The fate of the naira will hinge on how the government manages its debt profile, boosts oil production and leverages asset sales, according to Tilewa Adebajo, CEO of The CFG Advisory,
“The Naira position could be sub-1000/$ or north of 2000/$ depending on how government manages its debt profile, boost oil production and asset sales,” he said in his 2025 economic forecast titled, ‘From Reform Fatigue Quagmire to Sustainable Growth,'” he said.
He noted that Nigeria’s ambitious 18-month economic reform programme, designed to reposition the nation on the path of sustainable growth, has left the country teetering between progress and peril.
With poor implementation and a misaligned sequence of policy priorities, the programme has struggled to achieve its lofty goals, leaving the economy mired in stagflation and households reeling from reduced purchasing power.
Adebajo, described the current state as a “quagmire of reform fatigue,” where “the government has put the cart before the horse,” jeopardising any prospects of immediate recovery.
One of the most significant outcomes of the reform has been the staggering devaluation of the naira, plunging from about N450 per US dollar to as high as N1,700. Combined with the cost-push effect of fuel subsidy removal, inflation surged, reducing household purchasing power and increasing interest rates for firms.
“This is not the economic relief Nigerians were promised,” Adebajo lamented. He further noted that the much-touted social intervention programmes have failed to cushion the effects of these reforms, leaving many vulnerable citizens without any tangible support.
To make matters worse, Nigeria’s debt burden has soared past the $100 billion mark, with debt servicing costs doubling from N8 trillion in 2024 to an alarming N16.3 trillion in the proposed 2025 budget. “Debt servicing now outweighs the combined budgets for defense, security, infrastructure, education, and health,” Adebajo highlighted. The irony is glaring: funds saved from fuel subsidy removal are being funneled into debt servicing rather than critical capital investments that could stimulate growth.
Money supply has also reached a historic peak, growing by 50 percent year-on-year to a record N108 trillion. This unprecedented increase has undercut the Central Bank of Nigeria’s ability to achieve its 24 percent inflation target for 2024. Meanwhile, Nigeria’s GDP has plummeted to $195 billion, losing over $300 billion in value over the last decade due to devaluation, low productivity, and prolonged stagflation. Once Africa’s largest economy, Nigeria now ranks fourth, trailing behind South Africa, Egypt, and Algeria.
“The loss of $300 billion in GDP over eight years is a testament to the prolonged policy inconsistency and the failure to implement a coordinated economic strategy,” Adebajo observed. The ongoing GDP and Consumer Price Index rebasing exercises are unlikely to reverse this trend, as underlying structural issues remain unresolved.
Addressing these challenges requires bold, decisive action. Adebajo proposed that the federal government restructure its capital base by selling down joint venture oil assets to raise between $30 billion and $50 billion. “This move could significantly reduce the debt burden, stabilise the foreign exchange regime, boost the naira, and restore Nigeria’s credit rating to investment grade,” he suggested.
He further emphasised the need for the government to prioritise taming inflation, reducing borrowing costs, and fostering an investment-friendly environment to spur growth and productivity.
Looking ahead, he said Nigeria’s economic trajectory for 2025 remains precarious. Adebajo predicts that interest rates will remain high throughout the year, although inflation could ease to about 22 percent by year-end, with a potential for rate cuts below 20 percent by early 2026. However,
The oil and gas sector offers a glimmer of hope, with GDP in the sector growing by 10.2 percent in 2024, despite a paltry $3 billion in investments. “If we aim to replicate the $22 billion annual investment levels seen in 2009 and 2014, we could sustain optimal production and revitalise the sector,” Adebajo noted.
Ultimately, the success of Nigeria’s economic recovery hinges on the federal government’s commitment to implementing a coordinated monetary, fiscal, trade, and investment policy framework. “The sincerity and competence of the government in executing these policies will determine whether Nigeria emerges from this reform fatigue or sinks deeper into economic despair,” Adebajo said.
As Nigeria grapples with its 2025 budget cycle, the nation faces a pivotal moment. The stakes could not be higher, with three consecutive years of deficit budgets and cumulative deficits of over N36 trillion. For a country once dubbed the “Giant of Africa,” the time to reclaim that mantle is now—or risk watching it slip away indefinitely.
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