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By Chinwendu Obienyi
Nigeria’s economic story has always been one of resilience. The country prides itself as a nation that has weathered cycles of boom and bust, policy shifts and global headwinds, yet continues to reinvent itself in pursuit of sustainable growth. Since independence in 1960, the country has moved from an agrarian-based economy to an oil-dependent one, and now, once again, to a phase where diversification and productivity are the rallying cries for renewal.
Despite beginning with a modest but promising post-colonial economy, driven by agriculture and small-scale industry, discovery of oil in the late 1950s and its subsequent export boom in the 1970s which propelled her into a period of rapid revenue growth and ambitious public spending, cementing its status as Africa’s largest economy, its macroeconomic story in 2025 is one of cautious recovery.
It is a nation rebuilding its fiscal foundations after years of turbulence, yet struggling to translate those hard-won gains into real relief for millions of its citizens.
This factual concept is stemmed from the World Bank’s latest Nigeria Development Update (NDU) titled “From Policy to People: Bringing the Reform Gains Home,” which notes improvements in fiscal health, a rebound in GDP growth, and rising foreign reserves. Still, these macroeconomic gains have yet to reach millions of Nigerians grappling with high food prices, persistent inflation, and limited access to decent jobs.
According to the World Bank, real GDP grew by 3.9 per cent year-on-year (y/y) in the first half of 2025, up from 3.5 per cent in the same period in 2024. This growth reflects the impact of reforms implemented since mid-2023, including the liberalisation of the foreign exchange market, the removal of fuel subsidies, and a tighter monetary stance to curb inflation.
Economic story so far
Growth has been broad-based. The services sector contributed roughly 2.3 percentage points to GDP, while manufacturing and construction also gained momentum. Agriculture, although still sluggish, staged a modest recovery after contracting in 2024. Oil and gas output increased slightly, supported by rising production and gradual restoration of export volumes.
Nigeria’s external and fiscal positions have improved significantly. Official foreign reserves rose to $42 billion from $37 billion earlier in the year, helped by stronger non-oil exports and reduced demand for imported refined fuels following the start of domestic refining.
The current account balance swung to a surplus of 6.1 per cent of GDP, while the public debt-to-GDP ratio declined from 42.9 per cent to 39.8 per cent, in part due to the GDP rebasing exercise that lifted nominal output from N277.5 trillion to N372 trillion.
Fiscal revenues have also strengthened. Federation Account receipts increased to 9.5 per cent of GDP (N27 trillion) in the first eight months of 2025, up from 7.6 per cent (N19 trillion) in 2024, driven by improved non-oil tax collections, higher oil receipts, and savings from subsidy reforms. The fiscal deficit is projected to narrow to 2.6 per cent of GDP, signaling progress toward macroeconomic consolidation.
Yet structural challenges remain. While several states recorded surpluses due to higher internally generated revenues and federal transfers, the Federal Government’s deficit widened to 3.8 per cent of GDP (N8.1 trillion). Capital budget execution also lagged at just 24.5 per cent, highlighting bureaucratic bottlenecks and constrained fiscal space.
The report also stated that Nigeria’s FX market reforms have been pivotal since the introduction of a willing-buyer, willing-seller framework, the unification of multiple exchange windows, and efforts to clear FX backlogs which have in turn, enhanced transparency and restored confidence.
“The parallel market premium has nearly disappeared, and the naira has traded stably between N1,455 and N1,500 per dollar in recent months. Portfolio inflows, stronger oil and non-oil receipts, and rising remittances have all supported the official market”, it said.
Despite macroeconomic gains, Nigerians continue to feel the pressure. Inflation, particularly for food, remains a critical challenge. For instance, headline inflation averaged 23.5 per cent in H1 2025, with food inflation at 25.3 per cent.
This means that the cost of a basic food basket has surged more than fivefold since 2019, with low-income households, who spend roughly 70 per cent of income on food, disproportionately affected.
The Bank then estimated that 139 million Nigerians now live in multidimensional poverty, thus underscoring the disconnect between headline economic gains and household welfare.
“Nigeria’s economic growth has picked up, revenues are rising, debt indicators are improving, the foreign exchange market is stabilizing, reserves are rising, and inflation is beginning to ease. These are big achievements. However, despite these stabilization gains, many Nigerians are still struggling. In 2025, we estimate that 139 million Nigerians live in poverty”, Country Director, World Bank, Matthew Verghis stated.
The Presidency has since disputed the report, describing it as “unrealistic and detached” from the country’s economic realities.
Although the Central Bank’s tight monetary policy has slowed the pace of inflation, reducing the seasonally adjusted, annualised month-on-month rate from 27.6 per cent in April to 12.9 per cent in August, the impact on living standards remains limited. Without structural reforms to improve productivity and supply, real incomes and household welfare, according to the report, will continue to lag behind nominal gains.
Furthermore, the country’s growth remains uneven. While 18 of 19 sectors recorded positive growth, 13 experienced slower momentum than in 2024, and the “Other Services” sector contracted by 4.6 per cent. Labour-intensive sectors such as trade (1.5 per cent), manufacturing (2.4 per cent), and agriculture (1.5 per cent) remain below pre-pandemic levels, limiting employment creation.
Experts’ views
Although, the World Bank projected that Nigeria’s growth will accelerate to 4.2 per cent in 2025 and 4.4 per cent by 2027, anchored on continued expansion in the services sector and renewed private sector activity, economic analysts who spoke during a programme monitored by Daily Sun, said, the outlook, though positive, is not without risk.
The World Bank pointed to external threats such as softening oil prices, global trade disruptions, and geopolitical tensions that could weigh on Nigeria’s export and fiscal receipts.
Speaking on these developments, Founder, Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, cautions against over-reliance on poverty statistics.
“Firstly, there has to be a proper review of those numbers. We as a country must interrogate the methodology because there are all manner of metrics to determine who is poor, extremely poor or multidimensionally poor”, he said.
Acknowledging the severity of the poverty challenge Yusuf noted that some policy measures were unavoidable. He said, “Unfortunately, in an attempt to fix a broken economy, we had policies which were inevitable that have created more poverty problems. The President had said if there were other ways of addressing this broken economy without creating hardship, he would have adopted them.
There was no other way. We had an economy at the brink of collapse, a dysfunctional FX market, a subsidy regime, and many other things falling apart.”
He added that the true measure of reform success should focus on next steps rather than numbers alone. “This economy is sensitive to FX developments and energy costs, which affect purchasing power. For me, what matters is not the numbers but the next phase of reforms we can take. First things first, we need to keep stabilising the macroeconomic environment, accelerate inclusive growth which should reduce poverty, and come up with policies that address both growth and the cost of living”, Yusuf stressed.
Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, stated that domestically, reform fatigue, political uncertainty ahead of the next election cycle, and persistent food insecurity could kick in and slow policy momentum and undermine macroeconomic gains.
“To consolidate progress, the report urges Nigeria to strengthen monetary policy transmission, enhance clarity in FX operations, and sustain tax and fiscal reforms. Implementing the proposed tax modernization bills, rolling out VAT e-invoicing, and unifying tax identification systems would help broaden the revenue base. Equally, improving oil revenue transparency and rationalizing collection costs are seen as critical to building fiscal resilience. In essence, Nigeria’s economic story in 2025 is one of cautious optimism, an economy that has clearly turned a corner but still faces a long road to inclusive, stable growth. The reform foundation is solid, but sustaining it will require consistent execution, institutional discipline, and the political will to stay the course”, Chukwu said.
Conclusion
Without decisive action to boost productivity, attract investment, and expand social protection, the gains of reform risk remaining on paper. The challenge for Nigeria is clear: translate stability into prosperity, and growth into tangible improvements for households and businesses alike.
In essence, Nigeria’s historical promise, from independence to the oil boom and beyond, can only be fulfilled if reform translates into improved living standards. Stability alone will not be enough; productivity, investment, and inclusion are the keys to turning macroeconomic gains into real-life benefits for millions of Nigerians.
