Snapshot

Nigeria is entering 2026 with a notable shift in cash policy as the Central Bank of Nigeria removes longstanding limits on cash deposits and raises weekly withdrawal thresholds to ₦500,000 for individuals and ₦5 million for corporates. Withdrawals above these levels will attract modest processing fees, while ATM limits remain unchanged at ₦100,000 daily. The CBN’s intention is not to re-anchor the economy in cash, but to manage currency logistics more efficiently, reduce cash-handling pressures, and avoid destabilising the large informal sector that still depends on physical currency. This subtle recalibration reflects a wider monetary strategy, one that aims to balance digitalisation with economic realities on the ground.

GDP Trend

Foreign Reserve Trend

This shift comes at a time when macroeconomic indicators are signalling improvement. GDP expanded by 3.98% in Q3 2025, driven by crop production, ICT, real estate, and financial services. Foreign reserves have risen to US$46.7 billion, the highest in seven years. Diaspora remittances surged by 66.7%, and the clearance of a US$7 billion FX backlog has restored confidence among portfolio investors, contributing to a sharp rise in foreign inflows. For the first time in several years, Nigeria is experiencing a coordinated uptick in reserves, capital flows, and currency stability, suggesting that the macroeconomic stabilisation plan is gaining traction.

Yet beneath these positive signals lies a more complex inflation reality. Headline inflation has declined dramatically from 34.8% last year to 16.05%, an achievement that reinforces the narrative of macro stability. But the Argon Africa Inflation Pulse, based on real-life market costs, shows that households continue to face elevated prices for food, transport, energy, and rent. Nigerians do not buy headline inflation; they buy tomatoes, fuel, rice, garri, and bus fares. And in these items, the relief has been far weaker than the national aggregates suggest. Base effects, structural bottlenecks, logistics challenges, pass-through from FX movements, and insecurity in farming areas present an even future inflationary expectations goining into 2026. The result is a lived economy that feels detached from the numerical progress reported at the national level.

Interest Rate Trend

Amid these dynamics, the CBN has held its benchmark interest rate at 27%, maintaining the highest borrowing costs in Nigeria’s modern history. This decision supports monetary tightening, stabilises the naira, and deepens Nigeria’s appeal to foreign investors seeking high yields. However, the domestic trade-off is significant: credit remains expensive, investment decisions are being paused, SME growth is constrained, and sectors requiring long-term financing face operational strain. While this rate posture reinforces external confidence, it limits the pace at which real economic expansion can occur. Nigeria’s growth story, as a result, is stabilising but not yet accelerating.

The wider picture reflects a country gaining confidence but still navigating structural fragility. FX conditions are steadier, investor interest is returning, and macro indicators are improving. The CBN’s cash policy adjustments align with this environment, signalling a system gradually returning to equilibrium. However, the gap between official inflation figures and market-level price behaviour remains a critical vulnerability, and the cost of credit continues to mute real-sector dynamism. Nigeria’s task for 2026 is to convert stability into impact—to ensure that macroeconomic progress becomes visible in households, markets, and businesses. Argon Market Assessment warned: "The country stands at a turning point where confidence is emerging, but durability will depend on how effectively policies translate into improved welfare and sustained productivity across the economy".