The Nigerian Economic Summit Group (NESG) has raised serious concerns over the country’s weakening industrial capacity and the overwhelming dominance of the informal sector, warning that these structural deficiencies are threatening Nigeria’s long-term economic growth and development.
Presenting findings from a new research study on Wednesday, the Group disclosed that despite several promises and policy pronouncements by successive administrations on industrialisation, Nigeria’s economy remains informal, mainly posing significant challenges to revenue mobilisation, effective policy planning, and sustainable development.
According to the report, the informal sector currently accounts for 54.4 per cent of the economy, while the formal sector lags behind at 45.6 per cent. Speakers at the online event said this imbalance makes it difficult for the government to adequately gather data, collect taxes efficiently, and implement broad-based fiscal planning strategies.
The NESG’s analysis also revealed that Nigeria’s industrial base continues to contract, with real Gross Domestic Product (RGDP) declining over the last six years. Specifically, the country’s RGDP dropped from N43.1 billion in 2019 to N35.5 billion by 2024, which the Group described as alarming.
“This trend indicates a continuous erosion of productive capacity within key sectors, particularly industry, which has long been considered critical to economic diversification and resilience,” the report stated in a presentation titled “X-rqying the Data Insights from the Rebased GDP.”
Speaking during the presentation, the NESG senior economist and research team lead,
Dr. Faith Iyoha noted that while the services sector has overtaken agriculture and industry in contributing to GDP, this growth offers limited inclusive benefits due to its concentration in low-productivity, informal enterprises.
The report also highlighted the impact of naira depreciation on household welfare. Dr. Iyoha explained that although recent devaluation measures have helped stabilise the foreign exchange market, they have also significantly eroded consumers’ purchasing power.
“Currency depreciation and falling purchasing power have dampened welfare gains,” she said, noting that many Nigerians struggle to afford essential goods and services.
Supporting this observation, the research showed that Nigeria’s per capita GDP has plummeted from $2,777 in 2019 to $1,036 in 2024, reflecting a sharp decline in individual economic well-being and widening poverty levels.
Ekundayo Mesagan said the rebased GDP will give Nigeria a more robust, diversified GDP going forward, and help her to target the sectors that will ensure inclusive growth and job creation. “It will give us sector specifics to invest in,” he states. Meagan stated that with the rebasing, the government can now be more focused on critical micro segments of society. “It’s going to improve the fiscal space and there will be sector data availability,” he said.
In response to the challenges, NESG is urging policymakers to redirect attention toward high-impact, productivity-driven sectors that can foster inclusive growth and job creation. The Group stressed that structural transformation is urgently required to shift the economy away from low-productivity, informal activities toward more formalised, industrialised, and innovation-led growth.
“Nigeria’s economy is structurally concentrated in low-productivity and highly informal sectors,” NESG noted, warning that failure to address these bottlenecks could stall the country’s aspirations for sustainable growth and development.
The economic think-tank said industrial, trade and investment policies need to be informal sector centric, especially because of MSMEs.
On the other hand, it said agriculture growth at 1.7 per cent implies food prices will remain elevated on the back of demand pressure.
NESG said the increase in GDP per capita clouds the level of inequality and poverty that exists in real terms. “To reflect true welfare dynamics there is need for an updated household survey data and complementary metrics beyond GDP,” it stated, adding that productivity remains structurally weak while highlighting the need for sector-specific interventions—skills, energy access, mechanisation, and innovation.
“Exposes weak social coverage with millions of Nigerians still lacking health insurance, access to quality education and unemployment benefit. State of emergency response in the industrial sector. National Industrial Policy is essential to ensure coordinated and strategic industrial interventions,” NESG said in the research document.
