With reforms still on-going, the World Bank expects the rate of growth of Nigeria’s economy to slightly increase in 2025 to 3.7%. In its latest Nigeria Development Report, the bank says the federal government needs to build on the current momentum to achieve inclusive growth; BENJAMIN UMUTEME reports.
One thing is obvious and that is that the current reforms by the President Bola Tinubu are yielding results, especially with improvement in the country’s macro-economic indices.
As a result of the reforms which started immediately after President Tinubu assumed office with his famous ‘subsidy is gone,’ there have been sustained efforts to continuously ensure that the country’s business and investment climate takes a turn for the better.
Beginning from ending subsidies on petrol to addressing the distortions in the foreign exchange market, and several other reforms, there has been a marked improvement in investors’ interest in Nigeria once again.
Nigeria Devt Updates report
The report, titled, “Building Momentum for Inclusive Growth,”shows that economic growth in the last quarter of 2024 increased to 4.6% (year-on-year), pushing growth for the full year 2024 to 3.4%, the highest since 2014 (excluding the 2021-2022 COVID-19 rebound). Recent reforms have also helped to strengthen the foreign exchange (FX) market and Nigeria’s external position.
The consolidated fiscal position improved in 2024, driven by surging revenues. The fiscal deficit shrank from 5.4% of GDP in 2023 to 3.0% of GDP in 2024, a major improvement which was driven by a sharp increase in revenues of the entire Federation, which rose from N16.8 trillion in 2023 (7.2% of GDP) to an estimated N31.9 trillion in 2024 (11.5% of GDP).
The report further adds that Inflation has remained high and sticky but is expected to fall to an annual average of 22.1% in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations. Now, the challenge is to consolidate macroeconomic stability and ignite inclusive growth through deeper, wider structural reforms.
The NDU further highlights that in order for the economy to meet the government’s aspiration of achieving a $1 trillion economy by 2030 and deliver poverty reduction and shared prosperity, the pace of growth needs to accelerate further and its composition rebalanced towards those economic sectors and firms that are most productive, generate positive spillovers, and create jobs and opportunities at scale, especially for the poor and economically insecure.
“Nigeria’s consolidated fiscal position improved in 2024, driven by surging revenues that largely benefited sub-national governments. At the level of the Federation (i.e., consolidated government, including the Federal Government of Nigeria (FGN), Federal Capital Territory (FCT), state and local governments), the fiscal deficit shrank from 5.4 percent of GDP in 2023 to 3.0 percent of GDP in 2024.
“This significant improvement was driven by a sharp increase in revenues of the entire Federation, which rose from N16.8 trillion in 2023 (7.2 per cent of GDP) to an estimated N31.9 trillion in 2024 (11.5 per cent of GDP). This surge followed the removal of the implicit FX subsidy, improved tax administration, and reforms that enhanced the transparency and accountability of parastatal revenue remittances. Nigeria’s overall debt burden remains moderate, as the increase in public debt to about 53.2 percent of GDP in 2024—driven by FX revaluation effects— was counterbalanced by a continued improvement in the debt service-to-revenue ratio, which declined from 100 percent in 2022 to below 40 percent in 2024 due to the sharp rise in revenues,” the report noted.
Tinubu asserts
President Tinubu couldn’t have agreed more when he said that Inflation has begun to ease, with rice prices and other staples declining.
According to the president, even the oil and gas sector is recovering as rig counts are up by over 400% in 2025 compared to 2021, and over $8 billion in new investments committed.
He said, “We have stabilised our economy and are now better positioned for growth and prepared to withstand global shocks.
“In 2025, we remain on track with our fiscal targets. Gross proceeds per barrel from crude oil are broadly aligned with our forecasts as we intensify our efforts to ramp up production. Our fiscal deficit has narrowed sharply from 5.4% of GDP in 2023 to 3.0% in 2024. We achieved this through improved revenue generation and greater transparency in government finances. In the first quarter of this year, we recorded over N6 trillion in revenue.
“We have discontinued Ways & Means financing, which has been a major contributor to high and sticky inflation. The NNPC, no longer burdened by unsustainable fuel subsidies, is now a net contributor to the Federation Account. We are also achieving fuel supply security through local refining.”
Continuing, he said, “Our debt position is improving. While foreign exchange revaluation pushed our debt-to-GDP ratio to around 53%, our debt service-to-revenue ratio dropped from nearly 100% in 2022 to under 40% by 2024. We paid off our IMF obligations and grew our net external reserves by almost 500% from $4 billion in 2023 to over $23 billion by the end of 2024.
“Thanks to our reforms, state revenue increased by over N6 trillion in 2024, ensuring that sub-national governments can reduce their debt burden, meet salaries and pension obligations on a timely basis, and invest more in critical infrastructure and human capital development.
“One of our administration’s most impactful achievements is our bold tax reform agenda, which is already yielding results. By the end of 2024, our tax-to-GDP ratio rose from 10% to over 13.5%, a remarkable leap in just one year. This was not by accident. It results from deliberate improvement in our tax administration and policies designed to make our tax system fairer, more efficient, and more growth-oriented.”
Bagudu corroborates
Speaking recently in Abuja when he played host to a delegation from the Nigeria-Austria Development Cooperation, the Minister of Budget and Economic Planning, Senator Abubakar Bagudu, said the on-going reforms by the government have created favourable conditions for high returns on investment.
Bagudu added that the government would continue to maintain the course of the economic reforms as it looks to achieve its target of a $1 trillion economy by 2030.
“In the last two years, there have been numerous efforts to ensure that Nigeria’s economy heads in the right direction. President Bola Tinubu has put the economy in a position where it can attract domestic and foreign investment.
“We are determined to ensure that we listen to the private sector, or rather, people with experience such as yours, so that we can do better,” he said.
Financial experts broadly agree that Nigeria’s May 2025 Development Update signals a critical juncture. While recent reforms have created opportunities for macroeconomic stability and growth, the country faces persistent challenges including high inflation, debt sustainability, and low investor confidence.
They opined that the country must sustain and deepen its reform agenda, ensure policy coordination, and prioritise social protection and investment in infrastructure to translate positive momentum into inclusive, long-term growth.
Analysts say there is a need for the economy to generate more and better jobs at scale and reduce poverty. However, many say the engine room of growth – the real sector – has not been able to match the pace of growth of the other sectors whose growth is driving upward the country’s GDP.
For instance, power which is the foundation for the real sector is almost non-existence with industries spending a large portion of their earnings on alternative power, thus crippling their ability to employ.
And like the World Bank notes in the report, the best-performing sectors of the economy, like finance and ICT, are important drivers of growth but are not sources of mass employment as many Nigerians do not yet have the skills and opportunities to participate in them.
Experts thumb up ‘impressive strides’
For Acting World Bank Country Director for Nigeria, Taimur Samad, impressive strides have been made by Nigeria with the restoration of macroeconomic stability.
Samad said, “With the improvement in the fiscal situation, Nigeria now has a historic opportunity to improve the quantity and quality of development spending; investing more in human capital, social protection, and infrastructure. The allocation of public resources can begin to shift away from the past unsustainable pattern, and rather towards meeting Nigeria’s large development needs, including the government playing its essential role of providing basic public services and serving as an enabler of private sector–led growth.”
In the same vein, the World Bank Lead Economist for Nigeria, Alex Sienaert, explained that in order to generate growth and create jobs, the authorities must commit to build its human capital and infrastructure.
“International experience suggests that the public sector cannot sustainably generate growth and jobs by itself. Nigeria is no exception, particularly since public resources remain constrained. A useful strategy is to position the public sector to play a dual role as a provider of essential public services, especially to build human capital and infrastructure, and as an enabler for the private sector to invest, innovate, and grow the economy,” he said.
In a chat with Blueprint Weekend, Economist Friday Efih said fast-tracking growth would mean the government addressing major infrastructure gaps, such as in electricity and transportation.
“Fostering healthy competition, market openness, and improving the business environment to spur business dynamism; improving access to finance for new and existing firms to grow and improve productivity; and improving policies in key sectors to help unleash the potential of these sectors,” said.