How Nigeria can improve GDP growth in 2025

Nigeria’s economic growth rate could rise to 5.5 per cent in 2025 if the government sustains stability-focused reforms, the Nigerian Economic Summit Group (NESG) has said.

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The group’s Chief Economist and Director of Research, Olusegun Omisakin, disclosed this on Thursday.

According to a statement by the Head, Strategic Communications and Advocacy, Ayanyinka Ayanlowo, the organisation unveiled its 2025 Macroeconomic Outlook report, underscoring the vital importance of cohesive policy implementation in addressing the country’s economic challenges.

The report, titled “Stabilisation in Transition: Rethinking Reform Strategies for 2025 and Beyond”, projects three potential growth scenarios based on the quality of Nigeria’s policy execution.

“A GDP growth rate of 5.5 per cent is achievable if Nigeria continues with stability-focused reforms,” he stated.

“However, inefficient policy implementation and economic constraints could limit growth to 3.4 per cent, and a reversal of reforms could see it drop to 2.7 per cent. The quality of policy execution in 2025 will determine whether Nigeria reaches its stabilization goals or falls short.”

According to him, the quality of policy execution in 2025 will determine whether Nigeria reaches its stabilisation goals or falls short.

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Key challenges such as high inflation, food insecurity, and infrastructure deficits remain hurdles for policymakers. Inflation averaged 33.2 per cent in 2024, with over 33 million Nigerians experiencing food insecurity, exacerbated by climate conditions and soaring prices.

Despite these pressures, Nigeria recorded a trade surplus of $8 billion in 2024, compared with $1bn the previous year.

The economy grew by 3.2 per cent in the first three quarters of 2024, up from 2.5 per cent in the same period in 2023.

NESG Chairperson Niyi Yusuf attributed these gains to reform measures initiated in mid-2023, which included foreign exchange liberalisation and fiscal adjustments.

However, Mr Yusuf cautioned that economic stabilisation remains a work in progress.

“The optimal path to stabilization requires a consolidation and alignment of monetary, fiscal, social safety, trade, and regulatory strategies. This alignment will transition Nigeria to the Consolidation Phase of its Economic Transformation Roadmap, creating an improved policy environment and attracting investments in growth-enhancing sectors,” Mr Yusuf said.

The report also highlighted the need for exchange rate stability.

Mr Omisakin stressed that sustaining the foreign exchange price discovery exercise launched in 2023 would be critical.

“Exchange rate stability will be crucial. We believe operating at an exchange rate of N1,200 to $1 will significantly contribute to economic stability,” he added.

The CBN recently pledged reforms aimed at transparency and market confidence. Governor Olayemi Cardoso announced the establishment of a Compliance Department and the introduction of a Foreign Exchange Code to address disparities between bureau de change and official exchange rates.

“The CBN is taking transformative steps, including the establishment of a Compliance Department to align with global standards and enhance transparency. This department will be operational by February 2025,” Mr Cardoso said.

He also announced plans to launch a Foreign Exchange Code aimed at ensuring transparency and fairness in the FX market.

READ ALSO: CBN moves to ensure FX market not dependent on intervention – Official

“We are committed to reducing the disparity between bureau de change and official exchange rates while fostering exchange rate stability to attract foreign investments and support fiscal operations,” he added.

NESG’s outlook serves as a roadmap for policymakers, business leaders, and stakeholders, emphasising the need for strategic partnerships and good governance to achieve sustainable economic growth.