For investors, economic forecasts are more than reports. They are roadmaps that help decode uncertainty, identify opportunities and anticipate risk. Few institutions in Nigeria have built a reputation for producing investment research as comprehensive as Meristem Securities, and its latest outlook, “Stability Meets Uncertainty: Repricing Risks, Sustaining Growth,” arrives at a time when both global and domestic markets are searching for direction.
Speaking on Global Business Report on ARISE Television, Felicia Awolope, Head of Research at Meristem Securities Ltd., unpacked the thinking behind the firm’s extensive outlook for the second half of 2026. Her message was both reassuring and cautionary. While Nigeria and much of the global economy are gradually emerging into a period of greater macroeconomic stability, investors cannot afford to ignore the risks gathering on the horizon.
The report’s cover captures this duality with the image of a hot air balloon floating calmly through the sky. According to Awolope, the symbolism is deliberate. The balloon represents economies that appear to be sailing smoothly after years of turbulence, yet remain vulnerable to sudden winds capable of disrupting the journey. Stability may have returned, but uncertainty has not disappeared.
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That balancing act defines Meristem’s outlook for the remainder of the year. Global inflation has eased considerably from the extraordinary highs triggered by the Russia-Ukraine conflict, yet Awolope argues that inflationary pressures remain one of the biggest threats to economic growth. The latest geopolitical tensions in the Middle East, particularly around Iran, have once again reminded policymakers how quickly energy markets can shift. Because energy sits at the centre of virtually every productive activity, higher oil prices inevitably feed into transportation costs, food production, manufacturing and consumer goods, pushing overall inflation higher across economies.
This interconnectedness explains why central banks across the world have become increasingly cautious. Monetary policy decisions can no longer be based solely on domestic conditions. Policymakers must constantly assess geopolitical developments, commodity prices and global financial markets because events thousands of miles away can rapidly reshape inflation expectations at home.
For Sub-Saharan Africa, however, inflation is driven by a combination of global shocks and long-standing domestic structural challenges. Awolope points to Nigeria’s insecurity in food-producing regions, import dependence across several African economies and weak supply chains as legacy issues that have influenced prices for years. While these factors remain significant, many have already been absorbed into market pricing over time. What worries investors more are sudden external disruptions such as the recent Middle East tensions, whose impact is immediate and difficult to predict. These abrupt shocks force businesses to reprice goods almost instantly, creating fresh inflationary pressures across entire economies.
Despite these challenges, Awolope believes African economies continue to demonstrate resilience. She cautions against ranking geopolitical risks above domestic structural issues or vice versa, arguing that both require equal attention because they influence economic performance differently. Structural weaknesses gradually erode competitiveness over time, while geopolitical crises deliver immediate disruptions that demand swift policy responses.
One of the report’s most thought-provoking observations concerns the long-running debate over resource-dependent economies. Contrary to conventional assumptions, Meristem’s analysis shows that many non-resource-dependent African countries have consistently recorded stronger economic growth than resource-rich peers. Awolope is careful not to suggest that natural resources are a disadvantage. Rather, she argues that resource abundance often creates complacency.
Countries blessed with commodities frequently become overly dependent on resource exports while neglecting manufacturing, innovation and industrial development. Nations with fewer natural resources have little choice but to diversify, invest in human capital and develop competitive industries outside extractive sectors. Resource wealth should serve as a foundation for industrialisation, not a substitute for it.
Nigeria, she notes, possesses enormous opportunities beyond crude oil. While government efforts to diversify the economy have gathered momentum in recent years, greater value can still be unlocked by processing raw materials domestically rather than exporting them in their primary form. True economic transformation lies not merely in owning resources but in maximising the value created from them.
Debt sustainability also remains a major theme in Meristem’s outlook. Across Africa, several governments have returned to international debt markets, with some issuing Eurobonds primarily to refinance existing obligations. On the surface, borrowing to repay debt appears concerning. Awolope acknowledges the risks but argues that context matters.
With global borrowing costs moderating compared to previous years, refinancing has become relatively more attractive for countries seeking to manage existing debt obligations. The greater concern, she says, is not the refinancing itself but whether newly borrowed funds are deployed into productive investments capable of generating future economic returns. Sustainable borrowing ultimately depends on whether governments invest in projects that expand economic capacity rather than merely extending repayment cycles.
Improving macroeconomic conditions have also begun to reshape investor perceptions of African sovereign debt. Falling Eurobond yields across countries including Nigeria reflect growing confidence in exchange rate stability, improving growth prospects and governments’ ability to meet their financial obligations. Nevertheless, Awolope reminds investors that domestic reforms alone do not determine market pricing. Global interest rates, geopolitical tensions and international risk appetite continue to influence African debt markets, often limiting the full benefits of local economic improvements.
One issue attracting increasing attention across the continent is sovereign credit ratings. With plans underway to establish an African Credit Rating Agency, Awolope believes the initiative arrives at an important moment. Many African economies, she argues, remain insufficiently understood by international rating agencies that may not fully appreciate the continent’s unique economic structures.
Large informal sectors, varying degrees of resource dependence and local economic realities often require deeper contextual understanding than conventional global methodologies provide. At the same time, she cautions that the credibility of any African rating agency will ultimately depend on the quality of its methodology, transparency and independence. Investors will judge it not by its location but by its ability to provide objective and accurate assessments of sovereign risk.
For equity investors, however, Meristem sees encouraging momentum heading into the second half of the year. Nigeria’s stock market has enjoyed a remarkable recovery, supported by improved macroeconomic stability, stronger corporate earnings and greater exchange rate predictability. According to Awolope, one of the most significant improvements has been the relative stability of the foreign exchange market, which has restored investor confidence after the severe currency depreciation experienced in 2023 and 2024.
Stable exchange rates have improved corporate profitability, strengthened company valuations and renewed interest from both domestic and international investors. Looking ahead, Meristem expects additional catalysts to sustain market momentum, including stronger corporate earnings, major listings such as the anticipated Dangote Refinery, ongoing banking sector recapitalisation and Nigeria’s planned market reclassification by global index providers. These developments are expected to attract greater foreign participation while expanding liquidity within the capital market.
Sector-specific opportunities are also emerging. Financial services, telecommunications, oil and gas, and infrastructure-related businesses are expected to benefit from ongoing economic reforms, increased capital investment and government spending as political activities gradually intensify ahead of the next election cycle.
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While optimism surrounds equities, Awolope expects fixed-income investments to remain highly attractive throughout the remainder of 2026. Significant government borrowing requirements, lingering inflation risks and evolving liquidity conditions are likely to keep bond and money market yields elevated. Although temporary fluctuations may occur, investors seeking relatively stable returns are expected to continue finding value in Nigeria’s fixed-income market.
Ultimately, Meristem’s outlook is neither excessively optimistic nor unnecessarily pessimistic. It reflects a global economy that has regained its footing but continues to navigate an increasingly complex landscape shaped by geopolitical tensions, inflation risks and structural reforms. For Nigeria, the report suggests that the foundations for sustainable growth are gradually strengthening, supported by improving macroeconomic stability, resilient financial markets and ongoing policy reforms.
Yet, as the hot air balloon on the report’s cover quietly reminds investors, even the calmest skies can change without warning. Success in the second half of 2026 will depend not on assuming uncertainty has disappeared, but on remaining prepared for wherever the next wind may blow.
