CPPE Warns N15tn Debt Service Could Hurt 2026 Growth
Nigeria’s projected N15tn debt service bill in the 2026 fiscal year poses a serious downside risk to the country’s growth trajectory and could weaken the anticipated gains from ongoing macroeconomic reforms, the Centre for the Promotion of Private Enterprise (CPPE) has cautioned.
The policy think-tank made this known in its Review of the Nigerian Economy in 2025 and Outlook for 2026, where it stressed that escalating debt-service obligations may crowd out capital spending, strain government finances, and limit economic expansion.
According to the CPPE, which released the report through its Chief Executive Officer, Dr. Muda Yusuf, the fiscal pressure arising from heavy interest obligations remains one of the most significant constraints to effective budget implementation.
In the 2026 Appropriation framework, total expenditure is estimated at over N58tn, with debt servicing projected at N15.5tn — nearly half of expected revenue, a situation the organisation says reflects structural fiscal fragility.
Yusuf explained that while reform consolidation and macroeconomic stabilisation are expected to support moderate growth next year, the sustainability of such progress depends on how quickly Nigeria addresses its debt profile and revenue shortfalls.
He warned that with such a high debt-service-to-revenue ratio, the government risks sacrificing long-term infrastructure investment for short-term fiscal survival — a reality that undermines development planning.
Throughout the report, the CPPE repeatedly emphasised that “CPPE Warns N15tn Debt Service Could Hurt 2026 Growth,” noting that the level of resources earmarked for debt repayment leaves limited fiscal breathing room for human capital development, capital projects, and pro-growth interventions.
The organisation described this as a vulnerability that could weaken investor sentiment if left unaddressed.
Fiscal Headwinds and Structural Risks Remain
Beyond borrowing costs, the think-tank identified several other threats to the country’s growth outlook, including insecurity, oil production instability, and rising logistics and energy costs.
Yusuf stated that persistent security challenges continue to disrupt agricultural productivity, limit investment inflows in vulnerable regions, and drive up distribution costs — outcomes that ultimately affect output growth.
He also noted that Nigeria’s fiscal balance remains highly sensitive to oil revenue shocks, with production volatility still a major constraint.
Although non-oil economic activity has expanded, the CPPE warned that inadequate power supply, elevated transport costs, and structural bottlenecks continue to suppress productivity across the real sector.
The report added that geopolitical uncertainties and external market pressures could affect trade flows and capital movement in 2026, while pre-election political dynamics may heighten macroeconomic risk if not carefully managed.
Cautious Optimism for 2026 — But Risks Must Be Managed
Despite these threats, the CPPE projected a cautiously optimistic growth outlook for the Nigerian economy in 2026, provided that current reforms are sustained and supported by effective policy coordination.
The organisation forecasts GDP expansion of between 4.0 and 4.5 per cent, driven largely by services, telecommunications, finance, real estate, construction, and trade.
According to Yusuf, moderating inflation and gradual monetary easing — if achieved — could increase consumer confidence, stimulate private investment, and support productivity across key sectors.
He added that prospects within the capital market remain positive, particularly with potential large-scale listings capable of boosting liquidity and attracting fresh domestic and offshore portfolio inflows.
However, he reiterated that the outlook remains conditional, stressing again that CPPE Warns N15tn Debt Service Could Hurt 2026 Growth if fiscal strain intensifies or revenue performance weakens further.
Economic Stabilisation Gains Recorded in 2025
Reflecting on 2025, the CPPE noted that the economy achieved measurable macroeconomic stability following earlier turbulence associated with reform implementation.
Exchange rate movements moderated significantly, with the naira trading largely within a stable band for much of the year, improving pricing predictability for businesses and import-dependent sectors.
Inflation also slowed notably, aided by currency stability, better supply conditions, and easing logistics bottlenecks.
According to the think-tank, business confidence improved as more firms returned to profitability after the disruptions of the preceding year.
Nonetheless, from a fiscal standpoint, outcomes were mixed. Revenue projections underperformed due to oil production shortfalls and lower-than-expected crude prices, which reduced government income and weakened capital spending execution.
This underperformance reinforced the CPPE’s concern that escalating debt-service obligations continue to restrict fiscal space, even in periods of macroeconomic recovery.
Sectoral Performance Shows Structural Transition
The report highlighted Nigeria’s increasing shift away from heavy oil dependence, with the non-oil sector contributing over 96 per cent of GDP by Q3 2025.
Services remained the dominant growth engine, while manufacturing growth was modest, constrained by energy costs, power deficits, and logistics inefficiencies.
Agriculture recorded moderate recovery but continued to face insecurity-related disruptions and productivity gaps, limiting its export contribution.
The CPPE noted that unlocking sectoral potential will require targeted reforms, deeper private-sector participation, and improved infrastructure access — all of which depend on freeing fiscal resources currently absorbed by debt repayment.
Sustaining Reforms and Reducing Debt Burden Remain Critical
Overall, the organisation concluded that Nigeria has entered a more stable macroeconomic phase, but warned that CPPE Warns N15tn Debt Service Could Hurt 2026 Growth unless decisive measures are taken to broaden revenue mobilisation, strengthen public finance discipline, and prioritise growth-enhancing investments over recurrent debt obligations.
Yusuf recommended a combination of improved tax administration, structural reforms to raise productivity, deeper capital-market engagement, and stronger security coordination as essential steps toward ensuring that growth gains translate into improved living standards for citizens.
According to the CPPE, if reforms are sustained and fiscal pressure moderated, 2026 could mark the start of a more resilient and inclusive growth cycle for the Nigerian economy.
