Here’re four factors to shape Nigeria’s economy in 2025

As Nigeria gears towards 2025, its economy is on the cusp of a major overhaul with five key drivers poised to revolutionise its economic outlook.

From the rebasing of key macroeconomic indicators to the implementation of tax reforms, these game-changers are expected to reshape Nigeria’s economic trajectory, presenting both opportunities and challenges for policymakers, businesses, and citizens alike.

According to Afrinvest’s Nigeria Economic and Financial Market Review for 2024 and 2025 outlook, real GDP growth quickened to 3.2 percent in nine months of 2024 driven by the sustained recovery of the oil economy and resilient services sector. However, the agriculture and trade sector growth of 0.9% and 0.8% underperformed their long-term averages of 5.1% and 3.5% respectively.

Regardless, fiscal pressures remained elevated, owing to revenue underperformance, rising debt-servicing costs, and misalignment between pre-reform promised objectives employed by the fiscal authorities. Price pressure was also accentuated to a three-decade high of 3.4 percent in November 2024, fueled by multiple energy price hikes, Naira depreciation, and legacy drag factors to productivity.

In 2025, a modest recovery is expected, supported by stabilising inflation and improved global demand as Nigeria’s economic prospects largely hinge on executing these activities.

Read also: Nigerian economy tipped to rebound in 2025 on sustained reforms

The Tax reform bill

According to Afrinvest, this tax reform underscores the tension between Nigeria’s federal structure and its fragmented regional economies.

The National Assembly is currently reviewing four legislative proposals and it is expected to be enacted in July, according to Taiwo Oyedele, head of Presidential Fiscal Policy and Tax Reforms.

Notably, the proposed tax reforms are essential for fiscal sustainability and revitalization of the currently challenging fiscal capacity, evidenced by the jump in the national debt profile and debt-to-GDP ratio to N138 trillion and 58.3 percent in 11M:2024 from 40.1 percent in N97.3 trillion in 2023.

Effective implementation of these tax reforms would strengthen calls for fiscal federalism, demanding a more equitable and transparent resource-sharing formula.

It would create an opportunity for states to leverage the reforms to attract investments and improve internal revenue generation and also create a potential for economic discontent to eliminate security challenges, particularly in the North.

Rebasing of key macro indicators

Plans to rebase key economic indicators are underway and will be pivotal for accurate policy design and data reliability.

The National Bureau of Statistics is undertaking a crucial rebasing exercise set to be launched by the end of January to ensure Nigeria’s economic data accurately reflects the current landscape.

By updating the Gross Domestic Product (GDP), Nigeria Living Standards Survey (NLSS), and Consumer Price Index (CPI), the NBS aims to provide a clearer picture of the economy’s structure.

The NBS aims to align economic data with contemporary realities by offering a more precise measurement of financial performance and providing a reliable foundation for economic planning and development strategies to make informed decisions.

Ongoing Bank recapitalisation

The banking sector recapitalisation exercise remains vital to achieving Nigeria’s $1 trillion economy ambition by 2030.

The ongoing recapitalisation led by the CBN reflects an ambitious bid to bolster the financial sector’s resilience and align with the FG’s $1 trillion economic target.

The positive spillovers from a successful banking sector recapitalisation in 2025 would include wealth and job creation across other sectors of the economy.

However, the banking sector’s performance will be a benchmark for broader economic growth, with implications for financial inclusion and credit access.

To achieve this, banks have raised N1.7 trillion through innovative e-offering platforms. However, there is a need for additional funding of over N2 trillion for the sector to meet the N4.2 trillion estimated capital between 2025 to 2026 which could restrain smaller banks and exacerbate market consolidation.

To facilitate the transition, Nigeria’s Securities and Exchange Commission (SEC) has rolled out a detailed framework for banks to navigate the recapitalisation programme by creating streamlined procedures for the right issues, private placements, and public offerings.

Finally, on the monetary policy leg, the immediate and long-term success of many ongoing policy reforms of the CBN will require strengthening fiscal-monetary coordination, especially in the areas of blocking leakage channels easing the business environment, and attracting sizeable portfolio and long-term patient capital necessary for attaining price and exchange rate stability.

Planned census exercise

Nigeria has not conducted a population census in the past 18 years, despite the United Nations’ recommendation for a census every 10 years.

The 2023 census was postponed twice, leaving the country without accurate population data which has hindered effective decision-making by stakeholders.

In 2025, the planned census exercise – which doesn’t have a fixed date yet – will be a landmark event with significant implications for Nigeria’s development trajectory.

The census is critical for political representation and resource allocation under Nigeria’s federal system but hinged on overcoming logistical, financial, and political challenges including the potential for regional disputes over population figures.