Nigeria is still standing but under visibly increasing strain. The reform agenda has survived its most dangerous early phase, yet the political and economic buffers that once protected Abuja are thinning fast. The banking sector has moved from recapitalisation theory into consolidation reality, while Dangote’s growing economic gravity is quietly reshaping capital flows, fuel pricing and industrial expectations across the country. Politically, the government retains the advantage – largely because the opposition remains fragmented and internally mistrustful. But reform fatigue is now colliding with deeper regional and constitutional tensions. Meanwhile, insecurity continues to widen geographically and economically. Insurgency, banditry, communal violence and organised criminality are increasingly bleeding into one another, eroding confidence in state authority and drawing sharper international scrutiny. The result is a country operating in endurance mode. Markets remain engaged. Foreign partners remain invested. Institutions are still functioning. But Nigeria is now being judged less on ambition and more on delivery.
Opposition Fragmentation. Nigeria’s opposition still has grievances, personalities and pockets of momentum. But crucially, it still lacks cohesion. Since February, the fragile anti-Tinubu alignment that briefly hinted at a unified 2027 challenge has started to splinter. The cause? Ego, mistrust and regional calculation. Peter Obi and Rabiu Kwankwaso have both distanced themselves from the ADC-led coalition project, exposing just how shallow opposition unity really was.
For President Tinubu, this is significant. Public frustration with inflation, insecurity and reform fatigue remains real. But… Frustration alone does not win elections. Without a credible unified opposition structure, the presidency retains a major strategic advantage heading into the next electoral cycle. The political map is still fluid but the centre of gravity remains with the incumbency.
Looking closely, we can see the deeper issue is that Nigeria’s opposition continues to struggle with the same structural weakness that has haunted it for years – everyone wants coalition but nobody wants subordination. In short – too many kings, not enough crowns. Regional calculations, personal ambition and elite rivalry continue to override strategic discipline. The result is a fragmented challenge facing a government that, despite mounting pressure, still controls the institutional levers of power.
Fiscal Politics. What began as technocratic tax reform is steadily becoming a constitutional and regional power struggle. The Nigeria Revenue Service transition and the implementation of the Nigeria Tax Act 2025 have deepened tensions between Abuja and several northern governors, particularly around VAT allocation and the destination principle. The looming census debate is adding another layer of sensitivity, with population data increasingly tied to fears over revenue allocation, representation and long-term regional influence.
This is no longer simply an argument about revenue collection efficiency. It is increasingly viewed through the lens of regional advantage and political leverage. Northern political figures argue the reforms disproportionately favour commercially dominant southern states like Lagos and Rivers, while the federal government insists the system reflects economic reality rather than political preference. The danger here for Tinubu is that fiscal reform is now bleeding into identity politics. What was sold as modernisation risks becoming interpreted as redistribution by stealth. Legally, Abuja still holds the upper hand. Politically, however, the resistance is hardening rather than fading.
Reform Fatigue. The administration has also become far more conscious that macroeconomic reform alone is no longer politically sufficient. Since February, Tinubu’s messaging has pivoted sharply toward social cushioning, household relief and targeted welfare support.
The “Year of Families and Social Development” campaign marked the clearest sign yet that the presidency understands reform fatigue is becoming politically dangerous. The suspension of the 84-day Joint Health Sector Union (JOHESU) strike and renewed emphasis on digital transfer programmes has reinforced that shift. Abuja is now trying to soften the perception that reform is something done to the population rather than for it. But relief measures buy time, not loyalty. Inflation, transport costs and food prices continue to dominate daily life for millions of Nigerians. Public patience has not snapped – yet – but it is visibly thinning.
Credibility. Security is also becoming a direct test of state legitimacy rather than simply a military challenge. Large-scale attacks in north-central states, including the recent massacre in Kwara which killed at least 160, reinforced the perception that insecurity is widening geographically rather than shrinking into contained insurgency zones.
This matters politically because tactical victories no longer reassure the public when mass casualty incidents continue elsewhere. Every successful attack chips away at the idea that the state controls the national security environment. In turn, insecurity increasingly shapes perceptions of governance competence itself. Nigeria’s problem is no longer just that violence persists. It is that violence is becoming normalised.
US Relations. Nigeria’s relationship with Washington remains intact, but the tone has fundamentally changed. Since the late-2025 redesignation of Nigeria as a Country of Particular Concern, cooperation has continued under a far more conditional framework. Security coordination, intelligence sharing and counter-terrorism engagement remains active but the relationship now operates under scrutiny rather than strategic trust. The January Joint Working Group between Abuja and Washington reinforced this recalibration. Support continues, but it is increasingly tied to measurable outcomes rather than diplomatic assumptions.
Nigeria remains too strategically important for the US to disengage from it entirely. Population size, Gulf of Guinea security, energy infrastructure and ECOWAS influence still matter enormously to Washington. But Abuja no longer enjoys automatic diplomatic benefit of the doubt. The relationship has become more transactional, more conditional and far less forgiving.
ECOWAS Leadership. At the regional level, Nigeria has spent the past quarter trying to reassert itself as the political anchor of West Africa following the fragmentation of ECOWAS and the drift of Mali, Burkina Faso and Niger away from the bloc. Abuja has pushed a softer “big tent” approach focused on restoring dialogue rather than escalating confrontation. Public messaging around democratic stability, regional coordination and mediation has intensified as Nigeria attempts to reclaim leadership credibility across West Africa.
The challenge here is capacity – pure and simple. Nigeria still wants to lead the region but domestic insecurity, economic pressure and political distraction are limiting how much influence Abuja can actually project externally. The contradiction is becoming increasingly obvious – Nigeria remains the region’s indispensable power but also one of its most internally stretched states.
Strategic Hedging. Nigeria is also continuing to diversify its external relationships rather than align tightly with any single bloc. China’s decision to remove tariffs on Nigerian imports through 2028 reinforced Beijing’s growing economic footprint and Abuja’s wider strategy of diplomatic optionality. This reflects a broader shift in Nigerian foreign policy thinking. Rather than choosing fixed alignment, Abuja increasingly appears focused on extracting advantage from multiple partnerships simultaneously – Western security cooperation, Chinese trade access, Gulf investment and regional political influence. The result is a foreign policy that looks less ideological and more transactional. Nigeria is not abandoning Western partnerships but it is clearly trying to reduce dependency on any single external actor.
Investor Diplomacy. Tinubu’s recent diplomatic outreach in Europe, including engagement with France and international investors, underlines another reality. Nigeria still urgently needs external capital to stay engaged through the reform cycle. The administration’s message abroad remains consistent – reforms are painful but serious. Scratch the surface however and the subtext becomes clear and equally important. Abuja needs international confidence to hold while domestic pressure continues to build at home.
That balancing act now sits at the heart of Nigeria’s diplomacy. Foreign partners want security delivery. Investors want stability and predictability. Nigerian citizens want visible relief. Tinubu’s government is trying to satisfy all three simultaneously while operating with steadily narrowing political and economic margins. That balancing act is becoming progressively harder to sustain.
Numbers. Inflation has eased marginally but the improvement remains more statistical than psychological. Headline inflation has drifted lower from late-2025 peaks, largely due to base effects and slightly improved FX liquidity but food inflation remains stubbornly high and transport costs continue to hammer household spending. The underlying problem has not changed. Nigerians are still paying post-subsidy prices with pre-reform earning power.
The government continues to push the narrative that the worst of the inflation shock has passed. Technically, that may be true. Politically, however, the public mood still feels inflationary because real relief has not meaningfully trickled down to a household level. Prices may no longer be accelerating at the same pace but they still remain painfully elevated. The bigger risk now is “inflation fatigue”. Not panic. Exhaustion. A population that adapts to permanently higher prices eventually begins adjusting politically as well as economically.
FX. The naira remains one of the clearest indicators of Nigeria’s structural stress. Since February, the currency has stabilised somewhat compared to the extreme volatility seen during the earlier reform phase but this stability remains heavily managed rather than fundamentally secured.
Official rates have broadly traded within the NGN1,400 – 1,600/USD 1 range, while the parallel market premium continues to expose lingering confidence problems. The Central Bank has improved FX liquidity at moments through intervention and tighter controls but businesses are still planning around uncertainty rather than predictability. The core issue here remains supply. Nigeria still does not generate enough consistent dollar inflow outside of hydrocarbons to sustainably stabilise the currency without intervention.
The crude-for-naira arrangement around Dangote – we’ll come back to this later – has eased some short-term pressure on fuel-related dollar demand but it has not solved the broader FX imbalance. Instead, it has bought Abuja breathing space. That distinction matters – a lot.
In April, the CBN also removed the remaining cash-pooling restrictions on International Oil Companies, granting them full access to repatriated export proceeds through authorised dealer banks. The move points to a cautious re-liberalisation push inside the FX market as Abuja tries to rebuild investor confidence without surrendering control of Dollar liquidity entirely.
Oil and Production Pressure. Oil output has improved marginally from the lows of 2024/25 but production still struggles to move decisively above the OPEC threshold range. Scheduled maintenance at the Bonga field temporarily removed roughly 225,000 bpd from exports. This shows just how little slack exists inside the production system. Nigeria’s oil story is no longer simply about theft or sabotage. It is increasingly about fragility. Infrastructure disruption, maintenance exposure, underinvestment and security leakage all now feed into production volatility. Brent prices have also remained below the levels Abuja would ideally want for fiscal breathing room. That leaves the government trapped between reform ambition and revenue reality. The danger here is not immediate collapse. It is prolonged underperformance.
Banking. The banking recapitalisation race has become one of the most important business stories of the quarter. Pressure is concentrating quickly in the lower and middle tier banking space as institutions scramble to meet the March 2026 recapitalisation requirements.
With the March recapitalisation deadline now passed, the sector has moved from anticipation into consolidation reality. Stronger banks have absorbed weaker players, while others remain in restructuring limbo under close regulatory scrutiny. The system has avoided panic but not disruption.
Last year’s Providus – Unity merger has effectively become the template for survival. What initially looked like isolated restructuring now resembles the early stages of broader sector consolidation. Bigger banks continue to look relatively resilient but weaker institutions are running out of manoeuvring room. Merger talks, capital raising and quiet restructuring efforts have accelerated sharply over the past two months. For now, this sector still looks orderly. But the margin for error is narrowing quickly.
The post-recapitalisation phase is now shifting toward supervision rather than capital raising. In April, the CBN unveiled tighter stress-testing requirements and enhanced risk-based oversight standards, including modelling for exchange-rate shocks, commodity volatility and credit deterioration. The message is clear – recapitalisation was only phase one. Regulatory scrutiny is now deepening.
Payment Infrastructure. Nigeria’s digital payments ecosystem continues to expand at speed. In April, the CBN launched the Nigerian Overnight Financing Rate (NOFR) as a new domestic benchmark designed to improve money market transparency and strengthen monetary policy transmission. At the same time, regulators moved to deepen coordination across payment operators, telecoms firms and fintech providers, underscoring how strategically important digital finance infrastructure has become to both economic management and financial inclusion. According to the CBN, electronic transaction volumes exceeded 11.2 billion in 2024 with a combined value above NGN 1.07 quadrillion, reinforcing Nigeria’s position as one of Africa’s fastest-growing digital payments markets.
Dangote. The Dangote refinery continues to reshape the wider economy. It is no longer simply an industrial project. It is increasingly acting as a parallel macroeconomic stabiliser. The crude-for-naira arrangement has been multi-faceted. It has eased pressure on fuel imports, reduced some FX demand, stabilised domestic PMS pricing and strengthened investor confidence in Nigeria’s industrial capacity.
But importantly, at the same time, Dangote’s growing economic gravity is creating second-order risks. We see concentration risk, pricing influence, supply leverage and market dependency around a single industrial ecosystem.
The delayed NGX listing into late 2026 has also cooled some investor enthusiasm that had been building earlier in the year. Markets still view Dangote as a strategic anchor but anticipate that expectations will become more measured.
Power Sector. The national grid’s proximity to almost near collapse continues to hang over business sentiment. The fact that generation recently fell to almost negligible levels exposes just how fragile Nigeria’s industrial backbone still is despite all the reform rhetoric. And that matters. It matters because power instability now cuts directly across nearly every growth narrative Abuja wants to promote. Think – manufacturing, industrial processing, digital infrastructure, mining, and SME expansion.
Nigeria’s macroeconomic problem is no longer simply policy credibility. It is infrastructure credibility. Investors can tolerate difficult reform cycles. What they struggle to price is systemic operational fragility.
Business. Business sentiment has improved slightly at the margin, particularly among manufacturers and trade-linked firms benefiting from somewhat better FX access. But confidence remains cautious rather than bullish.
The private sector increasingly believes Tinubu is serious about reform. The bigger question is whether the state has the institutional depth and political stamina to sustain those reforms without triggering broader instability. That uncertainty still hangs over investment decisions.
Consumer Economy and Beer. One of the more revealing economic stories of the quarter has been the resilience of Nigeria’s beer market. Despite inflation and shrinking disposable incomes, overall consumer demand has proven surprisingly durable. Even so, we can see that this resilience masks growing stress underneath. Margins remain squeezed, energy and logistics costs are brutal, down-trading is accelerating and premium brands are steadily losing share to cheaper alternatives. The major brewers have stabilised operations through pricing discipline and tighter cost management but this is defensive adaptation rather than genuine expansion. The sector is effectively becoming a microcosm of the wider Nigerian economy. We see resilient demand, weak purchasing power, rising operational costs but increasingly thin margins.
The Big Picture. The overall economic picture is steadier than it was six months ago but it remains fundamentally fragile. Tinubu’s reforms have succeeded in changing direction. But they have not yet succeeded in restoring comfort. Markets remain engaged. Capital still sees opportunity. The banking system is functioning. The energy sector is improving incrementally. But the buffers are thinner now and tolerance for policy mistakes is lower. Nigeria’s economy is no longer in outright shock. Instead it has settled into a fragile holding pattern.
Insurgency. Boko Haram and Islamic State West Africa Province (ISWAP) remain degraded but far from defeated. The insurgency has evolved rather than collapsed. The emphasis is no longer on holding territory. It is on persistence, disruption and psychological pressure. Attacks are smaller, faster and more symbolic. They target villages, markets, military supply routes and vulnerable civilian infrastructure. The core imbalance remains unchanged – insurgent groups continue adapting faster than Nigeria’s counter-insurgency doctrine evolves.
The military continues to record tactical wins, including the killing of senior commanders and raids on militant camps across Borno and the wider Lake Chad corridor. But these victories are not translating into strategic control. Communities officially labelled as “stabilised” are still suffering raids, ambushes and kidnappings, undermining confidence in state-led resettlement efforts. The result is a widening credibility gap between official messaging and lived reality on the ground.
ISWAP in particular continues to demonstrate operational resilience. Cross-border mobility, taxation networks and localised recruitment pipelines have allowed the group to remain embedded across parts of the northeast and the wider Lake Chad Basin. This increasingly resembles a shadow governance ecosystem rather than a contained insurgency. Pressure spilling into Niger and Chad is also reinforcing the regional dimension of the conflict and complicating Abuja’s security calculus.
Northwest. The northwest has further entrenched itself as Nigeria’s most dangerous security theatre. Banditry has evolved beyond opportunistic criminality into a parallel economy built around kidnapping, extortion, arms trafficking and territorial coercion. In some rural areas, armed groups are now effectively regulating movement, collecting informal taxes and negotiating directly with communities. It is true that military operations have disrupted individual networks but they have failed to dismantle the broader incentive structure sustaining the violence. Kidnap-for-ransom remains lucrative, resilient and deeply embedded. Increasingly, communities are negotiating survival directly with armed actors because confidence in state protection has deteriorated. Put simply, that is not a security problem. It is a slow erosion of state authority itself.
Middle Belt. Violence across the Middle Belt has intensified both physically and politically. Farmer-herder clashes continue to grow more retaliatory, cyclical and communal in nature, with attacks becoming increasingly brutal and emotionally charged. State response remains fragmented and reactive, reinforcing perceptions that violence carries little meaningful deterrence. What makes this theatre particularly sensitive is the growing international framing of the conflict through a religious lens. Abuja continues insisting the violence is driven by overlapping pressures – land competition, migration, climate stress, ethnicity and criminality alongside religion. That assessment is broadly accurate. But external perception is shifting faster than nuance. This matters because the Middle Belt is no longer simply a domestic flashpoint. It is becoming a diplomatic liability, feeding international scrutiny and reinforcing foreign narratives that Nigeria is failing to contain sectarian insecurity.
Southeast. The southeast remains volatile but contained. The Indigenous People of Biafra’s (IPOB) operational capacity has weakened compared to previous years but its symbolic influence still carries weight. Security operations, arrests, protests and legal developments surrounding imprisoned IPOB leader, Nnamdi Kanu, continue generating periodic flashpoints. Abuja’s strategy remains overwhelmingly security-led. That has prevented a wider escalation but it has done little to resolve the deeper political grievances driving separatist sentiment. The risk here is not necessarily immediate destabilisation. It is the long-term normalisation of low-intensity unrest and alienation across parts of the region.
Oil Infrastructure. Oil infrastructure security has quietly re-emerged as a major strategic concern. Pipeline vandalism, crude theft and sabotage continue to weigh on production reliability, even as Abuja attempts to stabilise output around OPEC thresholds. This vulnerability matters more now because Nigeria has less production slack than before. As we already mentioned, maintenance at the Bonga field exposed how little operational buffer remains inside the system. Any additional disruption – whether technical or security related – now carries immediate fiscal consequences. At the same time, economic hardship is increasingly feeding wider urban insecurity. Fuel theft, organised robbery, cyber-enabled fraud and criminal gang activity remain persistent across major urban centres. The line between economic distress and organised criminality is becoming progressively harder to separate.
Foreign Partnerships. Security cooperation agreements with the US, France, the UK and regional partners have expanded intelligence sharing, maritime security coordination and counter-terrorism support. On paper, Nigeria’s security toolkit is improving. In practice, however, institutional overlap, funding delays and coordination gaps continues to dilute operational effectiveness. The deeper issue here is overstretch. Nigeria’s security architecture is simultaneously managing insurgency, banditry, communal violence, oil infrastructure protection, separatist tensions and urban criminality. The challenge is no longer simply capability. It is bandwidth. Without structural reform inside the security sector itself, foreign partnerships risk becoming symbolic force multipliers rather than decisive solutions.
The Bottom Line. Nigeria’s security picture has not stabilised. It has fragmented. Threats are now more decentralised, more economically embedded and more politically consequential than they were even a year ago. Tactical wins continue to coexist alongside strategic drift. The danger for Abuja is no longer simply the persistence of violence. It is the gradual normalisation of insecurity as part of everyday governance and economic life. That shift carries consequences far beyond the battlefield. Security failures are now feeding directly into diplomatic pressure, investor caution and political distrust at home. Until Nigeria moves from reactive containment towards prevention – pairing force with governance, economic relief and institutional credibility – the trajectory will remain one of persistence rather than resolution. So far, we see little evidence that Abuja is prepared to make that shift.
Nigeria is entering a more dangerous phase of its reform cycle. The easy wins are gone. What remains are the political, economic and security consequences of trying to restructure a fragile system while public patience, fiscal space and institutional capacity are all simultaneously under pressure. Tinubu’s government still retains room to manoeuvre. The banking sector has avoided immediate instability, foreign investors have not walked away and parts of the private sector are adapting faster than expected. But the margin for policy error is narrowing. Inflation remains socially corrosive, infrastructure weakness continues to undermine confidence and insecurity is spreading faster than the state can convincingly contain it.
The deeper challenge is that Nigeria is now being tested on execution rather than intent. Announcing reforms is no longer enough. Abuja must now prove it can deliver reliable power, stabilise the naira, contain violence and cushion households simultaneously. Failure in one area increasingly spills into the others.
The next two quarters will therefore matter enormously. If the government can hold macro stability, prevent fresh banking stress and demonstrate visible improvements in security and living conditions, investor confidence will probably hold. If not, the risk is not sudden collapse. It is slow erosion. Nigeria still has scale, capital attraction and strategic relevance on its side. But endurance is not the same thing as stability. The country is still moving forward, but with shrinking space for shocks and far less tolerance for failure than even six months ago.