Monthly Digest – July 2026

CONTENTS

1. IMF Reviews Nigeria’s Economy.

2. Food Inflation Rises Again as Cost-of-Living Pressures Persist.

3. FG Issues Transition Guidelines for Nigeria’s New Tax Framework.

4. Dangote Refinery Cuts Petrol Prices as Global Oil Market Begins to Stabilise.

5. CBN Tightens Ownership Rules.

6. Demand for FGN Securities Surges.

 

MONETARY POLICY & MACROECONOMIC OUTLOOK.

IMF Reviews Nigeria’s Economy.

The International Monetary Fund (IMF) has acknowledged Nigeria’s progress in restoring macroeconomic stability following nearly three years of economic reforms, describing recent policy actions as bold and necessary while cautioning that inflation, poverty, and structural constraints continue to pose significant risks to sustainable growth.

The assessment formed part of the IMF’s 2026 Article IV Consultation, an annual review that evaluates the economic performance and policy direction of member countries. The report examined Nigeria’s fiscal and monetary policies, foreign exchange reforms, financial sector stability, inflation outlook, public debt management, and broader macroeconomic conditions.

According to the IMF, Nigeria’s reform programme has begun to address several long-standing economic distortions that had weakened investor confidence and constrained growth over the years. The Fund cited the removal of fuel subsidies, the liberalisation of the foreign exchange market, ongoing fiscal reforms, and tighter monetary policy by the Central Bank of Nigeria (CBN) as important measures that have strengthened the country’s macroeconomic framework.

The report noted that these reforms have contributed to improved policy credibility and greater transparency in the foreign exchange market, while creating a more predictable operating environment for businesses and investors. Although the adjustment process has resulted in short-term economic hardship, the IMF believes the reforms are beginning to lay the foundation for stronger and more sustainable economic growth.

The Fund expects Nigeria’s economy to continue expanding in 2026, supported by improved crude oil production, stronger performance in financial services, telecommunications, agriculture, manufacturing, and other non-oil sectors. It noted that broadening the country’s sources of growth is essential to reducing dependence on crude oil revenues and improving resilience against external economic shocks.

Despite these positive developments, the IMF identified inflation as the country’s most pressing macroeconomic challenge. Rising food prices, elevated transportation costs, energy expenses, exchange-rate pass-through effects, and supply chain disruptions continue to weaken household purchasing power and increase operating costs for businesses. The report emphasised that while the CBN’s restrictive monetary policy has helped moderate inflationary pressures, achieving lasting price stability will also require improvements in agricultural productivity, transportation infrastructure, security, and domestic food supply.

The IMF also welcomed Nigeria’s ongoing tax reforms, noting that strengthening domestic revenue generation remains critical to improving fiscal sustainability and reducing the country’s dependence on oil income. However, it stressed that increased government revenue must be accompanied by greater fiscal transparency, efficient public spending, and stronger social protection programmes to ensure that the benefits of reform are broadly shared across the population.

On the financial sector, the Fund described Nigerian banks as generally resilient despite prevailing macroeconomic pressures. It observed that the CBN’s recapitalisation programme is expected to strengthen the banking industry, improve financial stability, and enhance banks’ capacity to finance larger infrastructure projects and private sector investments. At the same time, the IMF encouraged regulators to maintain close oversight of the financial system as higher interest rates could increase credit risks in some sectors.

While acknowledging the progress made, the report stressed that Nigeria’s reform agenda remains a work in progress. Sustained policy consistency, stronger institutions, improved infrastructure, enhanced agricultural productivity, and increased private sector investment will be essential if current macroeconomic improvements are to translate into higher employment, stronger household incomes, and long-term economic prosperity.

For businesses, the IMF’s assessment sends a positive signal that Nigeria is gradually becoming a more stable investment destination. For households, however, the immediate effects of inflation and high living costs remain significant, underscoring the importance of continued reforms that not only stabilise the economy but also improve the welfare of ordinary Nigerians.

 

 

INFLATION & AGRICULTURE.

Food Inflation Rises Again as Cost-of-Living Pressures Persist.

Higher transport costs, supply chain disruptions and rising production expenses continue to push up food prices despite signs of stability in some staple commodities.

Nigeria’s inflationary pressures intensified further in June following the release of the National Bureau of Statistics (NBS) Consumer Price Index report, which showed headline inflation rising to 15.93 per cent in May 2026, up from 15.69 per cent recorded in April. The increase marks the third consecutive monthly rise in headline inflation this year, signalling that while the economy has made progress in stabilising key macroeconomic indicators, the cost of living remains a major concern for households and businesses.

Food inflation remained the largest contributor to the overall increase, climbing to 16.96 per cent from 16.73 per cent in the previous month. The latest figures suggest that Nigerian households continue to spend an increasing proportion of their income on food, even as government reforms and tighter monetary policies begin to improve broader economic stability.

According to the NBS, the increase in food prices was driven by higher costs of essential food items including fresh fish, dried fish, beef, yam, potatoes, pepper, vegetable oil, eggs and other protein-rich products. Many of these commodities experienced upward price adjustments due to rising transportation costs, expensive farm inputs, insecurity in major food-producing communities, and increased logistics expenses associated with moving produce from farms to urban markets.

Although food prices generally remained elevated, market analysts noted that the pace of increase has begun to moderate for some staple commodities. Improved supply during the harvest season contributed to relative price stability for products such as beans, onions and locally produced rice in several parts of the country. While these improvements offered some relief to consumers, they were insufficient to offset the continued rise in prices across other food categories.

The persistence of food inflation highlights the structural nature of Nigeria’s inflation challenge. Unlike demand-driven inflation, which can often be managed through higher interest rates, food inflation in Nigeria is increasingly influenced by supply-side constraints. Insecurity across agricultural communities continues to limit farming activities in several states, while poor road infrastructure, rising diesel prices, flooding in some farming areas, and post-harvest losses continue to disrupt food distribution networks.

Transportation remains another significant factor. Industry reports indicate that logistics account for a substantial share of food costs in Nigeria, with transport operators continuing to pass higher fuel, maintenance and operating expenses on to traders and consumers. As a result, even when farm-gate prices remain relatively stable, retail food prices often continue to rise by the time products reach major urban markets.

The increase in food prices continues to place significant pressure on household purchasing power. For many Nigerian families, food accounts for the largest share of monthly expenditure, leaving less disposable income for healthcare, education, housing, transportation and savings. Lower-income households remain particularly vulnerable, as they spend a greater proportion of their earnings on essential food items and are therefore more exposed to rising prices.

Businesses have also continued to feel the impact of persistent inflation. Restaurants, food processors, supermarkets and manufacturers are facing higher input costs, while many small and medium-sized enterprises (SMEs) are experiencing tighter profit margins as they struggle to balance increasing operational expenses with consumers’ declining purchasing power. Companies involved in agriculture and food distribution are equally contending with higher financing costs, rising transportation expenses and supply chain uncertainties.

Economic analysts expect inflationary pressures to remain relatively elevated over the coming months, although favourable harvests, improved agricultural output and greater exchange rate stability could help moderate food price increases in the second half of the year. Continued government investment in agriculture, rural infrastructure and food logistics will also be critical to improving domestic food supply and reducing structural inflation over the long term.

Despite the recent increase in inflation, economists note that current price levels remain considerably lower than the record highs experienced during the peak of Nigeria’s inflation cycle in 2024. However, they caution that for many households, the benefits of moderating inflation have yet to translate into meaningful improvements in living standards, as wages and disposable incomes continue to lag behind rising consumer prices.

For policymakers, the latest inflation figures reinforce the need for a balanced policy approach that combines monetary discipline with targeted investments in agriculture, transportation infrastructure and food security. Addressing the structural drivers of inflation will be essential to achieving sustainable price stability while supporting inclusive economic growth.

 

 

FISCAL POLICY & TAX REFORM.

FG Issues Transition Guidelines for Nigeria’s New Tax Framework.

The Federal Government has released comprehensive transition guidelines for implementing the Tax Acts 2025, providing long-awaited clarity on how businesses, taxpayers and tax authorities should migrate from the previous tax regime to Nigeria’s new fiscal framework. The guidelines, issued in June, are designed to ensure a seamless transition by outlining the treatment of existing tax obligations, ongoing audits, disputes, assessments and compliance requirements under the new system.

The publication of the guidelines marks another significant milestone in Nigeria’s tax reform programme, following the enactment of the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board Act. Collectively, these laws represent the country’s most extensive overhaul of tax administration in decades, replacing multiple fragmented tax laws with a more harmonised and transparent framework aimed at improving efficiency, reducing compliance costs and strengthening domestic revenue generation.

According to the implementation guidelines, taxpayers with obligations that originated under the repealed tax laws will continue to fulfil those obligations through clearly defined transitional arrangements, ensuring that outstanding liabilities, audits and appeals are concluded without disrupting the operation of the new regime. The framework also provides direction to tax authorities on the administration of legacy tax matters while progressively adopting the new provisions.

The reforms seek to simplify Nigeria’s tax administration by harmonising procedures, reducing overlapping taxes, improving coordination among tax authorities and expanding the use of digital platforms for registration, filing, payment and compliance monitoring. Government officials say the new framework is intended to make tax administration easier for compliant taxpayers while improving efficiency in revenue collection and reducing opportunities for tax evasion.

For businesses, the transition guidelines provide greater certainty regarding their tax obligations and reporting requirements. Companies are expected to review their accounting systems, update internal tax compliance processes and familiarise themselves with the provisions of the new legislation to ensure smooth compliance. Tax professionals have advised organisations to engage proactively with the new framework, particularly where existing tax disputes, incentives or contractual obligations may be affected by the transition.

The reforms also introduce significant relief measures for many small businesses and low-income earners while broadening the national tax base through improved compliance rather than higher tax rates. By simplifying procedures and consolidating several taxes into a more coherent framework, the government hopes to improve voluntary compliance, increase non-oil revenue and create a tax system that is more equitable, predictable and aligned with international best practices.

Economic analysts believe the successful implementation of the new tax framework will play an important role in strengthening Nigeria’s fiscal sustainability at a time when government continues to reduce its dependence on crude oil revenues. A more efficient tax administration system is expected to improve public revenue, enhance investor confidence and provide government with greater fiscal capacity to finance infrastructure, healthcare, education and other critical development priorities. However, analysts also note that the long-term success of the reforms will depend on consistent implementation, transparent administration and sustained engagement with taxpayers to build trust and encourage voluntary compliance.

 

 

ENERGY & PETROLEUM.

Dangote Refinery Cuts Petrol Prices as Global Oil Market Begins to Stabilise.

Nigeria’s downstream petroleum sector recorded a notable shift in June as Dangote Petroleum Refinery reduced its ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, from ₦1,250 to ₦1,175 per litre. The adjustment followed a decline in global crude oil prices after geopolitical tensions in the Middle East began to ease, reducing pressure on international energy markets.

The price reduction marked the refinery’s first downward adjustment after several months of increases driven largely by volatility in global crude oil prices. Earlier in the year, rising tensions in the Middle East, particularly around the Strait of Hormuz, had pushed international oil prices higher, forcing refiners and fuel marketers to increase domestic petrol prices to reflect rising production and procurement costs. As global oil prices moderated in June, refiners responded by passing part of the reduction on to marketers.

Although the reduction offers some relief to fuel distributors, analysts caution that the impact on retail pump prices may not be immediate. Many marketers continue to sell products purchased at higher landing or depot costs, while existing inventory and transportation expenses may delay price adjustments at filling stations. Consequently, motorists and businesses may experience only gradual reductions in pump prices over the coming weeks rather than an immediate nationwide decline.

The development nevertheless highlights the increasingly important role of the Dangote Refinery in Nigeria’s deregulated petroleum market. As Africa’s largest refinery continues to expand production and strengthen domestic supply, it is becoming a major price setter within the downstream sector. Industry observers believe that increased local refining capacity is gradually reducing Nigeria’s dependence on imported petroleum products, improving fuel availability and strengthening the country’s long-term energy security.

Despite the positive development, petrol prices remain significantly higher than they were prior to the removal of fuel subsidies in 2023. Higher energy costs continue to influence transportation fares, food distribution, manufacturing expenses and overall business operations, making fuel prices one of the most important drivers of inflation across the economy. While lower depot prices could eventually moderate some of these pressures, analysts note that improvements in household living costs are likely to occur gradually as lower energy costs work their way through supply chains.

The outlook for Nigeria’s energy market remains closely tied to developments in the global oil market. Any renewed geopolitical tensions or disruptions to international crude oil supply could quickly reverse recent gains, while continued stability in oil prices and increased domestic refining capacity could create room for further price moderation. Industry experts also note that sustained local production, transparent pricing and greater competition among refiners and marketers will be essential to delivering long-term benefits to consumers and supporting broader economic stability.

For businesses, particularly those operating in transportation, logistics, manufacturing and agriculture, lower fuel costs would help reduce operating expenses and improve profitability over time. For households, however, meaningful relief will depend not only on lower petrol prices but also on corresponding reductions in transport fares and the prices of essential goods, many of which remain closely linked to energy costs.

 

 

BANKING & FINANCIAL REGULATION.

CBN Tightens Ownership Rules.

The Central Bank of Nigeria (CBN) has introduced new regulatory guidelines requiring banks, financial institutions and fintech companies to strengthen the identification and verification of Ultimate Beneficial Owners (UBOs), marking another significant step in the country’s efforts to improve corporate transparency and strengthen the integrity of the financial system.

The new framework, issued in June, requires regulated financial institutions to identify the natural persons who ultimately own, control or benefit from corporate entities opening or operating financial accounts. Rather than relying solely on registered company names or nominee directors, financial institutions are now expected to establish the true individuals behind corporate ownership structures as part of enhanced customer due diligence and Know Your Customer (KYC) procedures.

According to the CBN, the guidelines are intended to address the growing complexity of corporate ownership structures, which have increasingly been exploited in some jurisdictions to conceal illicit financial activities, including money laundering, terrorism financing, tax evasion and financial fraud. By improving transparency around beneficial ownership, regulators aim to strengthen Nigeria’s anti-money laundering framework while aligning domestic banking regulations with international standards established by the Financial Action Task Force (FATF).

The guidelines place greater compliance responsibilities on banks, merchant banks, payment service providers, microfinance banks, mortgage institutions and other regulated financial entities. Institutions are expected to maintain accurate and up-to-date beneficial ownership records, conduct enhanced due diligence for high-risk customers and implement stronger internal controls to detect suspicious transactions involving complex ownership arrangements.

The introduction of the new framework comes at a time when Nigeria continues to strengthen its financial regulatory environment to improve investor confidence and protect the integrity of its banking system. Financial transparency has become an increasingly important consideration for international investors, correspondent banks and development finance institutions, particularly as countries intensify global efforts to combat illicit financial flows and improve corporate governance.

Industry analysts believe the reforms will enhance the credibility of Nigeria’s financial sector by making it more difficult for anonymous shell companies or opaque ownership structures to access the financial system for unlawful purposes. Improved transparency is also expected to support law enforcement agencies in investigating financial crimes while strengthening confidence among legitimate investors seeking a predictable and well-regulated business environment.

Although the enhanced disclosure requirements may increase compliance obligations for financial institutions and some corporate customers, experts note that the long-term benefits significantly outweigh the additional administrative responsibilities. A stronger regulatory framework not only protects the financial system from abuse but also contributes to a more stable investment climate, improved international reputation and stronger relationships with global financial institutions.

For businesses, particularly companies with complex ownership structures, the new requirements underscore the importance of maintaining accurate corporate records and ensuring full disclosure during banking relationships. Financial institutions are also expected to invest further in compliance systems, staff training and technology to meet the enhanced regulatory expectations while delivering efficient customer service.

The CBN’s latest guidelines reinforce Nigeria’s broader commitment to strengthening financial sector governance, improving regulatory oversight and aligning the country’s banking industry with global best practices. As financial crime continues to evolve across international markets, stronger transparency measures are expected to play an increasingly important role in safeguarding the integrity, stability and credibility of Nigeria’s financial system.

 

 

INVESTMENT & CAPITAL MARKETS.

Demand for FGN Securities Surges.

Nigeria’s fixed-income market recorded another strong performance in June as investors demonstrated sustained appetite for Federal Government securities, with both FGN Bonds and Treasury Bills attracting significant subscriptions. The strong demand reflects growing confidence in the country’s debt market, supported by relatively attractive yields, improving macroeconomic stability and renewed optimism surrounding ongoing economic reforms.

The Debt Management Office (DMO) recorded subscriptions exceeding ₦1.41 trillion during its June FGN Bond auction, significantly surpassing the amount offered for sale. Investor demand was spread across medium and long-term instruments, highlighting continued confidence in government securities despite prevailing inflationary pressures and elevated interest rates.

Similarly, the Central Bank of Nigeria’s Treasury Bills auction recorded strong participation from institutional investors, pension fund administrators, banks, asset managers and other market participants seeking relatively low-risk investment opportunities. The continued oversubscription of Treasury Bills underscores the attractiveness of government-backed securities in an environment where investors remain cautious about market volatility.

Market analysts attribute the sustained demand largely to the relatively high yields currently available in Nigeria’s fixed-income market. Following the Central Bank’s tight monetary policy stance over the past year, yields on government securities have remained attractive, encouraging investors to increase allocations to fixed-income assets while balancing risk and return. For many institutional investors, government securities continue to provide a stable investment option with predictable income streams and minimal default risk.

The strong performance of the bond and Treasury Bills market also reflects improving investor sentiment towards Nigeria’s broader macroeconomic outlook. Recent reforms aimed at strengthening fiscal discipline, improving foreign exchange market transparency and restoring investor confidence have contributed to renewed interest in government securities. While inflation remains elevated, investors appear increasingly confident that ongoing reforms will support greater economic stability over the medium term.

Government securities continue to play a critical role in Nigeria’s public finance strategy by enabling the Federal Government to raise domestic capital for budget implementation, infrastructure development and other national priorities. Strong subscription levels provide government with greater financing flexibility while reducing reliance on external borrowing, although analysts caution that sustained borrowing must be balanced with prudent debt management to ensure long-term fiscal sustainability.

For investors, the continued strength of the fixed-income market presents opportunities to preserve capital while earning competitive returns in a relatively secure investment environment. Pension funds, insurance companies and other long-term investors have continued to increase exposure to government securities as part of diversified investment portfolios, while individual investors are also showing growing interest in Treasury Bills and FGN Bonds as reliable savings and investment instruments.

Looking ahead, analysts expect demand for government securities to remain strong, particularly if the Central Bank maintains its current monetary policy stance and inflation continues its gradual moderation. However, future investor behaviour will also depend on developments in interest rates, fiscal policy, exchange rate stability and overall economic performance during the second half of the year.

The continued oversubscription of FGN Bonds and Treasury Bills reflects not only investors’ preference for safe investment assets but also growing confidence in Nigeria’s financial markets as economic reforms gradually strengthen macroeconomic stability. As the investment environment continues to evolve, government securities are expected to remain an important component of both institutional and individual investment strategies.

 

 

SOURCES: Nariametrics, Businessday, istock images, Shutterstock, Punch newspaper, Reuters, Guardian News, ICIR Nigeria, Premium Times, Leadership News, Vanguard News, Daily Times Nigeria, Linda Ikeji’s Blog, Finance in Africa, Daily Post, Terrapass, Agora Policy, Nairaland.

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