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As we move further into 2025, Ni­geria’s economic story is one of resilience, renewal, and strategic recalibration.

Globally, economies are grappling with slowing growth, projected at 2.7% in 2025 by the IMF for advanced economies, and heightened geopolitical risks that affect trade and investment.

Against this backdrop, Nigeria has demonstrated remarkable determination.

Domestically, inflationary pressures, in­frastructure deficits, and unemployment persist, yet they now represent policy fron­tiers rather than defining constraints.

Recent policy measures, ranging from fiscal consolidation to targeted monetary adjustments, have laid the groundwork for a sustainable growth trajectory.

The real test, however, lies not only in achieving stability but in ensuring that it translates into tangible socio-econom­ic outcomes: decent jobs, rising incomes, improved productivity, and broader social welfare.

If Nigeria deepens reforms, invests stra­tegically in human capital, and leverages its structural advantages, the country can achieve not only recovery but inclusive and durable economic transformation.

Positive Developments in the Nige­rian Economy

1.Economic Growth and Stability

Nigeria’s economic trajectory is increas­ingly encouraging.

The International Monetary Fund (IMF) projects real GDP growth of 3.9% in 2025, up from 3.5% in 2024, with further accel­eration to 4.2% in 2026. This growth is un­derpinned by:

• Stronger oil production following oper­ational improvements and policy reforms in the petroleum sector.

• Recovery in services, particularly tele­communications, financial services, and transport, reflecting resilient domestic demand.

• Improved agricultural output, thanks to favorable weather patterns and gov­ernment support for mechanization and inputs.

The recent GDP rebasing has also given a more accurate reflection of the economy, capturing growth in high-potential sectors such as digital services, modular refining, and the creative industries. This expanded view highlights opportunities for job cre­ation, innovation, and revenue generation that were previously underappreciated.

Inflation Moderation and Monetary Policy Realignment

Inflation remains elevated but is gradu­ally moderating.

Headline inflation declined to 18.02% in September 2025, down from 20.12% in August, reflecting improved food supply, seasonal harvests, and targeted interven­tions in the energy market.

The Central Bank of Nigeria’s interest rate cut, the first since 2020, signals a nu­anced policy shift: a deliberate effort to balance price stability with growth and employment objectives.

This approach is consistent with mod­ern macroeconomic management, where inflation targeting is tempered by the need to stimulate investment and production in key sectors.

Fiscal Discipline and Debt Manage­ment

The Federal Government’s approval of the Medium-Term Debt Management Strat­egy (MTDS) 2024–2027 reflects a profession­al recognition that sustainable growth re­quires fiscal prudence alongside strategic borrowing.

Key objectives include:

• Extending average debt maturity to at least 10 years, reducing refinancing risk and interest rate volatility.

• Reducing foreign-exchange-denominat­ed debt to 45%, mitigating vulnerability to exchange rate shocks.

From an economist’s perspective, the MTDS positions Nigeria to borrow for growth, not consumption, ensuring that public investment projects generate re­turns exceeding debt servicing costs. This is a critical step toward fiscal sustainabil­ity and investor confidence.

Foreign Investment and Energy Sec­tor Confidence

Investor sentiment is improving, illus­trated by Shell’s approval of the HI Off­shore Gas Project, expected to supply 350 million standard cubic feet of gas per day to Nigeria LNG.

Economically, such projects deliver mul­tiplier effects: they stimulate domestic sup­pliers, create high-skill and semi-skilled jobs, and strengthen Nigeria’s position as a reliable energy hub in Africa. They also enhance balance of payments stability, by promoting export-oriented production.

Strategic Priorities for Sustained Economic Improvement

Expanding Infrastructure and Power Supply

The reduction of electricity subsidies by 35% and adoption of a targeted tariff structure have freed fiscal resources.

However, long-term industrial growth requires strategic investment in energy generation, transmission, and distribu­tion, as well as transport, logistics, and digital infrastructure. Economically, in­frastructure is not just a cost, it is a pro­ductivity multiplier. Reliable power and transport reduce production costs, attract investment, and enable firms to scale.

Deepening Economic Diversification

Dependence on oil exposes the economy to global price volatility. True resilience demands diversification into labour-in­tensive, exportable, and technologically dynamic sectors. Accelerating reforms in agriculture, manufacturing, mining, and technology is crucial.

Agro-processing, renewable energy, and ICT not only generate jobs but also expand Nigeria’s value-added capacity, a critical determinant of long-term growth.

Social Protection and Human De­velopment

Growth without inclusion is unsustain­able. Expanding social safety nets, skills development, and youth employment pro­grams ensures that reform gains are wide­ly shared.

Investments in conditional cash trans­fers, digital skills programs, and microfi­nance access are not mere social measures, they are strategic economic interventions that increase productivity, stabilise con­sumption, and reduce social unrest.

Strengthening Governance and In­stitutional Capacity

Policy consistency and institutional efficiency are non-negotiable for lasting economic progress. Strengthening trans­parent institutions, digital government processes, and public procurement systems reduces leakages, encourages private in­vestment, and enhances policy credibility. From an economist’s standpoint, strong institutions are a precondition for struc­tural transformation.

Key Drivers of Growth

Stronger Growth Projections

• IMF forecasts of 3.9% (2025) and 4.2% (2026) reflect recovery momentum, sup­ported by better data and emerging sectors.

Supportive Macroeconomic Funda­mentals

• Exchange rate stabilization, rising ex­ternal reserves, and improved FX trans­parency bolster investor confidence and economic predictability.

Coordinated Fiscal and Monetary Policies

• Combining targeted fiscal consolida­tion with accommodative monetary policy reinforces confidence in the real sector and promotes investment.

Structural Challenges and Risks

Several vulnerabilities require atten­tion:

• High food and energy inflation contin­ues to erode real incomes.

• Growth has yet to fully translate into employment and improved living stan­dards.

• Oil dependence exposes the economy to global shocks.

• Infrastructure deficits, governance inefficiencies, and security concerns con­strain productivity.

• Climate and agricultural risks, com­pounded by rural insecurity, threaten food security and economic stability.

Transforming Reforms into Employ­ment Gains

To convert reform momentum into broad-based job creation, Nigeria should:

Link Reforms to Labour-Intensive Sectors

•Prioritise agro-processing, housing, re­newable energy, and light manufacturing, which generate substantial employment per investment unit.

• Expand local content requirements in energy and infrastructure projects to max­imize domestic employment.

Accelerate Skills Development

• Launch a National Skills Acceleration Framework, connecting TVET institutions, private firms, and state governments.

• Promote partnerships with fintech and tech hubs, preparing youth for digital and AI-driven opportunities.

Unlock MSME Financing and Entre­preneurship

• Channel gains from fiscal reforms and exchange rate stabilization into credit guarantees, concessional loans, and inno­vation grants for small businesses.

• Simplify business registration, secure property rights, and ensure stable power supply to unleash Nigeria’s entrepreneur­ial potential.

By implementing these measures, the economy can translate reform gains into employment, income, and social cohesion, creating a virtuous cycle of growth and inclusion.

Conclusion

Nigeria in 2025 is at a critical inflection point, cautiously optimistic yet structural­ly fragile. Gains in growth, inflation mod­eration, and investment confidence mark important progress, but the work is far from complete.

To sustain the recovery, Nigeria must maintain macroeconomic stability, deepen structural reforms, and ensure that growth translates into tangible improvements for citizens. Achieving this requires collabo­ration among government, private sector, civil society, and development partners.

By committing to policy consistency, human capital investment, and inclusive growth, Nigeria can consolidate its recov­ery and emerge as a more competitive, re­silient, and equitable economy in the years ahead.

• Dr. Baba Y. Musa, is President, Nigeri­an Economic Society, and Director General, the West African Institute for Financial and Economic Management (WAIFEM)