By Seun Ibiyemi
The Centre for the Promotion of Private Enterprise (CPPE) has called for urgent reforms in Nigeria’s power sector despite the economy recording its strongest quarterly growth in five years.
Nigeria’s real Gross Domestic Product (GDP) grew by 4.43 per cent in the second quarter of 2026, accelerating from 3.89 per cent in the first quarter and 4.23 per cent in the corresponding period of 2025.
The CPPE, while describing the growth as encouraging, said the continued contraction in electricity, gas and steam posed a major risk to the sustainability of the recovery.
In a statement by its Chief Executive Officer, Dr. Muda Yusuf, reads that the electricity sector contracted by 10.63 per cent in Q2, although the decline was lower than the 15.30 per cent contraction recorded in Q1.
According to CPPE, the performance highlights the need to urgently address constraints in power generation, transmission and distribution to enable businesses to benefit fully from the improving macroeconomic environment.
“Better electricity performance would lower production costs across manufacturing, agriculture, mining, ICT, logistics and services, release business capital currently committed to self-generation of electricity and significantly improve competitiveness,” CPPE said.
Yusuf said a turnaround in the power sector would provide a major boost to Nigeria’s industrial and investment outlook.
He called for increased investment across the electricity value chain, alongside measures to resolve gas supply and market liquidity challenges.
He also urged government and regulators to deepen metering, improve commercial discipline and support embedded generation, captive power, industrial mini-grids and renewable energy systems.
He said state electricity-market reforms under the Electricity Act should be implemented with clear accountability and measurable targets, particularly for reliable power supply to industrial and agro-processing clusters.
Oil and non-oil sectors drive growth
The business organisation said the Q2 GDP figures showed that economic expansion was becoming more broad-based.
Oil-sector growth accelerated from 2.57 per cent in Q1 to 7.31 per cent in Q2, supported by an increase in average crude oil production from 1.55 million barrels per day to 1.72 million barrels per day.
The non-oil sector also strengthened from 3.94 per cent to 4.31 per cent, while services grew by 4.60 per cent and accounted for 56.62 per cent of real GDP.
Several sectors recorded improved performances during the quarter.
Mining and quarrying rose from 1.89 per cent in Q1 to 6.37 per cent in Q2, agriculture increased from 3.15 per cent to 4.39 per cent, while construction expanded from 6.38 per cent to 6.75 per cent.
Financial and insurance services also accelerated from 8.54 per cent to 9.29 per cent, while real estate growth increased from 2.29 per cent to 3.76 per cent.
Domestic refining remained a major growth driver, expanding by 43.94 per cent in Q2, compared with 37.46 per cent in Q1.
Cement grew by 12.75 per cent, chemicals and pharmaceuticals by 7.70 per cent, while accommodation and food services expanded by 6.96 per cent.
Information and communication technology remained one of the strongest-performing sectors, growing by 9.62 per cent, with telecommunications recording 10.38 per cent growth.
Manufacturing remains resilient
CPPE said manufacturing remained in positive territory at 3.24 per cent in Q2, compared with 3.29 per cent in Q1.
He described the performance as noteworthy given the continued pressures from energy, financing and logistics costs.
He said reducing these structural costs would allow productive sectors to expand faster and create more employment.
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Also, he identified textiles, apparel and footwear as sectors requiring targeted intervention after contracting by 1.23 per cent during the quarter.
According to Yusuf, the sector has significant potential for job creation and linkages with cotton farming, ginning, fashion, retail and exports.
He said the latest GDP performance suggested that improved foreign exchange stability, stronger oil output, increased investor confidence and better corporate performance were beginning to support economic recovery.
It, however, urged the Federal Government to consolidate the gains by maintaining policy consistency while reducing adjustment pressures on businesses and households.
He warned that abrupt policy reversals could undermine investor confidence and weaken gains made in the fiscal and foreign exchange markets.
Yusuf recommended lower production costs, stronger social protection and employment-focused investment to ensure that economic growth translates into improved living standards.
He said Nigeria could progressively raise economic growth towards 6–7 per cent if reforms were sustained and productive investment strengthened.
He added that the success of the recovery should ultimately be measured not only by GDP growth but also by job creation, rising real incomes, stronger MSMEs, increased manufacturing output and poverty reduction.
