2025: Experts Predict More Stable Economic Conditions

Financial and economic experts have forecasted transformative growth for Nigeria in 2025, driven by strategic policies, public-private partnerships, and infrastructure development.

They are of the view that 2025 holds out the prospect of more stable economic conditions than both 2023 and 2024. Since mid-2023 the monetary authorities and the federal government have implemented policies to tackle inflation and to stabilise the currency.

The effects of these policies have not been immediate. Inflation has risen from 28.20 per cent year-on-year in November 2023 to 34.60 per cent Y-o-Y in November 2024. The Central Bank of Nigeria (CBN) has raised its policy rate by 875 basis points over the past 12 months to 27.50 per cent. The one-year Treasury Bill (T-bill) yield in the secondary market has risen to 26.00 per cent over the same time. Measures have been taken to reverse the flow of unfunded loans from the CBN to the government.

Looking ahead into 2025, the president of Lagos Chamber of Commerce and Industry (LCCI), Gabriel Idahosa forecasted that the Nigerian economy could witness transformative economic growth in 2025 if decisive and strategic policy actions are formulated and implemented to address lingering economic challenges.

Idahosa said, “the Nigerian economy experienced a tumultuous period marked by persistent rising prices, burdening interest rates, high cost of production, low demand, and an uncertain macroeconomic policy direction.

“It stands at a critical juncture, presenting hope for possible transformative growth, which requires decisive and strategic policy actions to address lingering challenges.”

According to him, inflation is expected to ease as monetary policies take effect, with trade, agriculture, and manufacturing poised to drive job creation vital for addressing unemployment and poverty.

He, however, stated that closing infrastructure gaps should remain a top priority of the government, which would necessitate innovative funding models and enhanced public-private partnerships to accomplish.

Idahosa also tasked the federal government to do more to improve the country’s business environment in order to attract more direct foreign investments, especially in power (and in renewable and CNG projects), oil and gas, and telecommunications sectors.

The director/CEO of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf said the balance of outlook for the exchange rate in 2025 is on the upside based on the following expectations: sustained improvement in foreign reserves which is currently in excess of $40 billion dollars; improvement in accretion to reserves on the back of improved inflows from the IMTOs and diaspora remittances; improved capacity of the CBN to moderate rate volatility through periodic intervention in the forex market; the positive impact of the $2 billion Euro Bond proceeds on reserves; positive Impact of the successful domestic dollar bond of $500 million; the successful clearance of legacy forex obligations of about $7 billion by the CBN; the import substitution effect of the Dangote and Port Harcourt refineries with the consequential easing of demand pressure on the forex market; and gradual recovery of non-oil export sector and implications for forex inflows.

CardinalStone in its report titled ‘2025 Economic Outlook; Pressure To Plateau’ said that “the past year and a half have been challenging for the Nigerian economy. The limited social safety net provisions following government reforms, coupled with multi-decade high inflation and a volatile exchange rate, have intensified the cost-of-living crisis, dampened business profitability, and hampered productivity.

“Despite these economic headwinds, we maintain our view, which was recently corroborated by a World Bank report, that the reform agenda should be sustained and that most of the pressures facing the country are temporary. More still, the worst impacts may have already been felt, with major economic markers already turning green and the benefits of reforms looking set to materialise in the medium term.”

The Firm said “in terms of results, we expect to see some parallels with the first decade of the current century, wherein Nigeria initiated over 10 economic reforms, which delivered an average GDP growth rate of 8.3 per cent compared to 1.7 per cent in the pre-reform period and average FDI inflows of $4.1 billion up from $811.07 million in the pre-reform era.

“To complement and expedite the reform efforts, we expect the government to focus on three things; addressing the long standing structural constraints to inflation to complement the CBN’s monetary efforts; promoting export-driven initiatives, especially non-oil, to boost FX earnings; and resolving insecurity challenges to create a conducive environment for economic growth.”

Afrinvest Limited stated that “looking to 2025, Nigeria’s economic prospects largely hinge on the flawless execution of the following activities earmarked for the year. Proposed tax reforms, essential for fiscal sustainability, are on the front burner. Effective implementation of the tax reforms could help unlock about $7.5 billion annually (OXFAM International Nigeria).

“This would be pivotal to revitalising the currently challenged fiscal capacity, evidenced by the jump in the national debt profile and debt-to-GDP ratio to c.N138.0 trillion and 58.3 per cent in November, 2024 from N97.3 trillion and 40.1 per cent respectively in 2023.”