Should Nigeria continue its current trajectory of economic reforms, inflation is projected to decline to approximately 14 percent by the close of 2026, according to Yemi Kale, the group chief economist and managing director of Afreximbank.
Speaking at the ‘The Platform Nigeria’ event, Kale observed that although inflation dropped from 21.88 percent in July to 20.12 percent in August, Nigerian households are still likely to endure economic challenges in the short term.
He pointed out that Nigeria’s monetary policy over the last ten years has been marked by inconsistency, oscillating between tightening measures aimed at curbing inflation and easing policies designed to stimulate economic growth, often undermined by quasi-fiscal activities.
Recently, the Central Bank of Nigeria (CBN) has prioritized stabilizing prices by increasing the Monetary Policy Rate to 27.5 percent and refining open-market operations to mop up surplus liquidity in the financial system.
These strategic interventions have contributed to a noticeable reduction in inflation, which hovered between 25 and 30 percent during 2023-24 but is now trending downward into the low twenties. While food inflation remains elevated, it is showing signs of slowing. Kale emphasized that every one percent drop in inflation safeguards real income and savings, while fostering a more stable environment for investors. He also noted that previous reform initiatives fell short due to the absence of a robust and clearly communicated social safety net to protect vulnerable groups from immediate economic shocks.
As examples, Kale referenced Egypt and Ghana, where reform programs were paired with targeted social interventions such as direct cash payments and school feeding schemes to ease the impact on affected populations.
He remarked that Nigeria missed a critical opportunity in this regard. Kale underscored that the effectiveness of reforms depends not only on political determination but also on meticulous planning and execution, ensuring that social protection mechanisms accompany structural adjustments to sustain public trust over time.