Nigeria in 2025: Economic Reforms Show Promise Despite Growing Challenges

A New Chapter in Nigeria’s Economic Journey

The Nigerian government is actively working to improve the country’s economic outlook by addressing key challenges including food security, infrastructure gaps, electricity supply, and education spending, while also making the economy more resilient to climate events. These efforts are particularly focused on tackling structural impediments to private credit extension to support growth.

Notable Achievements and Current Status

In a significant development, Nigeria achieved its revenue target for 2025 by August, with the majority of revenue coming from the non-oil sector, demonstrating successful economic diversification efforts.

The government has implemented major reforms over the past two years that have enhanced macroeconomic stability and resilience. Key measures include the removal of costly fuel subsidies, halting monetary financing of the fiscal deficit, and improving foreign exchange market operations. These reforms have strengthened investor confidence, enabling Nigeria to successfully access the Eurobond market.

Challenges and Concerns

However, significant challenges remain. Nigerians are facing unprecedented economic pressures, including the impact of fuel subsidy removal, which has increased petrol prices by nearly 500% within one year. The foreign exchange market liberalization has led to over 100% depreciation in the domestic currency’s value between October 2023 and October 2024.

Inflation continues to be a major concern, having risen from 32.15% in August to 34.6% in November 2024, with this upward trend expected to continue into early 2025. A return to pre-COVID inflation levels of 11% appears unlikely in the near term.

Looking Ahead

Despite these challenges, the reforms implemented since 2023 have positioned Nigeria’s economy better to navigate the external environment. The focus now is on strengthening economic buffers and resilience while creating conditions conducive to private sector-led growth.

Moving forward, it is crucial that fiscal savings from the fuel subsidy removal are directed to the budget, with particular emphasis on protecting critical, growth-enhancing investments and expanding cash transfer programs to provide relief to vulnerable populations.