Nigeria’s total investment is projected to rise to approximately 20 per cent of Gross Domestic Product (GDP) in 2026, marking its highest level since 2020, even as the country’s fiscal deficit is expected to widen, according to projections by the International Monetary Fund (IMF).
The outlook points to a gradual recovery in investment activity following several years of declining investment relative to the size of the economy, although growing fiscal pressures could complicate the government’s efforts to sustain economic expansion.
According to the IMF projections, Nigeria’s total investment is expected to increase from 17.76 per cent of GDP in 2025 to 19.97 per cent in 2026, before rising further to 20.19 per cent in 2027.
The anticipated improvement would represent a significant recovery from the downward trend recorded between 2021 and 2024.
Nigeria’s investment-to-GDP ratio declined from 21.06 per cent in 2020 to 19.23 per cent in 2021, 18.10 per cent in 2022 and 17.55 per cent in 2023, before falling further to 16.78 per cent in 2024.
The projected increase suggests a gradual improvement in investment activity, potentially reflecting stronger private-sector participation, infrastructure spending and renewed economic confidence.
However, the recovery is expected to coincide with increasing pressure on public finances.
The IMF projects Nigeria’s fiscal deficit to widen from 1.76 per cent of GDP in 2025 to 3.30 per cent in 2026, indicating a higher gap between government expenditure and revenue.
The country’s primary balance, which measures government revenue against expenditure excluding interest payments, is also expected to deteriorate from a surplus of 0.81 per cent of GDP in 2025 to a deficit of 0.96 per cent in 2026.
The contrasting projections highlight the challenges facing the Nigerian economy as policymakers seek to stimulate investment while maintaining fiscal discipline.
Higher investment is important for expanding productive capacity, improving infrastructure, creating employment and supporting long-term economic growth.
However, a widening fiscal deficit could increase borrowing requirements and place additional pressure on debt servicing, particularly if government revenue fails to grow at a pace sufficient to support expenditure commitments.
Nigeria’s ability to sustain the projected investment recovery will therefore depend partly on the government’s capacity to improve revenue mobilisation, strengthen the business environment and attract long-term private capital.
The IMF outlook underscores the importance of ensuring that increased investment translates into higher productivity and economic output while keeping public finances on a sustainable path.
