In 2014, while reporting for International Finance magazine, I photographed guests raising their glasses at a business event in Lagos.

Nigeria had just overtaken South Africa as Africa’s largest economy after a GDP rebasing, and optimism filled the air. Investors spoke of an expanding consumer class, and analysts saw enormous potential in Africa’s most populous nation.

In 2016, a collapse in global oil prices (from highs of $112 to below $50) pushed Nigeria into recession, with foreign exchange shortages disrupting business for many. The COVID‑19 pandemic dealt another blow, plunging the country into a second recession in five years. Nigeria has been learning and recovering ever since.

While challenges remain, signals from this week’s dispatch suggest opportunities for a new growth momentum. The story of how capital is being allocated points to cautious optimism, and perhaps the beginnings of a more durable growth trajectory.

This edition is a mini deep dive that I hope you’ll find useful. Let’s dive in.

Analysis

Nigeria is pulling in foreign capital again, except that this time it’s not just hot money.

In June last month, the National Bureau of Statistics reported record inflows of $10.37 billion in Q1 2026, up 61% QoQ and 83% YoY. Nearly 95% came through foreign portfolio investment into bonds and Treasury bills. While the figures showed renewed confidence in Nigeria’s investment case, they largely represented short-term plays.

The broader external picture has also improved. Nigeria’s foreign reserves have climbed to multi-year highs, reaching more than $51 billion in mid-2026, up sharply from around $35.7 billion a year earlier.

The build-up has been supported by stronger FX inflows, improved market conditions and a more stable reserves trajectory, giving the Central Bank a larger buffer to manage the currency and external payments.

The confidence is now broadening into longer-term commitments.

Earlier this month, Nigeria’s Senate approved Huaxin Building Materials’ $1 billion acquisition of an 83.81% stake in Lafarge Africa from Switzerland’s Holcim, clearing the legislative hurdle for one of the largest foreign acquisitions in Nigeria’s manufacturing sector.

Headquartered in Wuhan, China, Huaxin Building Materials Group is described as one of the world's top ten cement and construction material manufacturers.

Nigerian stocks this year returned 67% to 68% in U.S dollar terms as of early this month, overtaking South Korea’s KOSPI index to become the world’s best-performing equity market. The equites that drove the rally came from financial services, telecoms and industrials, including cement.

Unlike previous rallies erased by currency depreciation, exchange-rate stability, a product of aggressive domestic macroeconomic reforms, allowed foreign investors to retain gains. S&P Dow Jones Indices had also placed Nigeria on its 2027 watchlist for a possible return to Frontier Market status. Analysts say that helped fuel the stock rally.

Meanwhile, long-term capital is also returning to oil and gas. Earlier this month, ExxonMobil and partners committed $1 billion to launch on-block operations at the Usan Infill Project in offshore OML 138, the company’s first deepwater drilling campaign in Nigeria since 2016. Expected to add up to 40,000 bpd, the development forms part of efforts to unlock more value from offshore assets and attract new upstream investment.

In gas, UTM Offshore secured a 15-year supply agreement with NNPC and Seplat, paving the way for an FID on its $3 billion floating LNG project by the fourth quarter of this year. The development ties into efforts to monetize Nigeria’s vast gas reserves and grow a gas-based processing industrial economy.

Crude production is also recovering. Oil output rose to 1.56 million bpd in June, the highest since April 2020. That’s 104% of Nigeria’s OPEC quota, up from 102% in May, highlighting operational stability.

Nigeria’s oil and gas sector has been a major driver of export earnings and government revenue. But its contribution to the economy shows the economy is much more diversified beyond oil.

In 2014, a rebasing saw Nigeria’s economy almost doubled in size to $509.9 billion. The rebasing, which saw Nigeria overtake South Africa to become Africa’s largest economy, captured fast‑growing non‑oil sectors such as telecoms, e‑commerce, and Nollywood. That exercise revealed oil, while a major foreign exchange earner, contributed less than 15% to total GDP, down from roughly 30% prior to the update.

At the time, Standard Bank research highlighted the rapid rise of Nigeria’s middle class, which it said grew 600% between 2000 and 2014 to 4.1 million households, with millions more expected by 2030. That optimism reflected the promise of an emerging consumer class.

Roughly a decade later, inflation, currency volatility, and other challenges eroded the purchasing power of millions, leaving the middle class smaller and less resilient than once projected.

According to the World Bank’s Nigeria Development Update in 2025, despite recent macroeconomic stabilization gains, over 139 million people (61% of the country’s population) now live below the poverty line due to the erosion of real income from sustained price pressures. This widespread hardship points to a widening disconnect between corporate market gains and actual household incomes.

Another rebasing in 2025 confirmed the the structural reality of the economy.

Nominal GDP for 2024 was adjusted upward by 30% to ₦372.8 trillion, translating to approximately $243 billion at prevailing current exchange rates. However, this jump was predominantly driven by inflationary pressures rather than an expansion in actual production. Indeed, total real GDP expansion across the preceding five years amounted to a modest 6% overall.

Data sources: National Bureau of Statistics, Nigerian Economic Summit Group, International Monetary Fund

The rebased data confirms the evolution of Nigeria’s economy, with the oil and gas sector now accounting for less than 4% of nominal GDP, highlighting how the country’s economy has diversified beyond oil.

Meanwhile, Nigeria’s headline inflation eased marginally to 15.91% in June, aligning with a bullish International Monetary Fund forecast. The IMF report projects a steady 4.1% GDP growth this year that will propel the nation past Algeria to reclaim its position as Africa’s third-largest economy. According to IMF’s forecast, Nigeria’s GDP is expected to reach $334 billion in 2026.

As capital flows seemingly begin to expand, the challenge will be ensuring growth is both sustainable and inclusive, a priority closely watched by Nigerians and international partners alike.

And maybe, Nigeria could revive that promise of its consumer class.