Executive Summary

Sub-Saharan Africa’s major frontier economies navigated a more complex macroeconomic environment in March 2026, as diverging inflation trajectories, shifting capital flows, and rising global uncertainty tested the resilience of recent stabilization gains. Nigeria continued to face FX pressures, with the naira depreciating modestly over the month and gross reserves declining to $49.29 billion by March 30, easing below February levels of US$ 50.45 amid accelerating portfolio outflows driven by global risk-off sentiment. Crude oil production increased marginally to 1.38 mbpd, though output remained short of the OPEC quota. Underlying inflation pressures re-emerged in February (the latest available data), complicating the CBN’s nascent easing cycle and pointing to a likely rate hold in May.

Kenya maintained broad stability, with headline inflation at 4.4% within the CBK’s target band, the shilling depreciating by 0.71%, and gross reserves reaching $13.65 billion, equivalent to 5.8 months of import cover. The CBK held its benchmark rate at 8.75%, pausing easing on caution over oil price pass-through risks. Ghana recorded the strongest performance, with headline inflation easing further to 3.2% year on year, the Bank of Ghana cutting its policy rate by 150 basis points to 14.0%, and reserves standing at $16.5 billion. Across the three economies, fiscal consolidation and strong external buffers provided a degree of resilience, though escalating geopolitical tensions, fuel price pressures, and the risk of capital flow reversals remain key downside risks to the near-term outlook.

“Three economies at different stages of the same cycle — stabilization gains intact, but diverging inflation trajectories, portfolio outflows, and escalating geopolitical headwinds testing the durability of the recovery.”

Regional Overview

March 2026: Three-Country Macro Snapshot

Inflationary Trends

Nigeria’s headline CPI eased marginally to 15.06% YoY in February (the latest available reading), continuing a sustained annual decline from 29.63% twelve months prior, even as month-on-month pressures rebounded sharply, with food inflation accelerating to 4.69% and core turning positive at 0.89%. Kenya’s inflation edged up to 4.4% YoY, remaining within the CBK’s 2.5–7.5% target band, though non-core inflation rose to 10.8%, reflecting food and energy pressures rather than demand dynamics. Ghana recorded the strongest print, with headline inflation easing to 3.2% YoY — extending a run of historically low readings through the opening quarter of 2026, driven by continued food price relief. The common near-term risk across all three markets is energy pass-through from Gulf crisis-related fuel cost increases, which had yet to fully register in official data at the time of this update.

Monetary Policy

All three central banks advanced their easing cycles through the first quarter of 2026, but the pace and room for manoeuvre diverge. Nigeria’s CBN cut 50 basis points to 26.50% in February, but the May MPC is expected to hold as resurging food inflation, energy pass-through, and FPI sensitivity constrain further moves. Kenya’s CBK paused at 8.75% in April, after ten consecutive cuts, on caution over oil price second-round effects. Ghana’s Bank of Ghana moved most aggressively, cutting 150 basis points to 14.00% in March, supported by sustained disinflation and strengthening fiscal and external buffers. Across all three, Gulf crisis-related fuel cost pass-through is the principal shared risk to the remaining easing space.

Foreign Exchange and External Reserves

All three currencies depreciated modestly in March, but the underlying external positions diverge. Ghana and Kenya entered the month from positions of strength, Ghana’s reserves stood at $16.5 billion (7.2 months import cover), supported by a $3.7 billion trade surplus, while Kenya’s reserves improved from $12.54 billion to $14.02 billion, with import cover rising to 6.0 months on the back of resilient remittance inflows of $412.7 million in February. Nigeria’s position moved in the opposite direction: reserves declined from $50.03 billion to $49.29 billion as FPI outflows accelerated amid global risk-off sentiment. The structural vulnerability is more acute than the headline figure suggests, portfolio inflows accounted for 85% of total capital inflows in the first nine months of 2025 and supplied 53% of FX liquidity in January 2026, leaving the naira disproportionately exposed to sentiment-driven reversals.

Fiscal Conditions

Fiscal trajectories diverged sharply in the opening quarter of 2026. Ghana delivered the strongest consolidation, with the fiscal deficit narrowing to 1.0% of GDP in 2025 from 5.2% in 2024 and the primary balance moving into a surplus of 2.6%, creating room for aggressive monetary easing and reinforcing confidence in the stabilisation programme. Kenya’s position remained under pressure, with the current account deficit widening to 2.4% of GDP from 1.3% a year earlier, while rising Eurobond yields signaled tightening external financing conditions. Nigeria’s fiscal outlook remained constrained by the persistent production shortfall relative to the 2.06 mbpd budget assumption, limiting the revenue upside from Brent trading above the $75 per barrel benchmark through March. Across all three markets, the durability of consolidation gains will be tested by electoral spending pressures and geopolitical-driven commodity price volatility in the months ahead.

Nigeria

Inflation

Official inflation data for March 2026 was unavailable at the time of this update, with the February 2026 release remaining the latest confirmed reading. Headline inflation eased marginally to 15.06% year on year in February from 15.10% in January, sustaining the annual disinflation trend. However, month-on-month dynamics pointed in a different direction: headline inflation rose to 2.01%, reversing the -2.88% contraction recorded in January, while food inflation accelerated sharply to 4.69% month on month from –6.02% and core inflation turned positive, rising to 0.89% from -1.69%.  The February data signals that underlying price pressures re-emerged even as the annual trend continued to moderate. The rebound in food inflation reflects a confluence of structural and seasonal factors: insecurity in food-producing regions, elevated logistics costs, and tightening supply as the economy transitions from the harvest into the planting season. These dynamics are unlikely to have fully resolved in March. The forthcoming print is expected to register continued upside pressure across both food and core components, with Gulf crisis pass-through effects — primarily via energy, fertilizer and transport cost transmission — projected to add approximately three percentage points to headline CPI, presenting a material complication for the CBN’s nascent easing cycle.

Disinflation holds on the headline — but with food prices already rebounding and Gulf pass-through yet to land, the path ahead is narrowing for the CBN

Monetary Policy

The CBN’s MPC cut the Monetary Policy Rate by 50 basis points to 26.50% at its February 24, 2026, meeting, the second cut in six months. Governor Cardoso framed the decision as a recognition that eleven consecutive months of declining inflation have sufficiently anchored expectations, creating space for gradual easing to support credit expansion and real sector growth.

The asymmetric corridor remains at +50/-450 basis points. The Cash Reserve Ratio is unchanged at 45.0% for commercial banks and 16.0% for merchant banks, with the Liquidity Ratio at 30.0%. The deliberate tightness of these parameters signals that the CBN is managing a narrow easing corridor by reducing headline policy rates while maintaining structural liquidity constraints to prevent premature credit loosening.

FX and External Reserves

The naira depreciated marginally in March, closing at ₦1,386.72/$ on March 31st against an opening of ₦1,378.02/$, depreciating by 0.63%. Gross reserves declined from $50.03 billion in mid-March to $49.29 billion by March 30, settling below February levels as FPI outflows accelerated amid global risk-off sentiment. The adjustment has been measured, but Nigeria’s structural vulnerability is significant: portfolio inflows accounted for 85% of total capital inflows in the first nine months of 2025 and supplied 53% of FX liquidity in January 2026, leaving the market inherently exposed to sentiment-driven reversals. As geopolitical tensions linked to the US– Israel–Iran conflict intensify, the pace of outflows increasingly tests the CBN’s capacity for orderly market intervention.

Oil Sector and Fiscal Position

Crude oil production recovered modestly in March, rising to 1.38 mbpd from 1.31 mbpd in February, according to OPEC data. The February decline was partly attributable to the scheduled maintenance shutdown of Shell’s Bonga FPSO, which went offline on February 1. Despite the month-on-month recovery, output remained below both Nigeria’s OPEC quota of 1.5 mbpd and the country’s own production target of 1.84 mbpd, with persistent structural constraints; pipeline vandalism, crude theft, and ageing infrastructure, continuing to cap Nigeria’s ability to sustain output at budgeted levels.

On pricing, Brent crude held above the $64.85/bbl budget benchmark through March, driven by geopolitical tensions linked to the US–Israel–Iran conflict. However, the revenue upside from elevated prices remained constrained by the production shortfall and the burden of encumbered cargoes, limiting the net fiscal benefit to the federation. Until structural impediments to production are meaningfully addressed, the gap between Brent-driven revenue potential and actual federation receipts will remain a persistent drag on Nigeria’s fiscal position.

Private Sector Activity

Private sector activity remained in expansionary territory in March, though momentum softened. The Stanbic IBTC Bank Nigeria PMI eased to 51.9 from 53.2 in February, signaling continued improvement in business conditions but at a moderating pace. Rising fuel costs emerged as a key drag on output and operating conditions, pointing to lingering cost pressures that, if sustained, could erode the pace of expansion in coming months.

Near-Term Outlook

Nigeria’s macro trajectory for Q2 2026 will be shaped by three intersecting variables: the durability of naira stability under accelerating FPI outflow pressure; the extent to which Gulf crisis-related energy cost increases pass through to retail fuel, transport, and food prices; and whether the 2027 electoral cycle begins to condition CBN rate decisions and fiscal spending patterns.

• Inflation is expected to rise in the coming months as Gulf crisis pass-through works through the transport and food supply chain — projections point to approximately three additional percentage points on headline CPI. The CBN’s 26.50% rate provides a real rate buffer, but a sustained energy-driven uptick materially reduces the space for further near-term cuts. ACIOE assesses a May hold as the base case.
• FX stability remains the critical variable. Reserves have declined from $50.45 billion in February to $49.29 billion by end-March, and the structural concentration of portfolio inflows — 85% of total capital inflows in the first nine months of 2025 — leaves the naira acutely exposed to sustained risk-off conditions. CBN intervention capacity is adequate but not unlimited.
• With the 2027 electoral cycle approaching, the government’s appetite for politically costly adjustments is narrowing. ACIOE assesses a moderate and rising risk that electoral considerations will increasingly condition fiscal spending priorities and the pace of structural reform delivery through the second half of 2026.
• In the oil sector, March output still remains under the OPEC production quota, and Brent held above the $64.85 budget benchmark, but the fiscal gain is being partially offset by the production shortfall relative to the 1.84 mbpd budget assumption. Sustained revenue upside remains contingent on progress against structural constraints that are beyond near-term government control.

Kenya

Inflation

Headline inflation edged up to 4.4% year on year in March 2026 from 4.3% in February, remaining within the Central Bank of Kenya’s target band of 2.5 – 7.5%. The increase was not broad-based: core inflation held steady at 2.1%, while non-core inflation rose to 10.8% from 10.1%, indicating that the uptick was driven by food and energy-related price pressures rather than underlying demand dynamics. Overall, inflation remained contained, though the acceleration in non-core components warrants monitoring given prevailing global commodity and energy price volatility.

Monetary Policy

The Central Bank of Kenya held the Central Bank Rate (CBR) at 8.75% during its April MPC meeting, pausing the easing cycle amid caution over the potential second-round effects of rising international oil prices on domestic inflation. The decision reflected a mixed domestic backdrop. Private sector credit growth continued to accelerate, reaching 8.1% in March 2026 from 7.4% in February and recovering sharply from the -2.9% contraction recorded in January 2025, pointing to improving monetary transmission. However, the non-performing loan ratio edged up to 15.6% of gross loans in March from 15.4% in December 2025, driven largely by the personal and household segment, signalling that asset quality pressures have not fully abated even as credit conditions ease. The current account deficit also widened to an estimated 2.4% of GDP in the twelve months to February 2026, from 1.3% in the same period a year earlier, introducing an additional external vulnerability. Overall, the CBK’s decision to hold reflects a cautious balancing act of supporting credit recovery while guarding against inflation and external risks that have become more pronounced in recent months.

Exchange Rate and External Position

The Kenyan shilling depreciated marginally in March, moving from KSh129.02/$ on February 26 to KSh129.93/$ by March 31, reflecting a depreciation of approximately 0.71%. The move reflects a broadly stable currency environment, underpinned by adequate reserve buffers, resilient remittance inflows, and active FX market management by the CBK. Gross foreign exchange reserves strengthened during the month, rising from $12.54 billion on February 26 to $14.02 billion as of March 26, with import cover increasing from 5.4 months to 6.0 months. By April 1, reserves had moderated slightly to $13.66 billion, equivalent to 5.8 months of import cover, though this remained comfortably above the CBK’s statutory minimum of 4.0 months, indicating a strong external buffer for the economy. Taken together, the reserve position improved meaningfully through March and remains well-capitalized relative to statutory requirements.

Remittances provided an additional layer of support, with February 2026 inflows reaching $412.7 million, up 8.0% year on year, sustaining their role as a reliable source of foreign exchange supply. However, with the Middle East representing a significant remittance corridor for Kenya, the ongoing conflict introduces a near-term downside risk to inflows and, by extension, to the reserve trajectory in the months ahead.

Money Market Conditions

Money market conditions remained liquid through late March. The CBK weekly bulletin reported that the interbank market stayed stable and KESONIA was around 8.74% on April 1 compared with 8.73% on March 26, showing little sign of liquidity strain. Government securities activity also remained important, with the weekly bulletins continuing to show active treasury bill and bond market operations and publication of domestic yield curve data. Meanwhile, Kenya’s Eurobond yields rose sharply over March, pointing to tighter external financing conditions even though domestic liquidity itself remained orderly.

Fuel Prices and Cost Pressures

Fuel prices for the March 15 to April 14, 2026, cycle were left unchanged by the Energy and Petroleum Regulatory Authority. In Nairobi, super petrol remained at KSh178.28 per litre, diesel at KSh166.54, and kerosene at KSh152.78. Even with pump prices unchanged in that review window, Kenya still saw some inflationary pressure from food and energy-related components, which is consistent with the rise in non-core inflation in March.

Near-Term Outlook

Kenya enters Q2 2026 from a position of relative macro stability, contained inflation, strong external buffers, and a recovering credit cycle, but faces a more complex external environment than at any point in its current easing cycle. The widening current account deficit, rising Eurobond yields, and the prospect of oil price pass-through into domestic fuel costs represent a meaningful shift in the risk balance. If Gulf crisis-related price pressures sustain and feed into the next fuel price review cycle, transport and food inflation could push non-core components higher, complicating the CBK’s path back to easing.

• Inflation is expected to remain within the CBK’s target band near-term, but the upward drift in non-core inflation to 10.8% signals that the composition of price pressures is shifting. Fuel prices were held unchanged in the March 15–April 14 cycle; any upward revision in the next review would feed directly into transport and food costs with broader second-round effects.
• The CBK’s pause at 8.75% is appropriate given the external environment. The path to further cuts will be conditioned by the trajectory of oil prices and the current account deficit, which widened to 2.4% of GDP from 1.3% a year earlier. A stabilisation in oil prices would reopen the easing window; further deterioration would likely extend the pause.
• Kenya’s external buffers provide a meaningful cushion, but the risk profile is shifting. Reserves stood at $13.65 billion on April 1, and remittance inflows reached $412.7 million in February. up 8.0% year on year. However, with the Middle East representing a significant remittance corridor, the ongoing conflict is expected to weigh on inflow volumes in the months ahead, introducing a credible downside risk to the reserve trajectory. Combined with the sharp rise in Eurobond yields through March, the external financing outlook is less comfortable than the current headline reserve figures suggest.

Ghana

Inflation

Ghana’s disinflation trend extended into March 2026, with headline inflation easing to 3.2% year on year from 3.3% in February, according to Ghana Statistical Service data. The moderation was driven primarily by easing food prices, reflecting continued supply-side relief. The March reading marks another month of historically low inflation, consolidating the strong disinflationary momentum that has characterized the economy through the opening quarter of 2026.

Monetary and Financial Conditions

The Bank of Ghana eased monetary policy further at its March 18, 2026, MPC meeting, cutting the policy rate by 150 basis points to 14.0%. The decision was anchored in continued disinflation, strengthening macroeconomic buffers, and improved financial conditions, reflecting the Committee’s growing confidence in the durability of Ghana’s stabilization gains. Banking sector conditions reinforced the case for easing. The non-performing loan ratio declined to 18.7% in January 2026 from a year earlier, pointing to gradual improvement in asset quality, while private sector credit growth accelerated to 28.1%, signalling that monetary transmission is gaining traction and that demand for credit is recovering alongside improving macroeconomic conditions.

External Sector and Exchange Rate

The cedi weakened somewhat in March. Bank of Ghana end-period exchange rate data show the cedi moving from 10.6865 per US dollar in February to 10.9980 in March. That amounts to a depreciation of about 2.9% over the month. Even so, Ghana’s external buffers remained much stronger than in previous crisis periods. The March MPC release reported gross international reserves at US$16.5 billion at end-February 2026, equivalent to about 7.2 months of import cover, while the merchandise trade surplus for the first two months of 2026 stood at US$3.7 billion.

Money Market and Fiscal Conditions

March’s policy narrative in Ghana was shaped by continued macro stabilization. In the March MPC communication, the Bank of Ghana reported that the commitment-basis fiscal deficit narrowed sharply to 1.0% of GDP in 2025 from 5.2% in 2024, while the primary balance moved into a surplus of 2.6% of GDP. This stronger fiscal performance gave the central bank more room to ease rates. Money market conditions were therefore improving in a context of falling inflation, lower policy rates, and stronger external accounts.

Gold and Fuel Price Context

Ghana continued to benefit from elevated gold prices, with spot gold trading at $4,653.95 by end-March, sustained by safe-haven demand linked to the US–Israel–Iran conflict, bolstering export receipts and reinforcing an already strong external position. Gross international reserves stood at $16.5 billion at the end of February, equivalent to 7.2 months of import cover, while the merchandise trade surplus reached $3.7 billion in the first two months of 2026, reflecting the scale of gold’s contribution to Ghana’s external accounts. As the world’s sixth-largest gold producer, the price surge translated directly into improved fiscal and reserve buffers, providing the Bank of Ghana with additional room to ease monetary policy aggressively. On the other side of the ledger, Iran-linked supply disruptions pushed domestic fuel costs sharply higher; petrol rose approximately 15% and diesel approximately 19% in the affected pricing cycle. With headline inflation at a historically low 3.2% in March, the immediate pass-through risk remains contained, but the scale of the fuel price adjustment means Ghana’s disinflationary trend faces its most credible test yet in Q2 2026.

Near-Term Outlook

Ghana enters Q2 2026 with the strongest macro configuration of the three economies — sustained disinflation, an active easing cycle, improving fiscal buffers, and an external position reinforced by record gold prices. With spot gold at $4,653.95 at end-March, export receipts and reserve buffers are likely to remain well-supported in the near term, providing the Bank of Ghana with continued room to ease. A further rate cut at the next MPC meeting is plausible if the disinflation trend holds and fuel pass-through remains contained.

• Inflation is the primary variable to watch. The 15–19% fuel price increase linked to Iran-related supply disruptions has yet to fully transmit into the broader price level, with headline CPI at 3.2%, there is buffer, but transport and food cost pressures could erode it quickly if the adjustment is sustained. The Q2 inflation trajectory will determine whether the Bank of Ghana can maintain its current easing pace.

• The cedi’s 2.9% depreciation in March warrants monitoring, though it occurred against a backdrop of strengthening reserves and a $3.7 billion trade surplus. Gold price support remains the key stabilizing factor for the external position — any reversal in safe-haven demand would change the calculus materially.

• Fiscally, the consolidation gains are significant — a deficit of 1.0% of GDP and a primary surplus of 2.6% represent a structural improvement that underpins the broader stabilization narrative. The near-term risk is that electoral pressures or fuel subsidy demands erode the discipline that delivered those outcomes.

Conclusion

March 2026 presented a mixed but broadly resilient picture across the three economies. Ghana delivered the strongest performance with historically low inflation at 3.2%, an aggressive 150 basis point rate cut, record gold prices reinforcing external buffers, and a fiscal position that has undergone genuine structural improvement. Kenya maintained stability across its core fundamentals, with strong external buffers, inflation held within target, and a recovering credit cycle, though a widening current account deficit and rising Eurobond yields introduced meaningful external vulnerabilities. Nigeria navigated a more difficult environment: the naira held within a contained range and oil output increased marginally to 1.38 mbpd, but accelerating FPI outflows, a persistent production shortfall relative to budget assumptions, and resurging month-on-month inflation all point to a more constrained policy outlook heading into Q2.

The common thread across all three markets is energy pass-through. Gulf crisis-related fuel cost increases had yet to fully register in official data at the time of this update, their transmission into transport, food, and core prices in the coming months will be the single most important variable shaping inflation trajectories, monetary policy decisions, and household purchasing power across the region in Q2 2026.

DISCLAIMER

This brief is prepared by ACIOE Associates for the exclusive use of its clients and is based on information believed to be reliable at the time of writing. It does not constitute investment, legal, or financial advice. ACIOE Associates accepts no liability for any decision taken on the basis of this document. Reproduction or distribution without prior written consent is prohibited.