Nigeria economy: Best and worst sectors in Q1 2026

After two years of painful reforms, Nigeria will be closing Q2 2026 with stronger macroeconomic indicators than it had a year ago.

Growth has improved, inflation is lower than 2025 levels, external reserves have climbed close to $50 billion, and the naira has shown greater stability compared with the height of the foreign exchange crisis.

Yet, beneath the better headline numbers are clear pressure points: weak oil production, tight credit conditions, fragile purchasing power, and a power sector that continues to drag on productivity.

Economic growth is typically measured by the growth rate of real GDP, which strips out the effect of inflation and shows whether the economy is producing more goods and services.

The GDP  

Data from the National Bureau of Statistics shows that Nigeria’s real GDP expanded by 3.89% in Q1 2026, higher than the 3.13% recorded in Q1 2025 and slightly above the 3.87% growth recorded for full-year 2025.

The expansion was supported by agriculture, services, ICT, manufacturing, construction, transportation and financial services.

• Agriculture grew by 3.15%.
• Manufacturing expanded by 3.29%.
• Construction grew by 6.38%.
• Information and communication rose by 10.98%.
• Financial and insurance activities grew by 8.54%.

Within manufacturing, cement grew by 11.53%, while telecommunications and information services expanded by 12.24%. Oil and gas also grew, but at a weaker pace, with crude petroleum and natural gas up by 2.57%, while mining and quarrying grew by 1.89%.

But the structure of the growth matters.

• Services accounted for 57.73% of real GDP in Q1 2026.
• Agriculture contributed 23.16%.
• Industries accounted for 19.11%.
• Non-oil activities accounted for 96.08% of GDP,
• Oil activities accounted for 3.92%.

This contribution creates a contradiction in Nigeria’s outlook: the sectors driving GDP growth are largely non-oil, but oil still drives foreign exchange earnings, fiscal revenue and external reserves.

Coronation Research described Nigeria’s Q1 2026 GDP performance as one where:

• “Growth persists, but underlying weaknesses remain.”  

The firm noted that although the 3.89% real GDP growth was encouraging, the economy’s expansion was still largely driven by non-oil and services activity, while weak oil production, poor power supply and limited industrial depth continued to expose the recovery to risks.

That said, let us look at the opportunities and risks

The opportunities

The first opportunity is that growth is becoming more broad-based. Agriculture grew by 3.15% in Q1 2026, compared with just 0.07% in Q1 2025.

• This is important because stronger crop production could help moderate food inflation if the momentum continues into the planting and harvest seasons.

The second opportunity is the resilience of services. Services grew by 4.31% in Q1 2026 and remained the largest part of the economy.

• ICT was a major bright spot, with information and communication growing by 10.98%, while telecommunications and information services expanded by 12.24%.

The third opportunity is manufacturing recovery. Manufacturing grew by 3.29% in Q1 2026, compared with 1.69% in Q1 2025.

• Cement grew by 11.53%, oil refining by 37.46%, and chemical and pharmaceutical products by 6.15%.
• This suggests that parts of the industrial economy are adjusting to the post-subsidy and FX reform environment.

The fourth opportunity is stronger external reserves. Nigeria’s reserves rose from $37.81 billion in June 2025 to $42.72 billion in September 2025 and have since moved closer to $50 billion in 2026.

• Stronger reserves improve confidence, support FX stability and give the CBN more room to manage external shocks.

The fifth opportunity is stronger non-oil revenue. The Budget Office reported that gross non-oil revenue reached N6.52 trillion in Q3 2025, exceeding the quarterly estimate by N468.58 billion.

• This was driven by Company Income Tax, VAT, Electronic Money Transfer Levy, and solid minerals revenue.

The risks 

The first major risk is weak oil production. Oil contributed less than 4% to real GDP in Q1 2026, but it remains central to dollar earnings and fiscal revenue.

• The Budget Office reported that average oil production stood at 1.64mbpd in Q3 2025, below the 2.12mbpd budget benchmark.

Coronation also noted that crude production remained below quota, limiting Nigeria’s ability to benefit from higher oil prices.

The second risk is the power sector.

Electricity, gas, steam and air conditioning supply contracted by 15.30% in Q1 2026.

• This contraction is not good as power availability remains a major constraint on manufacturing, SME productivity and long-term industrial competitiveness.

The third risk is tight monetary policy.  

With the MPR still elevated at 26.5%, borrowing costs remain high.

• This supports fixed-income returns and may help the naira, but it also limits credit growth, business expansion and consumer demand.

The fourth risk is weak purchasing power.

Although inflation eased when compared to 2025 levels, the gap between nominal GDP growth and real GDP growth shows that prices are still eroding household income.

• Nominal GDP grew by 17.79% in Q1 2026, while real GDP grew by only 3.89%, meaning nominal expansion still overstates real welfare gains.

The fifth risk is uneven growth.

Trade, crop production and real estate remain among the biggest contributors to GDP, but their shares weakened slightly between Q1 2025 and Q1 2026. Financial and insurance also remained positive but slowed sharply from 15.03% in Q1 2025 to 8.54% in Q1 2026. This suggests that some of the strongest engines of 2025 are losing momentum.

Finally, Nigeria enters H2 2026 in a better position than it did a year ago, but not yet in a comfortable position.

The economy is growing, reserves are stronger, non-oil revenue is improving, and key sectors such as ICT, agriculture, construction and manufacturing are showing positive momentum. These are real gains and should not be dismissed.

However, the recovery is still fragile. Oil production remains below target, the power sector is contracting, borrowing costs are still high, and household purchasing power remains weak.

The structure of the economy also shows that Nigeria’s GDP growth is driven mainly by non-oil sectors, while its fiscal and external stability still depends heavily on oil.

That mismatch will define the second half of 2026.

If oil output continues to disappoint, power supply worsens, or tight monetary policy continues to weigh on credit and consumption, the recovery may remain visible in the data but weak in the pockets of households and businesses.

The real test for H2 2026 is not whether Nigeria can grow. It is whether that growth can become stronger, broader and more meaningful for businesses, investors and ordinary Nigerians.