, and currency stability.
Adelokun is cautiously optimistic. Tighter Central Bank of Nigeria policies and less deficit spending are keeping inflation under control. Election-year spending could test this, but the bank is watching closely.
The take away…
Nigeria is entering a new phase: structurally stronger, yet still waiting for demand to catch up. Reforms are laying the foundation, exports support growth, and investment is slowly ramping up.
If consumption and private investment recover, growth could accelerate, and more sectors will benefit. If demand stays weak, growth will remain steady but slow; reforms alone won’t be enough.
“Stability is improving, yet momentum in demand remains the key variable,” Adelokun said.
