As Nigeria approaches 2025, the economic outlook presents a mix of cautious optimism and enduring challenges. With a blend of fiscal reforms, evolving monetary policies, and global economic uncertainties, stakeholders remain keen on how Africa’s fourth largest economy will navigate its path forward.
Nigeria’s economy, which grew at 3.4 per cent in 2022 and 2.7 per cent in 2023, faces significant headwinds as it enters 2025. Inflation, currency volatility, debt servicing, and global commodity prices remain critical concerns. Analysts predict a modest growth rate of 3.0 per cent for 2025, driven by recovery in oil production, agriculture, and the non-oil sectors.
Baring his thoughts, the chief executive of AntHill Concepts Limited, and member of the Board of Economists, NATIONAL ECONOMY, Dr. Emeka Okengwu, said the most important thing is that it is not stagnating. He noted that there have been some improvements, albeit sluggish. He also cited that if the Tax Reform Bill is passed into law and is implemented to the letter it will have some positive impact on the economy. “Although there is still a lot of work to be done; but if we are able to focus on getting the best out of the tax reform and taming food prices, we will do better. We also need to make sure our local governments have autonomy.”
Also baring his view of Nigeria’s 2025 economic outlook, the chief executive of the Center for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, said he thinks the economy will be better next year. Yusuf stated, “One of the biggest problems we have in the current year has been foreign exchange. But over the last few months we have seen some stability and some periodic intervention by the CBN. Hopefully that will be sustained in the New Year because our reserves have also improved. So, the forex outlook, which is very central to the problems that we have is looking a bit positive.
“Another factor in that respect is the import substitution effect of the Dangote Refinery and maybe other refineries that we can bank on. We expect that to also take some pressure off our forex demand. Then there are also good inflows from IMTOs, Diaspora remittances, and the fact that we just got a $2 billion Euro bond, which will also help our reserves when it comes in. Then we have the domestic dollar bond of $500 million, which was over-subscribed. Also, our oil output seems to be improving. By the time you put all of that together, it’s pointing to a more positive outlook especially as it has to do with forex. And if the forex is positive a lot of things will also be positive.
“The issue we need to worry about is how to manage our fiscal space in a way that it will not create macroeconomic issues for us in 2025. I’m talking about how can manage our spending, reduce our deficit and reduce our debt exposure – that is borrowing either domestically or foreign. These are the potential risks for the macro economy in 2025. But for other issues like insecurity, structural issues like power, there is nothing that gives much confidence that there will be much improvements in the New Year because these are things we have been grappling with for some time; they are not things that can easily go away that fast,” Yusuf said.
An economist at Lagos Business School, Dr. Chijioke Anumba, also emphasised the need for structural reforms. According to Anumba, “Nigeria’s dependence on oil revenue is a longstanding vulnerability. Although we see efforts to diversify through the Digital Economy and Agriculture initiatives, these sectors still need stronger policy support to deliver measurable growth by 2025.”
There can be no gainsaying the fact that oil production remains central to Nigeria’s fiscal projections, accounting for about 80 per cent of foreign exchange earnings. However, insecurity in oil-producing regions and fluctuating global oil prices pose risks. Experts project oil output will rise to 1.8 million barrels per day in 2025, driven by improved security measures and investments in exploration. An energy consultant, Bola Odunayo, remarked, “The 2024 Petroleum Industry Act (PIA) reforms have spurred interest in Nigeria’s oil and gas sector. If implemented fully, we could see improved investor confidence and increased production, though this depends on curbing oil theft and ensuring pipeline integrity.”
Inflation, which largely hovered around 33 per cent in 2024, remains a top challenge. The Central Bank of Nigeria (CBN) has implemented aggressive interest rate hikes to combat inflation while stabilising the naira. Some economists forecast a gradual decline in inflation to 18 per cent by Q4 2025. Prof. Funke Oladimeji, a monetary policy expert noted, “The CBN must strike a delicate balance between tightening rates to manage inflation and fostering growth. A predictable and transparent exchange rate policy will also be crucial in restoring investor confidence.”
Government investment in infrastructure, including roads, power supply, and rail systems, is expected to drive economic growth. The administration’s renewed focus on public-private partnerships (PPPs) for financing infrastructure projects signals a shift toward sustainable development. “Efficient infrastructure will unlock productivity across key sectors,” said Abdullahi Umar, a policy analyst at PwC Nigeria. “The government’s fiscal reforms must also address leakages, improve tax collection, and reduce dependency on borrowing.”
But chief economist and partner at SPM Professionals, Dr. Paul Alaje, bared some varying thoughts. According to Alaje, “The thoughts I have are not exactly my own, but what the data is reporting as of today. Based on the current economic environment, inflation may remain around the 30 to 35 percent corridor, and the exchange rate might be between N1,800 to N2,200. It might spike when there is pressure to as much as N2,500 to N2,600. That is the current economic environment.
“We strongly believe that if the government can adjust the policies we might see reduction of inflation to the lowest point of 22 to 25 per cent. That may also have some impact on what the exchange rate will be but we don’t see the exchange rate being below N1,000 even next year. There might be possible surge in our debt profile not just for the Nigerian debt profile, but for most African countries. The main determinant will be continuous budget deficit, low revenue inflow and devaluation.
“We might also see growth in Nigeria if the government does not rebase. Two things are possible: if we don’t rebase our growth outlook might be between 3 to 4 per cent; if we rebase it will be half of that – 1.5 to 2 per cent, depending on our level of rebasing. Unemployment on one hour basis might still be between 4 and 5 per cent next year,” he stated.
Commenting on the effect of the Dangote Refinery, Alaje said Dangote is importing crude oil from America. He stressed that the naira for crude agreement has failed, citing that Dangote is exporting to other African countries as we speak. “The policy environment has to change. If it doesn’t change then we would only be operating a wishful economy. It is the policy environment that the government puts in place that will allow the Dangote Refinery to have a positive impact on the Nigerian economy.
“One of the policies that needs to be changed is the floatation of the naira. All countries that have tried to float in absolute terms had their currencies lose value. I’ve advocated for pegging or managed float. Even though the last administration pegged the currency, the error they committed was that they printed naira worth $60 billion. No economy in Africa can swallow that. But you can equally ask, is the quality of life better today than it was then? If we don’t adopt the managed float policy then the naira will continue to slide and the impact on the economy will be dire.
“In my opinion, the government needs to revisit economic some polies – we need to ensure that we reduce our import of PMS, which will mean getting into real partnership with Dangote; we need to stop the ongoing crude theft within the Niger Delta Region, and the government needs to start a programme that will induce people to want to export. It does not make economic sense for us to want to devalue our currency like China but not want to export like China.
While opportunities exist, Nigeria’s economic outlook remains tempered by significant risks. The International Monetary Fund (IMF), has projected Nigeria’s public debt to GDP ratio to reach 46.6 per cent in 2024, and 46.8 per cent in 2025. This represents a 0.3 percentage points and 0.5 percentage points growth respectively when compared to the IMF projection for 2023.
NATIONAL ECONOMY notes that the debt to GDP ratio will further widen in 2025 if the naira continues its slide.
However, managing fiscal deficits without stalling critical infrastructure projects will be a delicate challenge. Despite moderate GDP growth, unemployment remains circa 40 per cent. Poverty alleviation will require more inclusive policies targeting SMEs, youth employment, and education. A slowdown in global economic growth and geo-political tensions could further affect trade and foreign direct investment (FDI) inflows.
Nigeria’s private sector is expected to play a crucial role in driving growth. FDI inflows have been sluggish but are projected to rebound with improved economic stability and investor-friendly reforms. Ngozi Ekeji, CEO of a Lagos-based investment firm, expressed optimism, “Nigeria remains an attractive market for investors, particularly in fintech, agriculture, and energy. By addressing systemic risks, the government can unleash the full potential of these sectors.”
