The Group Chief Economist and Managing Director of Afreximbank, Yemi Kale, has suggested that if Nigeria maintains the trajectory of its ongoing reforms, inflation could drop to approximately 14 per cent by the end of 2026.
This optimism comes as the National Bureau of Statistics reported that Nigeria’s headline inflation had already eased to 20.12 per cent in August from 21.88 per cent in July.
Kale, while delivering a keynote address at the ‘Platform Nigeria,’ cautioned that despite the long-term outlook, “between now and then the hardship on households will continue.”
Kale noted that for much of the previous decade, Nigeria’s monetary policy was inconsistent, oscillating between tightening to combat inflation and loosening to spur growth, which was often undermined by large quasi-fiscal interventions.
However, he observed that the CBN has now decisively reasserted price stability as its core mandate.
This was demonstrated by the initial raising of the Monetary Policy Rate to 27.5 percent—one of the steepest tightening moves on record—while open-market operations were streamlined to mop up excess liquidity.
Kale emphasized the transparency of the current actions, stating: “And importantly, these actions were accompanied by clearer communication with regular policy reports, forward guidance, and transparent explanations of the inflation outlook.”
According to Kale, the positive results of these decisive actions are now visible, as headline inflation, which averaged above 25–30 per cent in 2023–24, has begun to ease toward the low 20s, and food inflation, though still high, is slowing.
He stressed that these gains are not merely statistical, adding that every percentage point of disinflation protects the real value of salaries, pensions, and savings, and reduces uncertainty for investors who must plan projects years in advance.
Kale affirmed his long-term projection, saying: “And I believe that if we stay the course, inflation could fall to around 14 percent by end of 2026, all things remaining constant, as the effects of the currency float and fuel price jump are absorbed.”
Kale then shifted his focus to the social aspect of the reforms, highlighting that Nigeria missed a key opportunity to cushion the immediate shock.
He offered a sobering analogy, stating: “But the lesson here is, again, clear Reform is like curing a fever—you must endure some discomfort as the medicine takes effect, but the alternative of letting the fever rage because the pill is bitter or injection too painful is far worse.”
He added a second, equally important lesson for the government, noting that many peer countries have successfully matched reforms with targeted social cushions to protect their most vulnerable citizens.
Kale offered examples, saying: “I mentioned Egypt earlier. Ghana is another. Ghana combined its 2022 debt-restructuring and currency reforms with a comprehensive and well targeted, scaled-up cash-transfer and school-feeding program to absorb some of the shock. But in this regard, Nigeria missed a similar opportunity to soften the immediate shock of reform, relying on ad-hoc and often poorly implemented palliatives rather than a comprehensive, well-communicated and targeted social-protection plan.”
He concluded by emphasizing that the key to success is not only introducing necessary reforms or having the political will to see them through, but also ensuring that “reforms must also be carefully planned, and thoughtfully implemented, so that structural change is matched by social protection and long-term public confidence.”
