Nigeria: Economic and Political Overview
Nigeria is Africa’s leading economy - in close competition with South Africa - but is highly dependent on oil and is therefore very vulnerable to fluctuations in crude oil prices and production. Between 2015 and 2022, Nigeria's growth slowed and real GDP per capita declined due to policy missteps, rising fiscal deficits, and external and domestic shocks. Distortive monetary and exchange rate policies eroded confidence, while costly subsidies and lower oil output worsened deficits. The economy was further hit by COVID-19, global price shocks, demonetisation in early 2023, and severe floods in 2022 and 2024. Growth slowed further from 3.3% in 2022 to 2.9% in 2023, mainly due to weak crude oil output (World Bank). Nevertheless, the growth rate for 2024 accelerated to 3.4%, driven by strong performance in financial and telecommunications services (data NBS). The World Bank projects GDP growth to reach 3.7% by 2026, alongside 2.1% population growth, underscoring the need for much higher per capita growth to improve living standards.
Since the May 2023 administration change, Nigeria has implemented bold reforms to restore macroeconomic stability. Key measures include removing the gasoline subsidy, unifying the exchange rate, tightening monetary policy, refocusing on price stability, and ending deficit monetisation. The Federal Government’s fiscal deficit narrowed from 5.3% of GDP in 2023 to an estimated 4.3% in 2024, driven by higher non-oil revenues following forex subsidy removal and reforms improving revenue transparency from state entities, supported by restrained spending. Fitch projects Nigeria’s budget deficit to widen to an average of 4.2% of GDP in 2025–2026, despite rising revenues. Spending will be pushed up by wage increases, social and security costs, debt servicing, and pre-election expenses. Revenue gains are expected from non-oil tax reforms, though political and implementation risks may slow progress. Public and publicly guaranteed debt was projected to increase from 49% of GDP in 2023 to 51% in 2024, mainly due to exchange rate unification impacting external debt valuation. Despite this rise, debt levels remain sustainable but vulnerable to shocks. Moreover, the debt has a relatively long average maturity of 10.9 years, with over half denominated in local currency. While new measures are aiding Nigeria's economic recovery, high inflation persists (estimated at 31.7% in 2024 by the World Bank), making it crucial for authorities to maintain tight monetary policy, exchange rate flexibility, and fiscal discipline. Despite the September petrol price hike, disinflation is expected in the coming years, with an average rate of 18.1% in 2026, driven by monetary tightening. To date, the main obstacles to development in Nigeria are the inappropriate energy supply, deficient transport infrastructures, inefficient judiciary system, widespread corruption, together with high inflation. The gap between the official value of the naira and its value on the black market is substantial and the banking system is fragilized by the deteriorating quality of assets.
Despite the country's dynamism, the real challenge for Nigeria is the risk of a demographic explosion: according to the United Nations, the population of Nigeria could reach 730 million inhabitants in 2100. Concerns regarding this potential boom are exacerbated by the fact that half of the inhabitants live below the poverty line; pandemics are rampant (HIV, tuberculosis), infant mortality is high and the country struggles with significant levels of inequalities. According to the World Bank, unemployment stood at 3% in 2024; however, a high proportion of the active workforce is under-employed or employed in the informal sector. The overall GDP per capita was estimated at USD 6,542 in 2024 by the IMF, but the poverty rate is expected to increase to 56% of the population by 2026 as labour incomes are not keeping pace with inflation.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 363.82 | 199.72 | 194.96 | 224.78 | 239.41 |
| GDP (Constant Prices, Annual % Change) | 2.9 | 2.9 | 3.2 | 3.0 | 3.3 |
| GDP per Capita (USD) | 1,637 | 877 | 835 | 940 | 978 |
| General Government Gross Debt (in % of GDP) | 46.4 | 51.3 | 50.0 | 48.9 | 48.5 |
| Inflation Rate (%) | 24.7 | 32.5 | 25.0 | 15.2 | 15.4 |
| Unemployment Rate (% of the Labour Force) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Current Account (billions USD) | 6.02 | -1.09 | -1.42 | -3.46 | -3.73 |
| Current Account (in % of GDP) | 1.7 | -0.5 | -0.7 | -1.5 | -1.6 |
Source: IMF – World Economic Outlook Database, October 2021
The Nigerian economy is dominated by crude oil, which accounts for half of the government revenue and more than 75% of the country's total export earnings (Coface). Nigeria is among the first ten oil exporters, and its oil reserves are estimated at 37 billion barrels (OPEC). The country also has become one of the lead exporters of liquefied natural gas, with reserves amounting to 210.54 trillion cubic feet as of 2025. The country also extracts tin ore and coal for domestic use. Other natural resources include iron ore, limestone, niobium, lead, zinc and arable land.
Another key sector of the Nigerian economy is agriculture, which employs 34.3% of the workforce and contributes to about 22.7% of the GDP (World Bank). Crop production in Nigeria is dominated by food crops such as cassava, yams, maize, rice, sorghum, and millet, which are mainly grown by small-scale farmers. Other important crops grown in the country include cocoa, palm oil, rubber, groundnut, and cotton. Nigeria is the world's largest producer of cassava and the third-largest producer of tomatoes and groundnuts. The livestock sub-sector in Nigeria includes the production of cattle, sheep, goats, pigs, and poultry. The primary sector is also characterized by small-scale farmers, and a good part of the production is for subsistence purposes. According to the National Bureau of Statistics (NBS), in 2024, the agricultural sector grew by 1.19% in real terms compared to the 1.13% growth rate recorded in 2023, with crop production accounting for 90% of the overall nominal value.
The industrial sector makes up 32.6% of the GDP and employs 17.9% of the workforce. The largest subsector in the country is the petroleum industry, which currently suffers from oil theft that is believed to cost the country potential revenues valued as much as USD 11 billion. Significant oil losses are also recorded due to oil spills. The total annual contribution of oil to aggregate GDP in 2024 was 5.51% (data NBS). The manufacturing sub-sector is the largest component of Nigeria's industrial sector and includes the production of textiles, food and beverages, chemicals, cement, paper, and automobiles. However, the sector has been facing challenges such as inadequate infrastructure, high production costs, and limited access to finance and raw materials. Overall, the manufacturing sector is estimated to account for 15% of GDP (World Bank). The construction industry in Nigeria is also a significant contributor to the industrial sector, driven by the demand for new infrastructure, housing, and commercial buildings. The sector has been growing rapidly in recent years, and the government has been investing in infrastructure projects such as roads, airports, and railways to support its development.
Services represent 42.8% of the GDP and employ 47.8% of the population. Financial sectors, telecommunications and retail especially, are very dynamic. The finance sub-sector is a significant component of Nigeria's services sector, driven by the growth of the banking industry, insurance, and capital markets. Nigeria's banking industry is one of the largest and most sophisticated in Africa, with local and international banks operating in the country. Overall, the finance and insurance sector contributed 5.48% to Namibia’s GDP in 2024 (data NBS). Tourism is also a significant sector, but it struggles due to the country's poor power supply, insufficient road infrastructure, and poor water quality. To address the challenges facing the services sector, the Nigerian government has implemented various policies and initiatives such as the National Digital Economy Policy and Strategy, the Nigerian Tourism Development Master Plan, and the Nigerian Postal Service Reform. These initiatives aim to promote digitalization, improve infrastructure, increase productivity, and create employment opportunities. The ICT sector is also pivotal, contributing to 17.68% of GDP in 2024, with a share of 6% recorded by the real estate services sector. Lastly, the trade sector accounted for 15.46% of GDP (data NBS).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 34.3 | 17.9 | 47.8 |
| Value Added (in % of GDP) | 22.7 | 32.6 | 42.8 |
| Value Added (Annual % Change) | 1.1 | 0.7 | 4.2 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
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Source: Index of Economic Freedom, Heritage Foundation
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Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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