Nigeria’s economic reforms and outlook for the year 2025

There have been divergent opinions about the economic policies adopted by the administration of President Tinubu since it came into power on May 29, 2023. Those opposing the policies can be categorised into two groups: those who are ignorant about the workings of the policies but are genuinely concerned about the short-term hardships they have caused and opposition parties and their followers who have decided to oppose any policy introduced by this government. The President has repeatedly stated that he was aware of what Nigerians were going through.

One striking observation is that many of those opposing the economic reforms of this government are suggesting a return to the status quo—reversing the removal of fuel subsidies and the floating of the naira. This suggestion is absurd, as these policies are the very ones that have destroyed the Nigerian economy over the years. Trillions of naira that could have been used for building infrastructure, improving healthcare and education, enhancing the military capabilities of the Nigerian security agencies, and funding research and development were spent on fuel subsidies and defending the naira.

When President Tinubu assumed office, the country was in dire straits: high levels of insecurity, poor infrastructure development, a debt service-to-revenue ratio as high as 97 percent, a forex backlog of $7 billion, and many state governments struggling to pay salaries. The Nigerian economy was in a state of comatose in need of radical reforms. During his national broadcast on the occasion of Nigeria’s 64th Independence Anniversary on October 1, 2024, President Bola Ahmed Tinubu stated that Nigeria must either reform for progress and prosperity or continue business as usual and risk collapse. It is common sense that to achieve different results, things must be done differently.

The International Monetary Fund (IMF) and World Bank have commended the economic policies of this administration and emphasised the need for them to be sustained. The good news is that the reforms have already started yielding results. The federal government has commenced the implementation of a national minimum wage, with state governments following suit at varying rates. Insecurity levels have dropped, students are benefiting from a student loan scheme, the inherited forex backlog has been cleared, the debt service-to-revenue ratio has fallen to under 70 percent, foreign direct investments worth over $30 billion have been recorded in the past year, and the nation’s foreign reserves have risen to $40 billion. These are indicators of progress.

In 2025, with oil production expected to hit 2 million barrels per day and domestic refining capabilities improving, the value of the naira is likely to strengthen, creating a positive multiplier effect on the cost of goods and services. The living standards of Nigerians will improve as their purchasing power increases and inflation drops. Businesses will thrive in 2025, leading to higher employment rates as household consumption rises and the cost of doing business decreases. Additionally, the impact of the current administration’s efforts to diversify the economy, improve infrastructure, and enhance security nationwide will further boost economic activity in 2025. These projections are based on the assumption that there will be no major pandemics or other crises locally or globally.

Kenechukwu Aguolu FCA, PMP, CBAP, FCIA, ACTI; Project Manager| Business Analyst| Accountant. [email protected]