Nigeria’s economy has continued to expand despite macroeconomic challenges, recording a GDP growth rate of 3.40% in 2024, up from 2.74% in 2023.
However, given the country’s large population, this growth remains insufficient, as a GDP expansion of less than 4% is considered “suboptimal” for a nation with over 200 million people. The GDP per capita has declined to a historic low, further straining economic progress.
Although real GDP is on the rise, nominal GDP has shrunk by $168 billion, falling from $363 billion in 2023 to $195 billion in 2024. This decline highlights the impact of currency depreciation, with the naira plummeting from about ₦500/$1 to ₦1,600/$1.
“The GDP growth numbers are suboptimal for a 200 million population growing at 3% as GDP per capita has fallen to an all-time low, with an economy struggling with stagflation,” said Adetilewa Adebajo, CEO of CFG Advisory.
“This highlights ‘The Output Gap’ problem in the Nigerian economy where we are falling short of our productivity and growth potential.”
According to BusinessDay, experts suggest key economic strategies to surpass the 3% growth threshold.
1. Attracting Investments to Drive Economic Expansion
For Nigeria to achieve stronger growth, it must attract more investments—both domestic and foreign. According to Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprises (CPPE), investment incentives are crucial.
“More domestic investment and more foreign investment, especially foreign direct investments, are needed. We need to move to create an environment where it is more rewarding to invest in the real economy than to be investing in financial instruments,” Yusuf said.
“The returns on investment in financial instruments is much higher than investment in the real sector of the economy, in most cases. And that is not good for the growth of the economy,” he added.
2. Reforming Trade Policies to Enhance Productivity
Adebajo stressed the need for a comprehensive overhaul of trade policies. He emphasized that the federal government must revamp trade regulations, reform HS Codes, and realign industrial policies to address declining productivity in manufacturing, industry, and agriculture.
“Investment policy incentives also need to be amplified,” he said.
3. Reducing Excessive Fiscal Spending
Nigeria’s rising debt profile, currently around ₦150 trillion, coupled with a cumulative two-year deficit of ₦40 trillion, presents a significant economic challenge. The country’s 2025 budget allocates ₦16 trillion for debt servicing—an amount that surpasses combined spending on defense, education, health, and infrastructure, which stands at ₦14 trillion. Meanwhile, Nigeria is also seeking a $2.2 billion loan, further escalating its debt burden.
“While the sovereign risk spreads have fallen to a five-year low on our sovereign bonds, our credit rating remains at junk bond status,” Adebajo noted.
4. Optimizing Equity in Government’s Capital Structures
With declining revenue, the government must maximize its equity in capital structures by monetizing assets to reduce its debt burden. This approach could help Nigeria secure an investment-grade credit rating.
“The direction of the government should be to enact policies that will enhance productivity, create employment, close the output gap, and grow the economy,” Adebajo advised.
5. Implementing Industrial Policies for Import Substitution
Despite economic hurdles, Nigeria’s GDP has shown resilience. To sustain growth, the government must adopt strategic industrial policies aimed at reducing reliance on imports in key sectors.
“We must replicate the success with cement, fertilizer, and petroleum refining,” Adebajo suggested.
He further urged the government to establish a roadmap for Nigeria’s three major sugar refineries—Dangote, BUA, and FMN—to halt the importation of raw sugar. He emphasized that this shift could position Nigeria as a major player in the African Continental Free Trade Area (AfCFTA) and boost foreign exchange earnings.
“Deliberate policies therefore must be put in place to develop the local supply chain with Nigerian farmers, in an effort to boost local sugar cane production, increase agricultural productivity, and create employment along that value chain.”
By implementing these measures, Nigeria can unlock its economic potential, ensuring sustained growth and improved living standards for its citizens.
