As Nigeria approaches 2025, the country’s economy stands at the edge of a significant transformation. With five crucial factors positioned to reshape the economic landscape, stakeholders across government, business, and society have an opportunity to navigate both challenges and opportunities for long-term growth.
According to Afrinvest’s Nigeria Economic and Financial Market Review for 2024, real GDP growth reached 3.2% in the first nine months of 2024, encouraged by the oil sector’s recovery and a resilient services sector. However, agriculture and trade underperformed, with growth rates of 0.9% and 0.8%, falling short of their long-term averages. While fiscal pressures remain a concern—exacerbated by rising debt-servicing costs and revenue challenges—a modest recovery is anticipated in 2025, supported by stabilizing inflation and improved global demand. Below are the key factors driving this transformation.
Tax Reform Bill
Nigeria’s tax reform is expected to play a critical role in fiscal sustainability and economic revitalization. The National Assembly is currently reviewing four legislative proposals, with enactment anticipated by July 2025, according to Taiwo Oyedele, head of the Presidential Fiscal Policy and Tax Reforms Committee. The proposed reforms aim to:
- Reduce the national debt burden, which has climbed to ₦138 trillion (58.3% debt-to-GDP ratio) as of November 2024.
- Promote fiscal federalism by creating a more equitable resource-sharing framework.
- Empower states to attract investments, improve internal revenue, and address socio-economic challenges such as insecurity, particularly in northern regions.
Successful implementation of these reforms will enhance Nigeria’s fiscal capacity while fostering a more transparent economic system.
Rebasing Key Macroeconomic Indicators
The National Bureau of Statistics (NBS) is set to undertake a critical rebasing of Nigeria’s economic data by the end of January 2025. This process will update key indicators such as:
- Gross Domestic Product (GDP)
- Nigeria Living Standards Survey (NLSS)
- Consumer Price Index (CPI)
The rebasing will provide a more accurate picture of Nigeria’s economic structure, aligning data with current realities. These updates will enhance policy design, foster development strategies, and support evidence-based decision-making across sectors.
Bank Recapitalization
The Central Bank of Nigeria (CBN) is spearheading a recapitalization exercise to strengthen the financial sector and support Nigeria’s ambition to achieve a $1 trillion economy by 2030. Key highlights include:
- Banks have already raised ₦1.7 trillion through innovative e-offering platforms.
- An additional ₦2 trillion is required to meet the ₦4.2 trillion estimated capital needs for 2025–2026.
While this exercise is expected to enhance financial resilience and drive economic growth, smaller banks may face challenges, potentially leading to market consolidation. The Securities and Exchange Commission (SEC) has introduced a detailed framework to guide banks through the recapitalization process, including private placements and public offerings.
Planned Census Exercise
After an 18-year hiatus, Nigeria is preparing to conduct a population census in 2025. The lack of updated population data has hindered effective planning and resource allocation. The census will be instrumental in:
- Improving political representation.
- Informing resource distribution under Nigeria’s federal system.
- Addressing socio-economic challenges with accurate demographic insights.
However, logistical, financial, and political obstacles, including potential disputes over population figures, remain key concerns for successful execution.
Monetary Policy and Fiscal Coordination
The success of ongoing policy reforms depends on stronger coordination between fiscal and monetary policies. The CBN’s focus on addressing inflation and exchange rate instability will require efforts such as:
- Plugging revenue leakages.
- Easing the business environment.
- Attracting long-term investments and portfolio capital to sustain economic growth.
A harmonized approach between fiscal and monetary authorities will be critical for stabilizing prices, enhancing investor confidence, and achieving Nigeria’s economic goals.
