Nigerian economy tipped to rebound in 2025 on sustained reforms

The Nigerian economy will recover its decade-long lost gains if it could sustain reforms that became operational in 2023, experts have said.

These were the positions of economists and analysts who spoke at the First Bank economic outlook dubbed ‘Nigeria 2025: Path to Economic Rebound & Recovery’ on Wednesday in Lagos.

“Reforms that we have seen in the last three years must be sustained to increase investors’ confidence and stability of the economy,” Biodun Adedipe, founder and chief consultant of B.Adedipe Associates Limited said.

Adedipe emphasized that reversing the reforms or not staying the course may bring about “speculative attack” that may lead to investors having cold feet, offsetting the recent gains seen in the market, especially with the accretion of FX reserves and the recent stability of the naira.

Nigeria had in mid 2023 scrapped fuel subsidies that have kept prices artificially low and unified its multiple exchange rate market – a radical move that was necessary to save the country’s economy from imminent collapse.

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Two policies done almost immediately the new administration was sworn in had stoked prices to a record and escalated a worst cost-of-living crisis in a generation in Africa’s most populous nation.

But experts at the event said the country may begin to reap the benefits of the painful policies, albeit gradually towards the end of the year, pointing towards a rebound for the Nigerian economy.

Bismarck Rewane, a renowned economist and the chief executive officer of the Lagos-based macroeconomic and research firm Financial Derivatives Company said reforms are not without pains, assuring that “this year will be less difficult, painful than the previous year as the trend shows we’re hitting the equilibrium”.

Rewane noted that if Nigeria had not undergone the various reforms, the situation could have been more dire, explaining that inflation could have reached 44 percent.

With reforms bearing fruits, investors may begin to tap into the energy, agricultural and infrastructural space for potential investments with high yields, according to Ifeoluwa Dixon, head, fixed income solutions, FBNQUEST Asset Management.

How tax reforms will benefit SMEs, Nigerians

Meanwhile, in his address, Segun Alebiosu, managing director/ CEO of First Bank stated that 2024 was an unusual year laced with rising inflationary pressures and borrowing costs, hurting households and businesses.

Alebiosu however expressed optimism that with reforms implemented, net reserves swelling and fuel prices now market-determined, the country may begin to come out of the murky waters.

“2024 was a year of miracles. People have been fighting to get subsidies out for almost 40 years and that’s achieved. Prices of fuel are already stabilizing. We’ve seen FX reserves reach about $40 billion.

“These have sustained my optimism about the Nigerian economy in 2025,” Alebiosu said.

He noted that First Bank is committed to providing innovative solutions and services to help cushion the effects of the headwinds, stressing that 2025 would be a better year.

Rebound hinges on eliminating food, energy & manufacturing deficits

Adedipe who was the keynote speaker of the event highlighted elimination of food, energy and manufacturing deficits as ways to reposition the economy and save it from its sluggish growth.

“Nigeria must combat the food deficit so food inflation which is the major driver of headline inflation can come down. Food availability, affordability are ways to ensure food security,” the industrial economist stated, urging the government to address insecurity and post harvest loss to curb rising food prices.

He explained that eradicating the energy deficit is necessary for industrialization and economic growth, stressing that countries like the U.S.A, China have remained developed due to provision of energy security and ensuring conditions that stimulate the manufacturing sectors.