5 Key Policy Tests Nigeria Must Pass in 2026

Nigeria’s fiscal strategy will face a major test in 2026. Government revenue is improving, inflation has started to cool from recent highs, and new tax laws are coming into effect.

The question now is whether authorities can strengthen public finances without worsening household hardship or weakening investor confidence.

The policy choices made this year will shape budget outcomes, determine how credible the reform agenda looks, and influence how much trust Nigerians place in government. Five issues stand out as the most important tests.

1. Growing revenue without slowing the economy

The first challenge is sustaining revenue growth without weakening consumption, investment, or formal sector participation.

Non oil revenue has jumped sharply, rising from ₦5.96 trillion in 2022 to ₦16.09 trillion in 2024. However, nominal GDP growth has not expanded at the same pace, creating tension around the overall tax burden relative to economic activity.

The Central Bank of Nigeria expects Federal Government retained revenue to reach ₦35.51 trillion in 2026, but analysts warn that resistance to reforms is partly driven by poor public understanding of what the policies aim to achieve.

When people do not clearly see the benefit or believe the system is unfair, compliance drops and revenue targets become harder to reach.

The issue is not only how much revenue is raised, but how it is collected, how quickly, and how fairly, especially when businesses and households are already under pressure.

2. Reducing debt service pressure in a volatile environment

The second test is whether rising revenues can meaningfully reduce the weight of debt servicing.

Debt service consumed 51.3 percent of revenue in 2022, climbed to 68.4 percent in 2023, and eased to 53.1 percent in 2024 as revenues increased. The improvement is real, but the burden remains heavy, leaving limited room for capital spending and social investments.

This creates little margin for mistakes. If revenue growth slows, borrowing costs rise, or exchange rate pressures return, the gains can reverse quickly. The key question is whether revenues can consistently outpace debt obligations in a difficult macroeconomic setting.

3. Closing the gap between new laws and real world implementation

Nigeria’s new fiscal and tax laws aim to widen the tax base, simplify administration, and improve credibility. But early reviews suggest that gaps, unclear provisions, and difficult design choices could weaken the reforms if not fixed quickly.

Areas that could create friction include how capital gains are treated when inflation is high, how indirect transfers are defined and enforced, limits on foreign currency expense deductions, VAT linked deductibility rules, and compliance requirements for non resident entities.

Uncertainty in any of these areas can raise compliance costs, increase disputes, and influence investment decisions.

4. Managing inflation pain and household pressure

Inflation peaked in 2024, with headline inflation around 34.8 percent and food inflation close to 40 percent, before easing in 2025. Even as inflation slows, households remain strained after years of reduced purchasing power.

The CBN projects headline inflation will average 12.94 percent in 2026, but the cost of the adjustment has been steep. If people believe reforms are unfair, or that the political class is insulated while citizens carry the burden, public frustration can grow.

That “trust deficit” can become an economic risk, capable of undermining reform progress and widening social tension.

5. Building investor confidence through policy clarity

The fifth test is whether reforms make Nigeria more predictable for investors or create fresh uncertainty.

Changes to capital gains taxation aim to integrate gains into taxable income while offering thresholds and reliefs for smaller investors. Market performance can be strong when policy signals are clear, but it can also turn sharply when investors sense uncertainty.

For capital markets, the biggest issue is often not the headline rate, but how gains are measured, how losses are treated, how cross border transactions are handled, and whether rules are applied consistently. Investor confidence shows up in long term capital allocation, not only in short term price movements.