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By Chinwendu Obienyi
With revelations showing that Nigeria grappled with economic volatility in the first half of 2025, leading economists and market analysts have called for urgent structural reforms to avert a deeper crisis in the real sector.
According to them, rising operating costs, erratic foreign exchange policies, and weak fiscal performance are choking businesses, particularly small and medium-sized enterprises (SMEs) and undermining investor confidence.
Speaking at the H1 2025 Economic Discourse held in Lagos with the theme “Thriving in a Volatile Economic Environment”, which was organized by Cowry Asset Management Limited and monitored by Daily Sun on Wednesday, participants during a panel session, warned that while recent reforms have spurred an uptick in foreign portfolio inflows (FPIs), the real sector remains severely strained due to macroeconomic instability and policy inconsistencies.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, expressed concern over the government’s revenue performance and mounting debt.
“The fiscal numbers from the latest CBN report are disappointing, especially from the oil sector. Our debt-service-to-revenue ratio is nearing 80 per cent—that is a major red flag,” he said.
Yusuf argued that Nigeria must be more realistic with budgeting, as the gap between projections and actual delivery continues to widen. “The economy is not inclusive enough. SMEs are bleeding profusely under the weight of 30 per cent interest rates, inflation, and energy costs,” he said, warning that continued reliance on expensive credit is “suicidal” for businesses.
He added that many businesses may need to revise their models to survive, but ultimately, the policy environment must be improved. “If the government doesn’t address structural bottlenecks, especially energy, economic recovery will remain elusive,” he warned.
While acknowledging the resilience of the Nigerian economy, Director Institute of Capital Market Studies, Professor Uche Uwaleke, said much more is needed to be done to create the right environment for sustainable growth. “The turbulence in the first half was significant, yet the economy has performed better than expected. However, the IMF is right. We are yet to see tangible outcomes from these reforms.”
Uwaleke warned that investor confidence hinges on policy predictability. “The CBN must adopt a rule-based intervention framework and move away from ad-hoc FX fixes. Investors want to see transparency and consistency,” he said, urging the central bank to offer forward guidance and clearer market signals.
The Chief Executive Officer, Nigerian Exchange Limited (NGX), Jude Chiemeka, stressed that the country must prioritize investments in security, education, and skilled labour to attract longer-term, productive investments. “We are not just talking about manual jobs. We need to build capacity in technology and innovation to drive sustainable growth,” he said.
He also called for FX stability and a shift from import dependency to export-led development, stating that Nigeria needs to “get the basics right, one reform at a time.”
Providing a macroeconomic outlook for the second half of the year, the Founder, Cowry Asset Management Limited, Johnson Chukwu, projected that Nigeria’s crude oil output could reach 1.65 million barrels per day, with an average price of $67 per barrel, driven by OPEC’s production increase and asset sales by Shell and ExxonMobil.
Chukwu projected a 3.7 per cent GDP growth rate and inflation moderating to 20 per cent by year-end. He sees the exchange rate stabilizing around N1,525/$1 as the CBN increases market participation. However, he warned that interest rates may remain elevated beyond 20 per cent to retain FPI appetite and ease pressure on the naira.
“We think that interest rate will go back beyond the 16.3 per cent that we saw last week to the region of 20 per cent because the CBN needs high interest rates to sustain the interest of FPIs, otherwise, the pressure will come back on FX”, he said.
