With longest decline in inflation and growth in national productivity, a stable currency, foreign inflows and improved macroeconomic ratings marked out the year as a defining moment for the economy. But lingering insecurity, missed fiscal targets, policy gap and low filtration continue to limit scopes of economic gains. Deputy Group Business Editor, Taofik Salako reports
Nigeria’s economy entered 2025 with much promises of a stronger momentum and consolidation, after the whirlwinds shaken up by the 2023 reforms coalesced into more discernible shape towards the end of the previous year. Most forecasts saw the economy early and they were right as the year unfolded. Global credit ratings agencies-Moody’s Investors Service and Fitch Ratings upgraded Nigeria’s sovereign ratings citing positive macroeconomic outlook on the back of substantial gains from government’s reforms. Moody’s upgraded the country’s rating from Caa1 to B3 and adjusted the economic outlook from positive to stable. Fitch upgraded Nigeria’s rating from “B-“ to “B” with macroeconomic outlook “Stable”. Moody’s saw a more resilient fiscal position, stronger external accounts and demonstrated commitment to reforms but was cautious about waning momentum. Fitch premised outlook on continued reduction in vulnerabilities.
Inflation, which had sucked up households’ incomes, declined for eight consecutive times in 2025 to close November at 14.45 per cent, from 24.48 per cent in January. The successive improvement in average living cost was based on reduction in the prices of food, gas and transportation as well as stability in the foreign exchange (forex) market. After more than a decade of default, the National Bureau of Statistics (NBS) in January rebased the Consumer Price Index (CPI) to closely reflect historical changes and current realities of the economy. After the rebasing, inflation had dropped from 34.80 per cent in the pre-rebased period of December 2024 to 24.48 per cent in January 2025. The CPI subsequently showed a steady improvement, from April.
National productivity also improved, underscoring the stability in the financial sector and steady fiscal balance. Gross Domestic Product (GDP) outperformed most projections in 2025, with the economy growing by 3.98 per cent in third quarter. This compared with 3.9 per cent recorded in third quarter 2024.
While the economic growth was anchored on broad growths across all the sectors, the non-oil sector was the major driver of the overall robust economic outlook, underlying gains in government’s efforts at diversification amidst ports’ reforms. Non-oil sector, which contributed 96.6 per cent of total output, rose by 27 basis points to 3.91 per cent in third quarter 2025, an increase of 27 basis points on 3.64 per cent recorded in second quarter 2025. The oil sector, which accounted for about 3.4 per cent of total output, expanded by 5.8 per cent in third quarter 2025, with oil production averaging 1.64 million barrels per day (mbpd) during the period.
The private sector showed stronger evidence of growth and stability. The NESG–Stanbic IBTC Business Confidence Index, which tracks corporate perceptions, was steadily positive. At the stock market, most companies that hitherto suffered initial reforms shocks fully recovered with impressive profits, strengthening positive sentiments across domestic and global portfolios. Turnover at the stock market surpassed new record of N10.54 trillion by November, driven by strong foreign portfolio investments (FPIs). Besides, as against the previous trend where outflows were more than inflows, there has been a considerable increase in inflows compared to outflows this year. This raises tendency for long-term commitment, of “hot money” turning into “cool capital”. The foreign-domestic participation ratio has shifted from previous year’s 15.98 per cent-84.02 per cent to 20.77 per cent-79.23 per cent, underling the stronger influence of FPIs. Nigeria’s relative sovereign equities index- the All Share Index (ASI) of the Nigerian Exchange (NGX), closed weekend with average year-to-date capital gain of 49.17 per cent, one of the five highest gains globally. Pricing- the main basis for the ASI, is a reflection of overall perception-current performance and future risks.
The global perception was evident in Nigeria’s $2.35 billion Eurobond, which attracted more than $13 billion subscription, the country’s all-time global subscription to an offer. For 10 and 20 years notes, the enthusiasm by the international capital markets for long-term investments in the country highlighted reduction in global risk assessment, enabling the government to borrow at cheaper rates. The domestic issuance market also remain active. In the short-end of the debt market, more than N800 billion were raised through commercial papers by companies, a fast expanding market for emerging and established corporates.
Data by the Central Bank of Nigeria (CBN) showed that foreign capital inflows rose to $20.98 billion in the first 10 months of the year, representing 70 per cent increase over total inflows for 2024 and 428 per cent growth on $3.9 billion recorded in 2023. These supported foreign reserves, rallied to about $44 billion. The naira remains stable trading within N1,440 and N1,500 per dollar. With tighter financial services regulatory framework and global cooperation, Nigeria finally exited the grey list of Financial Action Task Force (FATF), which had been estimated to be a stopgap to some $30 billion in potential investments.
There have been modest recoveries in the energy and telecommunication sectors. Telecom subscriber base increased to 177.4 million active subscriptions. The country attained all-time transmission peak of 5,801.84 megawatts (MW), with a maximum daily energy of 128,370.75 megawatt-hours, the highest of such. The power sector reforms continued apace with the emergence of Nigerian Independent System Operator (NISO), which separated system and market operations from the Transmission Service Provider (TSP). With the unbundling, there is expectation of greater efficiency and investments. The national grid also was largely stable during the year compared with the frequent collapse witnessed in the previous year.
But the gap between policy pronouncement, implementation and impact continued to pose major risk during the year. Despite the steady decline in inflation rate, the CBN was sticky in cutting benchmark interest rate, leaving average cost of business almost unchanged. With government revenue falling significantly below its ambitious expenditure plan, debts rose, with attendant debt servicing costs further crowding the fiscal space. Beyond data, there’s growing urgency for the benefits of the reforms to translate to substantial reduction in poverty and better living standards across the nation.
