This week, we spotlight the three important national statistics – the monetary policy decision by the Central Bank of Nigeria (CBN), Q3:2025 public debt statistics by the Debt Management Office (DMO), and the Q4:2025 Gross Domestic Product (GDP) data by the NBS.
Starting with the former, the MPC, following its two-day assessment of developments in the domestic and global macroeconomic environment since its last meeting in November 2025, voted to reduce the Monetary Policy Rate (MPR) by 50 basis points to 26.5%. Meanwhile, other monetary policy parameters – the asymmetric corridor around the MPR, the Cash Reserve Requirement (CRR) for Deposit Money Banks (DMBs), Merchant Banks, and non-TSA government agency – were retained at +50/-450bps, 45.0%, 16.0%, and 75.0%, respectively. This decision aligns fully with our projection in last week’s commentary.
Key Supportive Factors
From the post-MPC communiqué published on the CBN website, key supportive factors underpinning the dovish pivot include: the sustained disinflation trend (headline inflation moderated by 5bps to 15.1% y/y in January); exchange rate stability (the Naira appreciated by 6.4% to ₦1,363.40/$ at the official market since the last MPC meeting) and continued real sector expansion (PMI remained in expansionary territory for the twelfth consecutive month, printing at 55.7 points in January).
In addition, improved availability and price stability of energy products; stronger external reserves (rising to $50.5bn in February according to post-MPC statement from $44.5bn in November 2025); and positive external sector developments, including a significant uptick in foreign portfolio inflows (up 225.6% to $14.2bn in 9M:2025) and improvements in the balance of payments position, partly supported by reduced reliance on imported refined petroleum products guided the MPC’s position.
The MPC’s position was further reinforced by the upward revision of the 2026 global growth outlook by the IMF (to 3.3% from 3.1% previously) and signs of moderating (albeit uneven) global inflation across major economies. The Committee also appraised Executive Order-9 (EO-9), which mandates that Nigeria’s oil and gas revenues be remitted directly into the Federation Account rather than retained by NNPC. The Apex Bank expressed the view that this directive would enhance fiscal revenue transparency and strengthen accretion to foreign reserves. We align with the MPC’s rationale for the rate adjustment, as it falls within the narrative we outlined in our pre-MPC note.
Cautiously Optimistic
Looking ahead, we remain cautiously optimistic that risk factors may remain broadly tilted to the downside in the near term, thereby enabling a positive pass-through from the dovish shift into the credit market. This could, in turn, ease pressure on corporate balance sheets and support renewed investment interest in equities. That said, the most significant downside risk to the CBN’s policy calibration remains pre-election fiscal dynamics. The Independent National Electoral Commission (INEC) has rescheduled the 2027 general elections to January 16, 2027 (from February 20, 2027 previously).
This adjustment potentially accelerates political activities and campaign spending. Historically, pre-election cycles have been associated with elevated liquidity injections into the system, which could complicate monetary transmission and inflation management. Furthermore, early politicking may distract focus from governance priorities and capital expenditure implementation. Consequently, we advise that the CBN maintain vigilant liquidity surveillance and remain resolute against potential fiscal-induced policy slippages.
Public Debt Statistics
In other development, Q3:2025 public debt statistics released by the DMO indicate that Nigeria’s total public debt stock, in Naira terms, increased marginally by 0.6% q/q and 7.7% y/y to ₦153.3tn. In USD terms, the debt stock rose by 4.3% q/q and 16.9% y/y to $103.9bn. The divergence between Naira and USD growth rates primarily reflects the $1.5bn external borrowing undertaken during Q3. However, relatively stronger Naira position in the period compared to both the preceding quarter and the corresponding period in 2024 (average exchange rate of ₦1,521.11/$ represented 3.7% and 3.9% appreciation q/q and y/y, respectively), aided the compressed growth rate of the debt numbers in the Naira terms.
Disaggregating the data, the Federal Government (FG) accounted for 95.1% of the ₦81.8tn domestic debt stock and 89.7% of the ₦71.5tn external debt component. This brings the FG’s total debt exposure to ₦141.9tn, representing an increase of ₦8.6tn in 9M:2025. When benchmarked against actual FG revenue of ₦18.2tn in 9M:2025 (as disclosed during the budget presentation), the ₦8.6tn debt accretion represents 47.2% of revenue over the same period. This suggests that one-third of every expense of the FG was funded by debt, implying a material reliance on leverage to drive fiscal activities.
At the sub-national level, domestic debt trajectories reveal that Enugu (up 52.0% y/y to ₦194.7bn), Borno (up 48.4% y/y to ₦47.2bn), Jigawa (up 26.4% to ₦1.6bn), Lagos (up 22.5% y/y to ₦1.0tn), and Taraba (up 10.3% to ₦89.7bn) recorded the most pronounced increases in domestic debt. Conversely, Kogi (down 64.7% to ₦14.3bn) and Katsina (down 44.2% to ₦17.0bn) led twenty-seven other states that recorded year-on-year reductions in their domestic debt profiles.
Looking Ahead
Looking ahead, we estimate that the total public debt stock may have risen to between ₦155.6tn and ₦158.0tn by year-end, reflecting the $2.25bn Eurobond issuance in November 2025 and approximately ₦4.7tn raised via Treasury Bills in Q4. While borrowing remains a legitimate fiscal financing mechanism, the quality and productivity of debt utilisation ultimately determine sustainability. The critical issue is whether borrowed funds are channelled into value-generating capital expenditure capable of expanding the productive base of the economy. We therefore reiterate our position that borrowing should be strategically deployed toward growth-enhancing investments, while governments at all levels strengthen internal revenue mobilisation, leverage areas of comparative economic advantage, and avoid excessive debt accumulation that could heighten medium-term fiscal vulnerability.
Shifting gears, the NBS reported on Friday that the Nigerian economy expanded by 4.1% y/y in real terms in Q4:2025, outpacing the growth recorded in the corresponding period of 2024. On an annual basis, real GDP growth for 2025 settled at 3.9%, aligning with Afrinvest’s broad projection. From a structural perspective, the oil economy expanded the fastest in Q4:2025, growing by 6.8% y/y compared with 2.1% in Q4:2024. The strong growth in the oil sector was largely driven by a low base effect, given that average oil production in the quarter stood at 1.58mbpd, below levels recorded in other quarters of the year.
However, this output level was higher than the 1.54mbpd recorded in Q4:2024 – a development that once again highlights Nigeria’s persistent crude oil production challenges arising from structural constraints. Overall, the non-oil economy expanded by 6.8% on an annual basis, compared with 5.5% in the preceding year. In Q4:2025, non-oil growth came in at 4.0% y/y, outperforming the 3.8% recorded in the corresponding period of 2024. On a full-year basis, the non-oil economy grew by 3.7%, representing a modest improvement over 3.3% in 2024. Consequently, the non-oil sector’s contribution to GDP declined slightly to 96.5% from 96.6% in 2024, while the oil sector’s share increased marginally to 3.5% from 3.4%.
GDP Performance
Examining GDP performance from a sectoral perspective, growth in Q4 was relatively healthy across the three broad classifications: Agriculture (4.0%), Industry (3.9%), and Services (4.2%). We attribute this broad-based expansion to positive developments during the quarter, including a deeper disinflation trend, relative FX stability, elevated year-end demand, and improved harvest outcomes in the agricultural sector. Overall, annual growth across the sectors settled at 2.9%, 4.6%, and 4.1% for Agriculture, Industry, and Services, respectively.
It is important to note that all 46 sub-activity sectors recorded expansion on an annual basis, except for Textile, Apparel, and Footwear, which contracted by 2.0%. The strongest annual growth was recorded in Coal Mining (39.2%), Quarrying and Other Minerals (36.1%), and Metal Ores (29.9%). Meanwhile, the top five contributors to the Nigerian economy remained Crop Production (20.4%), Trade (16.8%), Real Estate (14.6%), ICT (8.1%), and Livestock (6.1%). We project real growth of around 3.1% to 3.3% in Q1:2026, underpinned largely by FX stability, sustained disinflation, and strategic investment in oil & gas, telecoms, and recapitalisation gains in the financial sectors.
Afrinvest
