The world is set to enter 2026 in a quieter but still unsettled state.
The tariff escalations and geopolitical tensions that dominated 2025 are expected to give way to a fragile calm. Whilst over 15 key trading partners have successfully negotiated tariff reductions or improved trade access with the US, some of the trade agreements are temporary, and the risk of re-escalation remains.
Persistent Uncertainty
Beyond trade tensions, the US has brokered a cease-fire deal between Israel and Gaza, but it appears paper-thin, reducing only the risk of wider regional conflict.
Efforts to put an end to the four-year long Russia-Ukraine war are also in motion; however, unacceptable peace terms for Ukraine, especially around territorial concessions and security constraints, may stall progress and keep the conflict locked in a protracted stalemate.
All in, subdued trade, constrained fiscal capacity and persistent uncertainty are set to weigh on growth.
However, improved productivity from increased adoption and investment in Artificial Intelligence (AI) and easier financial conditions may partially offset a significant slowdown. Altogether, global GDP growth is expected to moderate to 3.1% in 2026FY from 3.2% estimated in 2025.
Turning to Nigeria
Turning to Nigeria, the 2026 outlook reflects a shift from a rebound to a measured economic renewal. The difficult reforms of the last few years, including currency realignment, fuel price liberalization, tighter monetary policy and renewed efforts to strengthen public finances, have begun to bear fruit in the form of firmer confidence, improving macro stability and a broader base of growth. In 2026, Nigeria’s economy is expected to gradually move beyond shock absorption and begin rebuilding around emerging drivers of expansion.
On the real side, growth is expected to be anchored by three reinforcing pillars – a more reliable energy sector, a slow but steady industrial growth, and an expanding services economy. In oil and gas, the transfer of onshore and shallow-water assets to domestic operators, the construction of new evacuation and storage infrastructure, and improved security in producing areas are laying the groundwork for more stable output and fewer supply disruptions.
Improved farmer access to mechanized farm tools is expected to spur farm output, though security and climate risks will remain binding constraints. Manufacturing stands to benefit from easier access to credit, a more stable exchange rate and improved availability of fuel and feedstocks as large private refineries ramp up operations.
At the same time, incremental reforms in logistics, digital infrastructure, housing finance, and public–private partnerships are poised to drive growth in the services sector – particularly trade, real estate, ICT, finance, and transport – thereby reinforcing its position as the main driver of non-oil activity.
Tax Reform Acts
The 2025 tax reform Acts seeks to broaden the base, close leakages, and raise compliance while using carefully designed incentives to encourage investment in priority sectors such as manufacturing, agro-processing, gas, power, technology and exports. If implemented transparently, with clear rules and effective digital platforms, these measures can deepen formalization and crowd in private capital rather than simply raising the tax burden on existing payers.
In parallel, disinflation driven by a firmer naira, softer fuel costs, and improved food supply is expected to create room for sustained monetary policy easing. A gradual reduction in policy rates and reserve requirements are expected to lower funding costs, support credit growth and reinforce the recovery in business investment.
External conditions are also expected to remain favourable for a firmer currency. Rising refined oil production and exports should partially cushion a potential drop in crude oil exports caused by lower oil prices and aid a steady decline in petroleum imports, sustaining a trade surplus. Sovereign credit rating upgrades, improved market access, and the prospect of index re-inclusion will strengthen credibility with global investors, even as better carry trade opportunities buoy foreign portfolio interest in naira assets. Long-term capital will remain concentrated in energy and associated infrastructure, but gradual improvements in the business environment may create an opportunity to broaden the pipeline over time.
Execution of Reforms
Even so, 2026 is not without significant risks. The main vulnerabilities lie in the execution of reforms rather than their framework. If tax implementation tilts too heavily toward short-term revenue mobilization, with complex rules and inconsistent enforcement, it could raise compliance costs, push activity back into informality and dampen investment appetite. Security setbacks in oil- and food-producing regions, growing insurgency, climate-related disruptions, gaps in administrative capacity, and pre-election policy drift could all slow the pace of gains and pose a downside risk to growth.
Nigerian financial markets should remain resilient in 2026. Generally, we expect the fixed income market to be shaped by the expected disinflationary trend, slowly easing monetary policy stance, improving foreign exchange conditions, and continued fiscal improvements. While we believe the directional bias is clearly downward, we cite that certain factors could disrupt the trajectory. Factors such as, elevated fiscal deficits, renewed FX inadequacies, reversal in disinflation which could force the monetary authority to delay or moderate rate cuts. All in, We see NTB and bond yields trending toward c.12.5% and c.12.9% by end-2026.
For equities, while risks remain present, the balance of probabilities remains favourable. All told, 2026 is positioned to extend the market’s recovery cycle as a progressively easing policy environment, firmer macro stability and deepening investor confidence reinforce both earnings resilience and valuation expansion across key sectors. Essentially, we believe a firmer macro backdrop, earnings growth and attractive valuations should continue to underpin equity performance. We forecast the NGX All-Share index to return 34.9% by 2026 year end.
We present our views on the different sectors we cover in the following sections:
Financial Services (banking): The banking sector enters 2026 in a fundamentally healthier position, following (1) balance-sheet strengthening through the recapitalisation programme, (2) the completion of catch-up provisioning in 2025, and (3) a more stable macro and interest-rate backdrop. Core-income growth remains resilient even as the 300bps expected policy-rate cuts in 2026 is expected to modestly compress yields, with OMO allocations, widened balance-sheet capacity and improving credit growth (13.0–14.0%) cushioning NIMs.
Provisioning normalises toward c.2.8% after the regulatory clean-up, though latent SME/retail risks may re-emerge beyond 2026. With sector P/B at just 0.9x, valuation re-rating potential is material as ROEs gradually converge toward COE. Top Pick: GTCO (BUY; TP: NGN115.19/s) for superior earnings quality and cost leadership.
Industrial Goods (Cement): The cement sector transitions into 2026 from an unusually strong 2025, moving toward a more balanced earnings cycle where pricing moderates and volume growth (c.3.9% y/y) becomes the anchor. Improved purchasing power, resilient private construction and steadier infrastructure execution support demand, while energy and logistics efficiencies sustain elevated EBITDA margins around 45.0%.
Despite this resilience, valuations remain deeply discounted (11.8x TTM P/E vs 19.6x historical), offering compelling re-rating potential as macro stability firms. Top Pick: WAPCO (BUY; TP: NGN203.65/s) for its superior volume trajectory, margin strength and valuation discount.
Agriculture: Agriculture retains strong structural momentum into 2026, underpinned by persistent domestic supply deficits, resilient consumption and favourable global crude-palm-oil pricing. Revenue growth is driven by firmer CPO prices and better extraction yields, while cost pressures ease with stabilising FX and softer imported-input inflation. Sector valuations remain attractive (13.5x P/E vs 21.8x MEA peers), leaving room for re-rating as operational efficiency improves. Top Pick: PRESCO (BUY; TP: NGN1,796.03/s) owing to scale advantage, superior margins and strong earnings visibility.
Consumer staples: The Food & HPC subsector enters 2026 in its strongest recovery phase since COVID, shifting from price-led gains to volume-driven expansion as consumer resistance peaks and real incomes stabilise. Valuation multiples consolidate at healthier levels (c.7.2x), while revenue growth of 22.2% becomes increasingly volume-anchored. Margin expansion accelerates, with EBITDA margins rising to 27.3%, supported by easing input costs, tighter cost control and strengthening cash-conversion cycles. Free cash flow inflects higher as capex intensity tapers and finance costs decline. Top Pick: UNILEVER (BUY; TP: NGN116.19/s) for its 61.4% upside, asset-light business model, sector-leading cash conversion and insulated balance sheet.
Breweries: Brewers extend their 2025 rebound into 2026, sustained by firmer consumer sentiment, easing cost pressures, better FX liquidity and accelerating premiumisation. Revenue growth remains strong (NB: 31.7%; INTBREW: 20.2%), while gross-margin recovery continues as imported-input costs stabilise. Post-2024 deleveraging reduces finance costs, supporting a meaningful uplift in earnings and enabling dividend resumption—an important catalyst for investor sentiment. Top Pick: NB (BUY; TP: NGN92.50/s) for its margin rebound, restored balance-sheet strength and compelling upside.
Telecommunications: Telecoms enter 2026 with clear earnings momentum following 2025’s tariff adjustments, subscriber recovery and improved FX conditions. Revenue is expected to grow c.21.0% y/y, driven by ARPU expansion and subscriber additions, while EBITDA margins expand toward 53.0% as energy costs moderate and tower-lease renegotiations materialise. Despite this momentum, valuations remain well below MEA peers, offering significant re-rating potential. Top Pick: MTNN (BUY; TP: NGN726.30/s) due to its scale, full-year tariff uplift, data-led growth and strengthened cash-flow visibility.
Oil & Gas (downstream): The downstream sector enters 2026 with uneven momentum, as reliance on imported products persists despite the gradual increase in domestic refining. Revenue growth is expected to remain under pressure, weighed down by lower product prices and softer volumes, while FX-linked procurement costs and working-capital constraints continue to compress margins and hinder cash conversion. Ancillary businesses may offer some support, but structural challenges remain pronounced for import-dependent marketers. Overall, we maintain an underweight view on the sector.
Services (Leasing): The leasing sector benefits from macro stabilisation, rising offshore activity, improved business confidence and expanding outsourcing needs. Marine leasing strengthens as crude-oil output steadies, while fleet management and personnel outsourcing grow amid cost-optimisation trends and elevated vehicle replacement costs. EBITDA margins remain structurally strong (above 54%), with FX stability reducing contract volatility. Top Pick: CILEASING (BUY; TP: NGN8.12/s) for its attractive valuation, improved utilisation and strong 2026 earnings momentum.
Cordros
