Lizzie Kings-Wali is the Chief Executive Officer of 4Stone Capital Limited. She speaks on the economy in 2025 and the outlook for 2026, writes Iheanyi Nwachukwu. Excepts
What’s your general view on the state of the economy?
I partly agree with analysts who consider 2025 to be a tipping point for the Nigerian economy.
Indeed, the economy has been stabilised, as evident by most macro statistics. For instance, we recorded a modest 3.98 percent GDP growth in the third quarter of the year, as the economy is poised to record the highest GDP growth in over a decade. Interestingly, the growth has been driven by both oil and non-oil sectors, including modest improvement in agricultural sector productivity. Inflation rate eased to 14.45 percent, the lowest since November 2020.
Orthodox economists may argue that Nigeria has now a positive real rate, with inflation rate well below interest rate and average yield on most investment assets. The foreign exchange market has been relatively stable, and the Naira may have found an equilibrium below the N1,500/USD psychological benchmark. The fiscal position has improved materially, especially the sub-national level. Nonethless, these pre-requisites, which validates the success of recent fiscal and monetary policy reforms, are yet to translate into better living standards for majority of Nigerians. So, yes, it is right to say 2025 marked significant economic progress for Nigeria but clearly there is still a lot of work to consolidate and transmit the progress into improved welfare f the average Nigerian. So, it’s not eureka yet, albeit I would agree that we are now on amber, hoping for the green light.
Most investors would say 2025 was a great year, with double digit returns on both equities and fixed income assets. What’s your outlook for the year 2026 and where would you ask investors to put their monies?
All Naira-denominated assets were repriced in 2025 and this can be broadly justified by the lagged effect of 2023/24 devaluation of the Naira as well as the inflationary pressure. The equity market rallied at 50.6 percent, notwithstanding the average yield of 20 percent on fixed income assets. Real estate portfolio and other alternative assets, including commodities, also delivered strong returns in the year. That been said, I remain cautiously optimistic on Nigerian equites, given its discounted valuation to peer emerging and frontier markets.
For instance, the NGX All Share index is still priced at barely 8x Price to earnings ratio, compared to 16.5x and 12.1x P/E of the MSCI Emerging and Frontier Market indices respectively. Financial Services stocks, especially tier-1 banks are incredibly cheap, with the likes of Zenith Bank and United Bank for Africa trading at over 55 percent discounts to their respective book values and low single digit forward P/E of 4x. I am bullish on industrials like Dangote Cement.
As inflationary pressure eases and consumer purchasing power improves, I believe the fast-moving consumer goods stocks should see upward rerating. Given the prognosis for lower interest rates, investors may be better-off to lock-in current high yields on fixed income securities, as the inverted yield curve reinforces the expectation for lower yield environment in 2026. Whilst fiscal deficit and elevated level of public sector borrowing may seem counter intuitive to my expectation of lower yield, the risk-off sentiment of banks and increased money supply would support my outlook. I would expect money supply and lower inflation to taper likely return on alternative assets, including real estate.
What’s your perspective on the role of monetary policy authority in this regard?
As you know, every economic policy has a trade-off and an important element of policy execution is to ensure that the benefits of a policy are well harnessed whilst managing the attendant challenges. One of the negative offshoots of a high-interest rate environment is that it subdues potential economic growth and more so, it undermines the overall transmission of economic progress to most people, especially as small businesses, which directly impact most Nigerians, cannot afford the attendant high cost of capital. Clearly, the high interest rate has helped to stem the foreign currency crisis, improved foreign capital importation and reawakened domestic investment appetite.
Given improvements in the fundamentals of the Naira, as evident in the position of the external reserve, stable FX market, rising trade surplus, modest improvement in oil output, easing inflationary pressure amongst other metrics, Nigeria’s monetary policy authority should be more confident in pursuing a pro-growth strategy in the new year. Interestingly, recent trend in global monetary policy should strengthen the appetite for a dovish policy. The Federal Reserve in the United States reduced policy rate thrice in 2025, putting America’s benchmark rate at the lowest since 2022. There are optimism for further easing in most major economies, including China, where a seeming glut in the real estate market had led to default of key property developers and weakening economic sentiments So we have headroom for policy easing and the MPC may test the market in its first or second meeting in 2026, as it transits to a more liberal approach to further stimulate the economy and more so, improve the pass-through effect of economic growth on standard of living for the average Nigerian. That said, as money supply rises on the back of expansionary fiscal spending and election-related flows, the monetary policy authority would remains cautious to ensure broad stability of the economy.
In your view of the fundamentals of the Naira, you seem hopeful on the stability of the local currency. Why?
I would say exchange rate is one of the most sensitive and volatile variables to forecast, because there are lots of moving parts and sometimes the expectation effects can dominate sentiments and overshadow fundamentals. Albeit in my professional career of about three decades, I have seen a few economic and market cycles, and like you said, if history helps to predict the future, I am cautiously optimistic on the Naira going into 2026 and I would expect the CBN and broader monetary policy authority to consolidate on reforms and administrative measures to sustain the stability in the FX market. I expect the Naira to hover around the N1,500/USD anchor with a tight trading band of +/- 5 percent, as we may see relatively higher volatility in the last quarter of 2026 on the run-up to 2027 general elections. As much as I expect a dovish monetary policy, it would be modest, as the CBN and broader MPC remain resolute on their primary objective of price stability.
How do you see the implementation of the new tax law affecting businesses and individuals as it takes effect on January 1, 2026?
Clearly, this tax reform increases the tax base by seeking to block probable leakages that breed tendencies for tax evasion and indeed it raises the tax yield on higher income earners. Low income earners would pay less tax and, in some cases, even completely exempted from personal income tax. Whilst there seems to be lots of misconceptions about the use of banking information for tax identification and tracking, which is not uncommon in some other countries, the reality is that the tax reform would also gradually capture a lot of underground or informal economic activities which are currently outside of the tax net. Notwithstanding the focus on the federal government, I think the state governments would benefit immensely from the tax reform, as it helps to deepen their internally generated revenue.
I think it’s no doubt that Nigeria needs this tax reform to improve fiscal capacity and sustainability over the medium to long term and
I do hope that it would be implemented responsibly in a way that does not disrupt economic activities or cause inadvertent hardship on businesses. It is instructive to say that if we must bridge the huge infrastructural gap undermining the development of the country, then we must seek a sustainable way to fund it and everyone has a role to play, not just for our benefit today but for the prosperity of our future generations. More so, there is need to ensure that our tax system is effectively progressive as a tool for income redistribution and social justice. To some extent, I think this tax reform partly addresses these important issues.
Albeit we must see improved fiscal responsibility and prudence. The government should not just enforce civic responsibilities; all levels of government must also reciprocate this commitment to national development through better accountability and fiscal responsibility by ensuring judicious use of the tax revenue and steady reduction of fiscal deficits. It’s like saying, he who comes to equity, must come with clean hands.
What’s the outlook for your business and how confident are you about investing in the economy in 2026?
Like I noted earlier, we are bullish on the stability and recovery of key fundamentals of the economy, even as our optimism is guided with caution. We are deploying more capital across our flagship businesses, including the financial services, agriculture, real estate and technology portfolio. For instance, we are quite optimistic on our insurance and retail lending business. Whilst our insurance business is less than three years old, the growth of the business and prospect validates our foray into the sector. We are excited at the immense opportunities in the sector, as we leverage our innovative culture and client-centric approach to create value for customers. The industry is indeed fragmented with lots of players but or experience shows that very few operators add value to clients, so as we demonstrate our value creation capabilities, we are growing fast and strong in no time. The experience in our retail lending portfolio is no different and the opportunity to cross-sell further reinforces the synergy value within our portfolio of businesses.
Our agriculture portfolio is evolving and we see it as our conduit to position ahead of the global food security crisis. Globally, agricultural output is declining against a growing population. Health concerns are limiting interest in GMO-driven growth of food supplies, so we are diligently making strategic investments in the sector, with focus on increasing our yield and acreage cultivation. In the medium term to long term, we would not only have contributed towards Nigeria’s food security but also deliver incredible returns to our shareholders and co-investors. In the real estate market, we are focusing on the middle market, which has strong demand, as it is that segment of the market where affordability and need matches. The return profile of this segment of the market remains attractive and the turnover rate of the assets aligns with our investment horizon and capital management philosophy.
If you are to advise the government, what would you say the priority should be in 2026?
Having stabilised the economy, I would say there should be continued and improved coordination of monetary and fiscal policies/regulations to ensure consistency. More so, the implementation of the tax reform should be professional to avoid disrupting genuine business and broader economic activities.
Beyond the direct market-oriented issues, there is need for a renewed approach towards stemming the prolonged insecurity across the country. I believe it’s not just about funding, as budgetary allocation to defense and supplementary spending over the past 15 years have shown that throwing more money at the problem in itself cannot achieve much results, rather there is need for a rethink of the strategy, using the right mix of military and kinetic approaches, and more importantly ensuring there are no fear, favour, nepotism or sacred men in the execution of all strategies.
The insecurity situation in the country masks huge prospects of this country and denies us of both local and global capital flows. The recent surge in brain drain is not only driven by economic factors, but also security concerns, denying the country of both human and financial capital needed to harness the latent opportunities for development.
