Macroeconomic Report & Economic Updates

According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria exceeded its OPEC crude oil production quota of 1.5 million barrels per day (mbpd) for the third consecutive month in July 2026, producing 1.505 mbpd of crude oil and 0.17 mbpd of condensates, resulting in a combined output of 1.67 mbpd. However, total production declined by approximately 4% month-on-month, largely due to operational disruptions at the Erha and Akpo assets. Despite these setbacks, relatively stable operations at the Forcados, Bonny, Qua Iboe, Escravos and Bonga terminals indicate some degree of resilience within the wider oil-producing system. The ability to maintain production above the OPEC quota despite asset[1]specific disruptions is encouraging, particularly given the importance of crude oil production to government revenues, export earnings and foreign-exchange liquidity. However, the month-on-month decline also shows the vulnerability of aggregate production to disruptions at individual high-output assets. Sustaining the recent improvement therefore requires not only maintaining production at operational fields but also reducing unplanned downtime and accelerating the restoration of impaired capacity. The NUPRC and relevant industry stakeholders should strengthen proactive asset maintenance, production monitoring and rapid[1]addressing operational disruptions.

According to the Nigerian Exchange (NGX) weekly report for July 31st, 2026, the NGX All-Share Index (ASI) declined by 0.84% to close at 245,283.68, while market capitalisation stood at ₦158.326 trillion, a 0.79% decline over the week. Despite the decline in the market's overall performance, trading activity strengthened, with investors exchanging 5.119 billion shares valued at ₦404.762 billion across 285,223 deals, compared to 4.433 billion shares worth ₦306.143 billion traded in 255,589 deals in the preceding week. The financial services industry dominated trading activity, accounting for 3.918 billion shares valued at ₦271.428 billion across 123,514 deals, representing 76.55% of total equity turnover volume and 67.06% of total equity turnover value. The services industry followed with 203.203 million shares worth ₦3.061 billion, while the consumer goods industry ranked third with 191.283 million shares valued at ₦13.203 billion. Although the decline in the ASI and market capitalisation indicates weaker market performance during the week, the increase in trading volume and value suggests that investor participation remained strong despite the downturn. To support market stability and sustain investor confidence, policymakers should sustain reforms that improve market transparency and corporate disclosures while encouraging long[1]term institutional investment. This would help strengthen demand for equities and improve overall market stability. A stable policy environment is also necessary to attract investments.

According to the 2025 Annual Report and Statement of Accounts published by the Central Bank of Nigeria (CBN), Nigeria recorded total foreign exchange (FX) inflows of US$109.86 billion in 2025, representing a 13.81% increase from US$96.53 billion in 2024. This growth was driven largely by autonomous inflows, particularly non-oil export receipts and capital importation. Net FX inflows rose to US$60.81 billion, despite a 27.83% increase in aggregate outflows to US$49.05 billion and a 59.36% rise in overall FX utilisation, which reached US$42.83 billion. FX utilisation was largely concentrated in invisible imports and visible imports for the industrial sector, the latter accounting for 42.11% of total utilisation. Meanwhile, the decline in CBN[1]sourced inflows was primarily attributed to lower receipts from government debt and foreign exchange swap transactions. The increase in net FX inflows underscores the growing contribution of autonomous sources to Nigeria's foreign exchange liquidity. This development has strengthened private-sector liquidity, improved investor confidence, and supported the expansion of non-oil trade. However, the significant increase in autonomous outflows and the economy's ongoing reliance on imported industrial inputs highlight persistent structural weaknesses in the system. These include limited domestic manufacturing capacity and increased vulnerability to volatile short-term capital flows. To sustain this positive momentum, monetary and fiscal authorities must work in close coordination. The CBN and the Federal Government should introduce targeted tax incentives, improve trade and export logistics, and strengthen the competitiveness of the non-oil export sector to promote sustainable autonomous FX earnings over the long term. In addition, maintaining a transparent, market-reflective exchange rate regime, supported by effective regulatory oversight, will help reduce exchange rate volatility, enhance investor confidence, and channel capital inflows into productive sectors of the economy rather than speculative activities.

The Central Bank of Nigeria (CBN) in its 306th Monetary Policy Committee (MPC) meeting, held on 20 and 21 July 2026, decided to retain the Monetary Policy Rate (MPR) at 26.5%, the Standing Facilities Corridor around the MPR at +50/-450 basis points, the Cash Reserve Requirement (CRR) for Deposit Money Banks at 45%, for Merchant Banks at 16%, and non TSA public sector deposits at 75%. The Committee maintained a cautious monetary policy stance, despite a marginal moderation in headline inflation in June 2026, citing global uncertainties due to renewed hostilities in the Middle East. The MPC noted the risk of pass through to domestic inflation from spillovers to global energy prices due to the conflict, while acknowledging the Nigerian economy’s resilience to external shocks. By retaining the MPR, the CBN signalled continued restraint on liquidity and credit growth to consolidate disinflation and exchange rate stability, even though this may keep lending rates high in the near term. By holding the policy rate, the CBN signalled that it is waiting for clearer signs of price stability before easing rates. To further bolster the economy against external shocks, alongside maintaining stable prices, the CBN should boost external reserves by improving FX market transparency and liquidity to reduce volatility, strengthen prudential supervision to ensure banks maintain adequate capital and liquidity buffers, and coordinate with fiscal authorities to align monetary and fiscal actions in support of macroeconomic stability. Furthermore, targeted grants for local production are needed to reduce production costs and, in turn, lower prices.

According to the National Bureau of Statistics (NBS), Nigeria's headline inflation rate stood at 15.91% year-on-year in June 2026, remaining considerably lower than the 25.29% recorded in June 2025 and easing slightly from 15.93% in May 2026. The Consumer Price Index (CPI) increased to 143.0 from 140.7 in the previous month, while month-on-month headline inflation moderated to 1.66%, down from 1.75% in May. In contrast, food inflation accelerated, rising from 2.98% month-on-month in May to 3.75% in June, an increase of 0.77 percentage points, and reached 17.52% on a year-on-year basis. This increase is attributed primarily to higher prices of fresh tomatoes, dried green peas, beef, cassava flour, and garri, among other food items. Furthermore, food and non-alcoholic beverages remained the largest contributors to headline inflation, accounting for 6.37 percentage points of the year-on-year rate and 0.66 percentage points on a month-on-month basis. Consequently, the marginal 0.02 percentage-point decline in headline inflation provides little relief to households, as the moderation has been driven largely by the core basket. In contrast, the food basket, which constitutes a significant share of household expenditure for the average Nigerian, continues to experience upward price pressures, which, in turn, is likely to affect households’ consumption and ultimately their welfare.Therefore, the government should strengthen farm-to-market infrastructure, particularly road networks, and expand storage facilities in surplus-producing states. Such measures would help reduce interstate disparities in food prices and contribute to greater price stability across the country.