Nigeria Turns the Corner: Economy stabilises as reforms begin to bear fruit

Chris Uba

Nigeria’s economy, once teetering on the brink of fiscal collapse, is showing strong signs of recovery following sweeping reforms introduced by President Bola Ahmed Tinubu’s administration. Key indicators — from GDP growth to inflation and foreign reserves — suggest that Africa’s largest economy may have turned a decisive corner toward stability and inclusive growth.

In a statement on Monday, Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said the country’s most difficult phase “is behind us,” describing the current moment as “a turning point toward prosperity.”

“Despite our historical shortfalls and present-day challenges, Nigeria has turned a decisive corner,” Edun said. “The road ahead will demand hard work and discipline, but we are firmly on the right path.”

From Crisis to Stability

When President Tinubu assumed office in 2023, Nigeria was grappling with slowing growth, surging inflation, dwindling reserves, and investor flight. The fuel subsidy, multiple exchange rates, and mounting debt had created an unsustainable fiscal landscape.

Two years on, reforms are reshaping that narrative. According to government data, GDP expanded by 4.23 percent in the second quarter of 2025, while inflation has moderated to 18.02 percent after six consecutive months of decline.

The exchange rate has stabilised, narrowing the gap between official and parallel markets to about 1 percent, down from nearly 70 percent in 2023. Foreign reserves have also risen above $43 billion, the highest since 2019.

“These are more than just numbers,” Edun noted. “They are the foundation for building inclusive growth that benefits every Nigerian.”

Easing the Pressure on Households

While macroeconomic gains are encouraging, Edun acknowledged that “the economy is ultimately about people, not statistics.”

Food inflation remains Nigeria’s most visible pain point. But recent interventions — including targeted agricultural support and food security programmes — are beginning to yield results.

A bag of rice that sold for around ₦120,000 last year now averages ₦80,000, while prices of staples like garri, pepper, and tomatoes have also dropped.

The government, Edun said, is balancing food price relief with incentives for smallholder farmers to remain in production.

To cushion vulnerable families, over 8.1 million households have received direct cash support under the National Social Investment Programme, with a target of reaching 15 million once identity verification is completed.

“This is more than a safety net,” Edun explained. “It ensures that the impact of reforms is cushioned for the most vulnerable, even as we continue to strengthen the social register.”

Hard Truths: Debt and Revenue

Despite progress, fiscal challenges persist. Nigeria’s debt service costs remain high, consuming a substantial share of revenues, while the country’s revenue-to-GDP ratio — at around 10 percent — is among the lowest in Africa.

To tackle this, President Tinubu in June 2025 signed the Nigeria Tax Act and related fiscal reforms, which will take effect from January 1, 2026. The new legislation aims to broaden the tax base, simplify compliance, and introduce progressive rates that protect low-income earners while improving collection efficiency.

Complementary initiatives like the Revenue Optimisation and Assurance Programme (RevOp) are also expected to plug leakages and strengthen government finances for investment in infrastructure, health, and education.

Anchoring Growth in Real Sectors

The government is now shifting focus from stabilisation to inclusive, sector-driven growth.

Oil production has rebounded to 1.68 million barrels per day, including condensates, supported by improved security and renewed investment confidence. Refinery projects, both public and private, are expected to revitalise the downstream sector.

In agriculture, programmes to enhance food supply and market access are under way, while manufacturing and technology sectors are being incentivised to create jobs for Nigeria’s youthful population.

The creative industry and mineral exports have also been identified as new frontiers for diversification.

Infrastructure development remains a cornerstone of the growth agenda, with the government relying on public-private partnerships (PPPs) to bridge funding gaps. Projects like the Ajaokuta–Kaduna–Kano (AKK) gas pipeline and the Project Bridge 90,000 km fibre expansion are expected to boost industrialisation and digital connectivity nationwide.

Restoring Confidence at Home and Abroad

Investor sentiment, once fragile, appears to be turning. Foreign direct investment inflows have begun to recover, while domestic investors and multilateral partners are re-engaging with Nigerian projects.

“The clearest sign that Nigeria is on the right path is the return of confidence,” Edun said. “But confidence is fragile — sustaining it demands predictable policy, disciplined fiscal management, and steady progress in reducing inflation.”

Looking ahead, the government projects 7 percent GDP growth by 2027/28, driven by private-sector participation, fiscal reforms, and continued investment in human capital.

“If we work together,” Edun said, “we will not only meet this target but surpass it. The task ahead is to deepen resilience, broaden opportunity, and translate reforms into real improvements — in food prices, power, schools, and jobs for our youth.”

A Decade of Renewed Hope

For the first time in years, optimism appears to be returning to Nigeria’s economic narrative. While challenges remain, analysts note that macroeconomic stability, disciplined reform, and a more transparent fiscal regime are setting the stage for sustained growth.

As Edun concluded:

“We can be assured that Nigeria’s next decade will be one of shared prosperity and renewed hope.”