Nigeria’s economy is expected to grow at approximately 4.2 per cent over the medium term through 2026 to 2028, according to the World Bank’s latest Nigeria Development Update released in Abuja on 7 April 2026.
The projection reflects improving macroeconomic fundamentals following the government’s stabilisation reforms since mid-2023, but the Bank warned that rising inflation driven by global energy shocks poses a significant risk to welfare gains and business operations.
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Growth is coming, but at a cost
World Bank Country Director for Nigeria, Mathew Verghis, noted that Nigeria’s macroeconomic conditions have continued to improve into early 2026, with inflation declining for 11 consecutive months to 15.06 per cent in February before new pressures emerged. Foreign reserves reached $50.45 billion in February 2026, their highest level in 13 years, providing a degree of external stability.
However, the Middle East conflict and its effect on global oil prices are now threatening to reverse some of the disinflation progress. The Bank estimates that higher energy prices could add over 3 percentage points to headline inflation, with further knock-on effects through transport, logistics, and food supply chains.
The headline growth number tells one story. The lived experience of a small business owner dealing with higher fuel costs, tighter credit, and weaker consumer purchasing power tells another.
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What it means for SMEs specifically
For small businesses, the mixed outlook presents a genuine dilemma. Economic growth creates demand and opportunity, but persistently high inflation erodes the purchasing power of the customers SMEs depend on and pushes up the cost of inputs, energy, and logistics simultaneously.
Sectors most exposed to the current pressures include food processing, manufacturing, and distribution — all areas where SMEs are heavily concentrated. CBN Deputy Governor Muhammad Abdullahi reiterated at the report launch that inflation remains the government’s primary concern, describing it as the biggest tax on low-income earners and small business operators alike.
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Navigating the crossroads
Finance Minister Wale Edun acknowledged the delicate balance Nigeria faces, noting that higher crude prices provide short-term fiscal relief while intensifying cost pressures across the broader economy. The government is seeking international support to help manage the transition and maintain reform momentum.
For Nigerian SMEs, the task is straightforward even if the execution is not survive the current cost environment long enough to benefit from the growth that the macro data says is coming.
