Real Economy Remains Under Pressure Despite Reform Gains, CPPE Warns

Mid-Year Review Highlights Persistent Pressure on Nigeria's Real Economy

Nigeria's real economy continues to face significant challenges despite improvements in key macroeconomic indicators, according to the Centre for the Promotion of Private Enterprise (CPPE) in its 2026 mid-year economic review. The policy think tank said businesses and households remain under pressure from high borrowing costs, weak consumer purchasing power, elevated production expenses and persistent inflationary pressures, even as reforms have improved exchange rate stability and investor confidence.

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The CPPE noted that recent economic reforms have strengthened several macroeconomic fundamentals, including foreign exchange liquidity and fiscal revenues. However, it argued that these gains have yet to translate into meaningful improvements for the productive sectors of the economy, where manufacturers, small businesses and consumers continue to grapple with high operating costs and constrained demand.

Macroeconomic Gains Yet to Reach the Real Economy

According to the CPPE, Nigeria has recorded progress in stabilising the foreign exchange market and improving fiscal performance following key policy reforms. These developments have helped restore investor confidence and strengthened the country's macroeconomic outlook.

Despite these gains, the organisation said many businesses continue to operate in a difficult environment characterised by expensive credit, high energy costs and rising logistics expenses. These factors have limited expansion, reduced investment and weakened productivity across several sectors of the economy.

High Interest Rates Continue to Weigh on Businesses

The CPPE identified elevated interest rates as one of the biggest constraints on economic activity. The high cost of borrowing has increased financing expenses for businesses, making it more difficult for companies to invest in expansion, purchase equipment or finance new projects.

Small and medium-sized enterprises (SMEs), which account for a significant share of employment and economic activity, remain particularly vulnerable because of limited access to affordable credit.

The think tank urged policymakers to strike a balance between controlling inflation and ensuring sufficient access to financing for productive sectors of the economy.

Weak Consumer Demand Slows Economic Activity

The review also highlighted the continued impact of inflation on household purchasing power. Although inflationary pressures have moderated in recent months, the cumulative increase in prices has reduced disposable incomes, limiting consumer spending on non-essential goods and services.

According to the CPPE, subdued consumer demand continues to affect manufacturers, retailers and service providers, contributing to slower business activity and weaker inventory turnover.

The organisation stressed that stronger household incomes would be essential to supporting sustainable economic recovery and stimulating private-sector growth.

Implications for Housing and Construction

The CPPE's assessment has direct relevance for Nigeria's housing and real estate sector. High interest rates continue to increase the cost of mortgage financing and construction loans, making it more expensive for developers to finance projects and for prospective homebuyers to access credit.

At the same time, reduced household purchasing power has affected demand for residential property, while elevated production costs have increased the price of building materials and construction services.

Although improvements in exchange rate stability may ease imported input costs over time, developers continue to face significant cost pressures that affect housing affordability and project viability.

Policy Recommendations

The CPPE called for measures that would strengthen the productive sectors of the economy, including lower financing costs, improved infrastructure, enhanced energy supply and policies that support manufacturing and private-sector investment.

The organisation also emphasised the need to sustain ongoing reforms while ensuring that macroeconomic improvements translate into tangible benefits for businesses, workers and households.

Outlook

The CPPE's mid-year review suggests that while Nigeria's macroeconomic reforms are beginning to deliver measurable gains, the real economy continues to face considerable challenges. Sustained improvements in inflation, interest rates, consumer purchasing power and business costs will be critical to strengthening economic activity.

For the housing sector, a healthier real economy remains essential to improving mortgage accessibility, boosting construction activity, encouraging private investment and supporting long-term growth in residential and commercial real estate.

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