LCCI STATEMENT ON 2026 BUDGET

FROM STABILITY TO SCALE: POWERING PRODUCTION, JOBS AND GROWTH IN 2026

The Lagos Chamber of Commerce and Industry (LCCI) appreciates the recent presentation of the 2026 budget before the end of 2025. We, however, cannot see the possibility of having a robust debate on the budget by the national Assembly and passing the Appropriation Act before the end of this year. This may mean that the 2026 budget may not start within the established budget circle of January to December. The federal budget is a timely shift from macroeconomic stabilization to growth acceleration. The Budget reflects growing confidence in the economy, supported by moderating inflation, improving external reserves, and recovering investor sentiment. Importantly, it signals a deliberate effort to consolidate recent reforms and translate stability into higher output, job creation, and shared prosperity.

LCCI is encouraged by the strong emphasis on production-oriented spending, with capital expenditure of ₦26.08 trillion (approximately 45 percent of total outlays) significantly outweighing non-debt recurrent expenditure of ₦15.25 trillion. This composition supports infrastructure development, industrial expansion, and productivity growth. However, the ₦15.52 trillion allocation to debt servicing remains a significant fiscal burden, underscoring the need for stricter borrowing discipline, enhanced revenue efficiency, and expanded public-private partnerships to safeguard investments that promote growth.

A further review of the 2026 budget reveals relatively optimistic macroeconomic assumptions that may pose fiscal risks. The oil price benchmark of US$64.85 per barrel, although lower than the US$75.00 benchmark in the 2025 budget, appears optimistic when compared with the 2025 average price of about US$69.60 per barrel and current prices around US$60 per barrel. This raises downside risks to oil revenue, especially since 35.6 percent of the total projected revenue is expected to come from oil receipts.

Similarly, the oil production benchmark of 1.84 million barrels per day is significantly higher than the current level of approximately 1.49 million barrels per day. Achieving this may be challenging without substantial improvements in security, infrastructure integrity, and sector investment. Persistent challenges such as oil theft, pipeline vandalism, and underinvestment could undermine this assumption and further weaken revenue outcomes.

The exchange rate assumption of ₦1,512/US$ compares with ₦1,500/US$ in the 2025 budget and approximately ₦1,446/US$ as of the end of November 2025, indicating expectations of mild depreciation. While this may support naira-denominated revenue, it also increases the cost

of imports, debt servicing, and inflation management, with broader macroeconomic implications.

In addition, the inflation projection of 16.5 per cent in 2026, up from 15.8 per cent in the 2025 budget and a current rate of about 14.45 per cent, appears optimistic, particularly in a pre-election year when higher government and political spending could expand money supply and intensify inflationary pressures.

We are also concerned about Nigeria’s historically weak budget implementation capacity, which is likely to be further strained by the combined operation of multiple budget cycles within a single year, including the 2024 Budget, the Supplementary Budget, and the budgets for 2025 and 2026. This has significant implications for fiscal coordination, transparency, and the effective execution of projects.

Looking ahead, LCCI identifies agriculture and agro-processing, manufacturing, infrastructure, energy, and human capital development as key drivers of growth in 2026. Unlocking these sectors will require decisive execution—scaling irrigation and agro-value chains, reducing power and logistics costs for manufacturers, accelerating infrastructure delivery through PPPs, sustaining oil and gas sector reforms, and aligning education and skills development with private-sector needs.

The dwindling oil price, impacted by various geopolitical tensions, new tax laws starting in 2026, the insecurity situation affecting food production, the cost of doing business, and the policy inconsistencies are critical factors to watch and focus on if we aim to grow the economy to a $1 trillion mark in 2030. We must also resolve the issues surrounding the Naira for crude, increase the supply of oil to local refineries to boost local refining capacity and conserve the substantial foreign exchange used for fuel imports, and address the need for internationally standardized regulatory oversight over the oil and gas sector.

Overall, the 2026 Budget presents a credible opportunity for Nigeria to transition from recovery to expansion. Its success will depend less on the size of allocations and more on execution discipline, capital efficiency, and sustained support for productive sectors. LCCI remains committed to working with the government to ensure the Budget delivers stronger growth, more jobs, and a more competitive Nigerian economy.

DR. CHINYERE ALMONA, FCA

THE DIRECTOR GENERAL,

LAGOS CHAMBER OF COMMERCE AND INDUSTRY

22ND DECEMBER 2025