Nigerian Economic Summit Group
Nigeria’s economic reforms have improved some key indicators, but high food inflation, expensive borrowing, weak electricity output and limited private-sector credit continue to constrain households and businesses, the Nigerian Economic Summit Group (NESG) has said.
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Speaking at the 32nd Nigerian Economic Summit in Abuja on 26 October, NESG Chairman Olaniyi Yusuf described the outcomes of the country’s roughly three-and-a-half-year reform programme as mixed. He said the reforms had created some economic stability, but that stability had yet to translate sufficiently into stronger businesses, better jobs and improved living standards.
The assessment highlights a central challenge for Nigeria’s economy: improving headline indicators does not automatically make goods more affordable, reduce business operating costs or expand access to financing.
Real gross domestic product grew by 4.43 per cent year on year in the second quarter of 2026, compared with 3.89 per cent in the first quarter. Headline inflation fell to 14.63 per cent in September from 34.8 per cent in 2024, while gross external reserves reached approximately $55.1 billion in October.
However, food inflation remained at 19.59 per cent in September. Maximum lending rates stood at about 29.2 per cent in August, while private-sector credit declined to 18.1 per cent of GDP, according to figures cited by Yusuf.
These conditions have implications for property developers, construction businesses and prospective homeowners, who depend on affordable finance, reliable infrastructure and household purchasing power to sustain investment and demand.
Economic Stability Has Yet to Ease Cost Pressures
Yusuf said the reforms, including petrol subsidy removal, foreign-exchange liberalisation, fiscal restructuring, tax changes and banking-sector recapitalisation, had addressed distortions that weakened public finances and affected resource allocation.
However, he warned that the gains had not yet translated into broad improvements in economic welfare. Lower inflation, for example, means prices are rising more slowly; it does not mean that prices have returned to earlier levels or become affordable for households.
The distinction matters for the housing market. Higher food, transport and energy costs leave households with less income to save towards a home deposit, pay rent or meet mortgage obligations. At the same time, developers face elevated costs for materials, logistics, power and financing.
This combination can weaken effective demand for housing even where the need for homes remains substantial. Developers may find it harder to sell completed units at prices that recover construction costs while remaining affordable to intended buyers.
High Borrowing Costs Constrain Investment
The NESG chairman identified expensive financing as one of the constraints limiting business expansion. Maximum lending rates stood at approximately 29.2 per cent in August, while private-sector credit declined to 18.1 per cent of GDP.
For property developers, high interest rates can increase the cost of acquiring land, financing construction and holding unsold inventory. Projects that depend on borrowing may become less viable, particularly where developers target households with limited purchasing power.
High borrowing costs also affect prospective homebuyers who need mortgages. When repayment obligations rise relative to household incomes, fewer buyers may qualify for loans or afford the monthly payments required to purchase a property.
The implications extend beyond residential housing. Construction companies, building-material suppliers and other businesses across the real estate value chain need working capital to maintain operations, invest in equipment and manage project schedules.
The NESG’s assessment suggests that improving macroeconomic stability will need to be accompanied by more affordable financing and stronger credit flows if private investment is to expand meaningfully.
Electricity and Infrastructure Deficits Continue to Raise Costs
Yusuf also highlighted pressure on the productive economy, noting that electricity and gas sector output reportedly contracted by approximately 11.6 per cent in the first half of 2026. Electricity generation fell from 5,400 megawatts in the fourth quarter of 2025 to 4,454 megawatts in the second quarter of 2026.
Unreliable electricity increases operating costs for businesses that depend on generators and alternative power sources. For construction firms and property operators, these expenses can affect material production, site operations, water supply, security and the running costs of completed buildings.
Poor transport infrastructure and insecurity add further costs by disrupting logistics, increasing delivery times and complicating project execution.
For Nigeria’s housing market, reliable power, roads, drainage and water supply are important components of development viability. Infrastructure deficiencies can make housing more expensive to build and occupy, particularly in locations where developers must provide essential services themselves.
The NESG therefore called for the next phase of reforms to prioritise lower production costs, reliable infrastructure, productive investment and more effective public expenditure.
Foreign Capital Inflows Need to Support Long-Term Investment
Nigeria attracted approximately $23.2 billion in foreign capital inflows during 2026 to the period cited by Yusuf, but portfolio investment accounted for most of the inflows, while foreign direct investment represented a relatively small share.
The distinction matters because portfolio investment and direct investment serve different purposes. Portfolio flows can support financial-market activity and liquidity, while direct investment can finance businesses, facilities and other productive assets over a longer period.
Yusuf also said public debt stood at approximately ₦166.79 trillion in June 2026, while debt servicing had moderated to about 50 per cent of federal revenue. He stressed that economic transformation requires patient capital and sustained investment in productive assets.
For real estate, long-term investment is important because housing projects typically require substantial upfront funding and take time to complete and generate returns. More predictable economic conditions, reliable infrastructure and accessible financing can help attract capital into housing construction and related services.
However, stronger investment will depend not only on capital inflows but also on the operating conditions that determine whether businesses can deploy funds productively.
NESG Calls for Growth That Improves Living Standards
The 32nd Nigerian Economic Summit, held under the theme “Growth that Works: Delivering Jobs, Productivity and Shared Prosperity”, focused on productivity, human capital and resilience.
Yusuf said economic performance should be judged not only by GDP growth but also by the quality of jobs, business productivity and the extent to which prosperity reaches households.
He called for stronger links between education and employment through technical and vocational training, digital skills and industry-relevant education. He also identified agriculture, agro-processing, manufacturing, construction, tourism and digital services as sectors that could expand productive opportunities.
The NESG argued that the private sector would remain central to economic transformation, but businesses needed reliable infrastructure, predictable regulation, affordable financing and a more efficient operating environment.
For the housing sector, these priorities are closely connected. A stronger construction industry can create jobs, support local suppliers and expand housing supply, but sustained progress requires financing conditions and household incomes that make projects commercially viable and homes accessible to buyers.
Nigeria’s economic reforms have delivered some improvements in macroeconomic indicators, but the NESG’s assessment points to the next challenge: converting those gains into lower operating costs, stronger investment, better employment and improved housing affordability.
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