Though things are gradually picking up, we must diversify the economy with a strong focus on agriculture and manufacturing.
If we may be blunt, Nigeria’s economic predicament did not begin in 2023. For many years, the country’s economic foundations were built on faulty assumptions and policy shortcuts. By the period between 2015 and 2023, those weaknesses had hardened into a system that was economically unsustainable. Had Nigeria been a private enterprise, few rational investors would have committed capital to it.
The economy suffered prolonged underinvestment, weak productivity, declining exports, shrinking government revenues, widening fiscal deficits, and chronically low growth. Rather than confront these structural failings decisively, successive governments often resorted to subsidies and borrowing to paper over cracks. These measures offered short-term relief but deepened long-term fragility.
By 2023, the consequences became unavoidable. The country had institutionalised an artificial foreign exchange regime, borrowed heavily to sustain fuel subsidies, and, at times, committed crude oil revenues before production. A significant portion of government income went into debt servicing. Beyond fuel, subsidies extended to electricity and agriculture, leaving public finances strained and policy credibility eroded.
Economic growth flatlined. Investor confidence weakened, foreign direct investment declined, portfolio flows dried up, and international rating agencies downgraded Nigeria. The economy drifted toward isolation, with policy features that mirrored command systems rather than a modern market economy.
The year 2023 was therefore a sink-or-swim moment. A reset became unavoidable. Reforms were not optional, they were existential. The decision to dismantle price controls and allow market forces to reassert themselves triggered painful adjustments. Prices rose sharply, living costs surged, and Nigerians endured what can only be described as a harsh transition phase. This experience mirrored the difficult adjustment faced by other transition economies in history.
The outlook for 2025 began under strain. While reforms were gaining traction, households faced high inflation, reduced purchasing power, elevated food and energy prices, and exchange rate pressures. For an import-dependent economy, these shocks multiplied across housing, construction, transport, and rents. Poverty deepened, and social safety nets struggled to keep pace with the scale of hardship.
By the first quarter, public optimism had waned. Patience was tested, resilience stretched thin. This was understandable. No reform narrative can substitute for the lived reality of hunger, rising costs, and uncertainty.
As the year progressed, however, conditions began to improve. Food prices eased. Energy costs declined, aided by increased domestic refining capacity. These shifts brought some relief to households and businesses. By the third quarter, macroeconomic indicators showed clearer signs of recovery. Inflation slowed, interest rates began easing, GDP growth improved, foreign reserves strengthened, the exchange rate stabilised, and capital markets turned bullish. Credit ratings improved, and investor confidence returned cautiously.
Yet the central question persists: can ordinary Nigerians feel these improvements in their daily lives? While food prices have moderated, they remain above pre-reform levels. Purchasing power is still weak, and job creation has not kept pace with population growth.
This gap reflects the nature of reform itself. Economic reforms are designed first to stabilise an economy in distress, much like resuscitating a patient in critical condition. Stability is necessary but insufficient. The next phase must be growth that translates into higher incomes and better living standards.
To reach that phase, Nigeria must focus on productivity and diversification. Agriculture and manufacturing must move from rhetoric to reality. These sectors have the capacity to absorb labour, grow exports, earn foreign exchange, and strengthen the currency. Without them, growth will remain narrow and uneven.
Diversification must be supported by credible ease-of-doing-business reforms, deeper inflows of long-term foreign direct investment, and a functional credit economy that supports production rather than speculation. Investment in health and education must be prioritised, not deferred. Social safety nets must be expanded and better targeted. Infrastructure gaps in roads, rail, power, and digital connectivity must be closed systematically.
Equally critical is public finance discipline. The practice of overlapping budget cycles and rolling over capital budgets from one year to another undermines credibility and planning. It signals weak execution and erodes confidence in fiscal management. Budgeting must be grounded in realistic revenue assumptions and strict implementation timelines.
The task before government in the coming year is clear. Growth indices must translate into income growth, job creation, and lower living costs. Many Nigerians understandably feel they cannot afford to wait. At the same time, rebuilding an economy hollowed out over years cannot be instantaneous.
