Africa Nigeria Defies Inflation Pressures to Lead Africa's Business Growth Index

Nigeria Leads Africa in Business Activity Growth Despite Inflation Surge

Nigeria has recorded the highest improvement in business activity among eight major African economies tracked in May 2026, a development analysts describe as a significant marker of the country's economic resilience — even as global inflationary pressure mounts. The finding, reported by BusinessDay on June 5, comes amid fresh tension in the Middle East that has driven up global oil, fuel, and fertiliser prices, creating headwinds for economies across the continent.

The performance stands out precisely because of the circumstances under which it was achieved. Economies across Africa have been grappling with the ripple effects of elevated global commodity prices and currency pressures, making Nigeria's ability to outpace its peers on the business activity index a noteworthy achievement for President Bola Tinubu's administration.

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Capital Importation Surges

Complementing the business activity data is a remarkable capital importation figure for the first quarter of 2026. Nigeria attracted $10.37 billion in foreign capital inflows in Q1 2026, representing an 83.8 percent increase compared to the corresponding period in 2025. The surge signals renewed investor confidence in Nigeria's economic reform trajectory, particularly following the unification of foreign exchange rates and the ongoing liberalisation policies of the Central Bank of Nigeria (CBN).

For the corporate sector, the picture is equally encouraging. Data from Nairametrics indicates that Nigeria's largest listed companies have not only recovered the dollar value of profits lost during the historic naira devaluation of recent years, but have collectively surpassed their pre-devaluation earnings peak — a milestone that underlines the durability of Nigeria's private sector.

West Africa's Wider Stability Outlook

Beyond Nigeria, the broader West African economic story remains cautiously optimistic. Reports indicate that Nigeria and other countries in the sub-region are projected to maintain GDP growth at approximately 4.7 percent in 2026 — a forecast that, if realised, would cement West Africa as one of the continent's stronger-performing regional blocs amid global uncertainty.

The Nigerian Export Promotion Council (NEPC) has also been active, conducting intensive capacity-building workshops designed to prepare small and medium enterprises (SMEs) for greater participation in global markets. These efforts align with a broader federal government push to diversify revenue streams beyond oil and gas, a structural reform ambition that has gained traction since the Tax Reform Acts of June 2025 came into effect.

Tax Reform and Fiscal Foundations

Nigeria's tax reform landscape, reshaped by a sweeping set of laws enacted in mid-2025, continues to define the business environment in 2026. The reform package — comprising the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Establishment Act, and Joint Revenue Board Act — consolidated a previously fragmented tax framework and set the Value Added Tax (VAT) rate at 7.5 percent from January 1, 2026. This places Nigeria among the countries with the lowest VAT burden among major African economies.

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Industry watchers at VIsBlog note that the tax reform has been cautiously welcomed by businesses, particularly SMEs that previously faced compliance burdens under multiple overlapping tax regimes. The simplification of structures, combined with stronger enforcement mechanisms, is expected to broaden the tax base and improve revenue mobilisation in the coming quarters.

Banking Sector Milestones

The banking sector has also been in the spotlight. First Bank of Nigeria, a subsidiary of First HoldCo Plc, announced the appointment of Dr Julius B. Omodayo-Owotuga as Executive Director effective May 13, 2026, following approval from the Central Bank of Nigeria. The appointment signals continued governance strengthening across the Nigerian banking landscape, a process accelerated by the CBN's bank recapitalisation programme.

Additionally, the CBN's unveiling of its Payments System Vision 2028 — announced in Abuja — has been described as a landmark chapter in Nigeria's journey toward a modern digital economy. The vision document sets out a roadmap for seamless digital payment infrastructure over the next two years, with implications for financial inclusion, transaction efficiency, and cross-border commerce.

What It Means for the Months Ahead

With Nigeria topping Africa's business activity charts in May and capital inflows hitting near-record levels, the overall economic trajectory is broadly positive. However, economists caution that the inflationary environment — fuelled partly by external shocks — remains a risk that must be carefully managed through monetary and fiscal coordination.

For businesses on the ground, the combination of reformed tax structures, improving access to capital, and a more competitive banking sector creates an environment with more upside than at any point in recent memory. As VIsBlog continues to track Nigeria's economic story, the coming months will test whether this momentum can be sustained against the backdrop of global volatility and domestic structural challenges.