Six key issues to shape Nigeria’s economy in 2025

The Nigerian economy – still reeling from the challenges of 2024 – is poised for a make-or-break year in 2025.

Olusegun Zaccheaus, partner and lead for strategy & West Africa, revealed during an executive roundtable hosted by PwC and BusinessDay on Thursday, noting that several fiscal issues are bound to influence the Nigerian economy this year.

“GDP may grow marginally by 3.3 percent in 2025 on the back of sustained policy reforms, albeit growth prospects may be limited by elevated economic pressures,” he said.

He noted that fiscal sustainability concerns may remain elevated, given debt servicing costs and a high fiscal deficit of 7.6 percent which exceeded the budget limit of 3.8 percent in 2024.

However, the Nigerian government’s planned expenditure increase to N47.9 trillion in 2025, along with the new minimum wage, is expected to fuel inflation. Consequently, the CBN may sustain a tight monetary policy to manage these inflationary pressures.

“Price stability in Nigeria remains a significant challenge, with inflation at 34.8% in December 2024 driven by factors such as food, transport and utilities amongst others. In 2025, inflation will likely be influenced by several factors, including monetary phenomenon, supply-side dynamics, cyclical elements, sector-specific inflation, and the effects of inflation rebasing,” he said.

Zaccheaus added that inflation is expected to decline to 26 percent in 2025 on the back of monetary policy tightening and improving dynamics in Nigeria’s foreign exchange market.

“Foreign exchange (FX) stability is a pivotal issue in Nigeria, as the naira depreciated by average of 39.8 percent in the official market in 2024 despite external reserves growing to $38.67 billion.

“The ease of the volatility in 2025 will be centered around price discovery, transparency and market friction, liquidity, supply-demand backlogs and Market and investor confidence,” he said.

He added that the CBN may maintain its monetary tightening stance in 2025 with elevated interest rates, focusing on achieving long-term price stability and improving investment outlook.

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

Here are six key issues to shape Nigeria’s economy in 2025

Revenue generation gaining momentum

Government revenue is expected to grow in 2025 on the back of government reforms, however, achieving the ambitious target of N36.35 trillion remains will require significant effort.

Debt sustainability

The 2025 budget adds N7.4 trillion in debt, with oversubscribed Eurobond issuance reflecting investor confidence. However, rising debt risks may reduce access to credit for private investment.

Fiscal strategy and budgets

Privatisation and asset sales are central to reducing deficits and boosting non-debt revenue in 2025. The strategy addresses fiscal imbalances but hinges on effective implementation to sustain economic stability.

Broad policy interventions

Establishing regional development commissions and amendments to fiscal laws aims to reduce inequalities and attract international funds. However, raising the minimum wage to N70,000 risks inflationary pressures.

Monetary policy alignment

Rising government spending has strained liquidity and complicated inflation control. Coordinated monetary and fiscal policies are critical for a stable investment environment 2025.

Unlocking issues to macro stability

Agricultural reforms, increased food production, and security spending rising to 16 percent of the budget aim to reduce food inflation and enhance macroeconomic stability.