The Centre for the Promotion of Private Enterprise (CPPE) has emphasized the importance of backward integration and cost optimization as critical strategies for Nigerian businesses to navigate the challenging economic landscape in 2025.
This was highlighted in the organization’s recently released 2024 Economic Review and 2025 Outlook report, which provided an in-depth analysis of Nigeria’s economic performance and projections for the coming year.
“Current economic reforms have their silver linings which include the following: Enormous opportunities for import substitution across all sectors. It reduces cost, and mimprovespatronage and profitability. This is essentially about focusing more on backward integration initiatives.
“Boost to recycling business because of the soaring cost of raw materials and other inputs. Provision of domestic alternatives to medical tourism, education tourism and vacations abroad. Many Nigerian elites are now seeking domestic alternatives in these areas because of the forex situation. This offers new opportunities for domestic investors.
“Local fabrications of spare parts and other mechanical devices. High food prices offer new opportunities and incentives for investment in agriculture because of better profitability prospects,”
According to the report, Nigeria’s economy remains marked by sectoral growth disparities. While the service sector, particularly financial services, insurance, and transportation, experienced robust growth in 2024, the real sector continued to lag.
Key industries such as agriculture and manufacturing posted minimal growth rates of 1.14% and 0.92%, respectively, in Q3 2024. Meanwhile, sectors like air transport, quarrying, and petroleum refining remained in recession, highlighting ongoing challenges in sectors with high job-creation potential.
Key risks for businesses in 2025
Muda Yusuf, Director/CEO, CPPE identified several risks businesses must address to remain resilient. These include forex volatility, highinterestt rates, inflation, cybersecurity threats, regulatory uncertainties, and political instability. According to him, corruption, especially in public-sector dealings, and climate change risks further compound the challenges for businesses.
To mitigate these risks and thrive in 2025, CPPE advises Nigerian businesses to prioritize backward integration, He encouraged companies to reduce dependency on imported raw materials by sourcing and developing local alternatives. This he said not only cuts forex exposure but also enhances local value addition.
Yusuf advised businesses to prioritize cost-reduction measures such as leveraging technology, adopting efficient energy solutions, and domesticating supply chains can help firms remain competitive.
Reduce debt financing, high interest rates pose significant risks, He urged businesses to limit borrowing and explore alternative financing options. Talent retention, amid global workforce challenges, retaining skilled professionals in specialized roles will be crucial, he added.
He also noted that businesses must adopt flexible strategies to manage economic uncertainties and respond to market dynamics effectively.
Despite the challenges, CPPE highlighted several opportunities for growth in 2025 including, Import substitution across sectors avenues for cost savings and profitability, Renewable energy investments and local fabrication industries showing promise.
According to Yusuf, Weak domestic currency enhances export competitiveness and offers investment opportunities for diaspora Nigerians. He also said that the deregulation of the petroleum sector and decentralization of electricity provision open new avenues in energy and infrastructure.
“Businesses must recalibrate their strategies to thrive amidst Nigeria’s economic complexities, With a deliberate focus on backward integration, cost management, and leveraging emerging opportunities, Nigerian enterprises can build resilience and drive sustainable growth in 2025.
“Outlook for export business has become very positive because of the weak domestic currency. It enhances the competitiveness of domestically produced products or services. But the local content of such products must be very substantial to guarantee good profitability prospects.
The weak currency now offers bigger opportunities for diaspora Nigerians to invest at home.
“There should be a deliberate policy to promote legal migration abroad to fill skill gaps in many of the countries in Europe and North America, especially the United States and Canada. Many of these countries are also experiencing an ageing population which offers opportunities for our youths, many of whom are currently unemployed.
“Brighter prospects for outsourcing business for foreign companies. Bigger Investment opportunities in the petroleum refineries and related industries following the deregulation of the sector.
“Growing opportunities in renewable energy investment which are cheaper and more environment friendly. New opportunities in the use of CNG, LPG in transportation. Decentralization of electricity provision opens up numerous opportunities in the electricity value chain,” Yusuf said.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
