2025: Nigerians long for rewards of economic reforms

With or without a crystal ball, economic forecasts are as tricky as ‘stargazing’ prophesies. On one hand, it is prone to unpredictable factors; on the other, it is largely influenced by unusual variables. Still, experts’ projections can be a helpful exercise in looking at the trends weaved around already-formed factors such as foreign exchange, inflation and interest rates. But for local economists and allied professionals, the near-term direction of the curves depends more on how the government manages key policy issues that shaped 2024 than the new frameworks it initiates this year, ADEYEMI ADEPETUN, HELEN OJI, TOBI AWODIPE and WALIAT MUSA write.

At best, 2025 will be a year of recovery for the economy. In the worst case, last year’s economic turmoil will continue to hobble the country, increasing the millions of households that go to bed hungry each night and improving the general misery level.
 
But the possibilities are more complex than this binary simplification. The economy could snap, and the already high economic rates could spiral. And there could be multiple ‘bus stops’ on the two extremes – the bleeding of yesteryear may only leave the economy stagnating.      
 
All these will depend on the policy choices and the trade-off preferences of the country. There is no doubt last year brought harrowing experiences for Nigerians, occasioned mainly by the economic reforms, which President Bola Ahmed Tinubu said have come to stay.
 
The reforms require some reality checks, as stakeholders have often suggested. But which reality check? This question suggests a compromise. There are also worries that the economic conditions and fundamentals could deteriorate again, and the gains of the reform lost. The surging confidence by investors, for instance, is linked to the commitment to market reforms.
  
The confidence level could snap if there are overt signals that the government is backtracking on subsidy removal, exchange rate liberalisation, and fiscal space clean-up. As a start-up to agenda-setting for the year, the market is actively monitoring the government’s sustained commitment to energy subsidy removal.
 
Stimulating power revolution  
WITH fuel subsidies almost completely gone, what happens to the power subsidy, which has stalled investment in the electricity value chain despite the legislative leeway? Through the Nigerian Electricity Regulatory Commission (NERC), the federal government claimed it spent N1.9 trillion on power subsidies for the first 11 months of last year.
 
For a sector expected to replicate the telecoms years of an economic miracle following liberalisation, subsidy rigidity is the least investors would want to worry about in deciding their commercial frameworks.  Will Tinubu deal with the power subsidy brouhaha with dispatch this year? A negative answer means the government would need to make over N2 trillion in provisions from its scarce resources to settle the shortfall in energy billing in 2025 and grant consumers some relief. Otherwise, the era of power revolution may start this year. It is a policy choice with trade-off benefits.

Already, energy stakeholders are wary of worsening grid collapse amidst uncertainty and moribund infrastructure – a challenge that could only be reversed with improved commercial incentives. With 12 grid failures recorded in 2024 alone, the grid continues to operate below optimal capacity, leaving millions of Nigerians and businesses grappling with frequent outages.

Electricity Market Analyst, Lanre Elatuyi, said 2025 would remain a learning year with uncertainties, highlighting the complexities arising from the growing regulatory autonomy of states and the operational commencement of the Nigerian Independent System Operator (NISO).

“Many more states will grab regulatory autonomy. And this will set the sector on a path no one can predict accurately. Lessons will be learnt, and I hope we will be able to have a clearly defined path to provide the reliable and affordable electricity supply Nigerians deserve,” he said.He added that projections are complex due to the sector’s transition to wholesale competition, network reliability and customer satisfaction.

For the Executive Director of the PowerUp Initiative, Adetayo Adegbemle, addressing liquidity in the power sector to improve its overall health is more important than at any other time in the industry’s history. According to him, the success of the metering projects will also play a pivotal role. This comes from widespread scepticism about the government’s ability to deliver 10 million meters as promised.

“I have also expressed the need for the Transmission Company of Nigeria (TCN) to be audited, especially as projects being executed are not having any major impact on the grid. Overall, the outlook is not necessarily positive for 2025,” he said.

Despite the grim outlook, stakeholders agree that 2025 could lay the foundation for a restructured power sector if lessons are learned and policies are implemented effectively.

From a consumer perspective, Adeola Samuel-Ilori, National Coordinator of the All Electricity Consumers Protection Forum (AECPF), painted a grim picture as he warned of potentially worsening grid collapses, citing the lack of significant efforts to replace moribund equipment and obsolete machinery.
He also flagged life-threatening incidents in some areas, such as tension wires and obsolete transformers, as potential hazards that could trigger further grid failure.

Samuel-Ilori provided real-world examples of neglect under Ikeja Electric, including a reported tension wire near collapse in the Ijoko area and a deteriorating transformer in the Abaranje area. Both issues, he said, have remained unresolved despite repeated complaints.
 
“These are signs of systemic failure. If these problems persist, it’s only a matter of time before lives are endangered, and the grid suffers further instability,” he explained.

While the Electricity Act allows states to operate within their territories, Samuel-Ilori noted that Lagos State, for example, has yet to reveal concrete plans for improving the sector, emphasised that without clear strategies from states like Lagos and cooperation from DisCos such as Eko and Ikeja Electric, one cannot expect any significant improvement in service delivery.

For now, the Siemens agreement remains in limbo while distribution companies (DisCos) show no intention of investing in the downstream to improve their efficiency. A new approach is required to break this fatigue, just as the government needs to define its position on the Siemens deal.
     
Supportive policies
LAST year, the country saw significant manufacturing companies exiting the country as in recent years. Capacity utilisation has ebbed for those who have remained, resulting in employee layoffs and slow job creation.  To reverse the trend, stakeholders want the government to consolidate support and workable policies. 

President of the Lagos Chamber of Commerce and Industry (LCCI), Gabriel Idahosa, urged the Federal Government to rejig the policy framework to save businesses urgently.

“Businesses must embrace innovation, digital transformation and sustainability as growth strategies, while collaboration between the private and public sectors is critical to overcoming challenges and attracting investment. He stated that we need investments in all the sectors to turn this poor situation around,” he stated.

Decrying the state of the economy in 2024, which was marked by persistently high inflation rates driven by escalating costs of goods and services, cut-throat interest rates, high cost of production, low demand and an uncertain macroeconomic policy direction, he said, tightening monetary policies has not had the desired effect and that the Central Bank of Nigerian (CBN) should consider a more realistic strategy this year.

“Petrol prices surged from N198 to N1,030 in just 18 months, sending inflation through the roof and have increased from 22.79 per cent in June 2023 to 34.60 per cent in November 2024. Because fuel is integral to every facet of life, subsidy removal has been a major driver of high food prices, transportation, energy costs, and, generally, the cost of living,” he stated.He said that prioritising diversification, investment in critical sectors and policy consistency will be essential to achieving the government’s medium-term economic recovery objectives.

“For 2025, the outlook is cautiously optimistic, with the agriculture sector expected to grow tremendously, supported by government initiatives to enhance food security, improve rural infrastructure and expand agricultural value chains. Ensuring access to affordable financing will be crucial to unlocking the sector’s full potential and ensuring its pivotal role in Nigeria’s economic diversification agenda,” said the LCCI boss.

Decrying that several multinational companies exited the Nigerian market last year, he said to prevent more companies from leaving this year, the government must improve infrastructure, enhance FX access, promote local production and reduce reliance on imports.

“We must address structural bottlenecks, foster innovation and expand public-private partnerships to unlock this sector’s potential. Government must embrace fiscal discipline, diversify revenue sources and attract private investments through public-private partnerships to foster economic development.”
“We must also improve our business environment to attract more foreign investments. Inflation is expected to ease as monetary policies take effect, with trade, agriculture, and manufacturing poised to drive job creation—vital for addressing unemployment and poverty. Closing infrastructure gaps remains a top priority, necessitating innovative funding models and enhanced public-private partnerships. The 2025 Appropriation Bill proposes an expenditure of N49.7 trillion, significantly higher than the N28.8 trillion in 2024. This is very ambitious and demands bold action and fiscal discipline,” he said.
On his part, Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said the government must take more deliberate steps to save more industries this year. “We have a major productivity issue in manufacturing, agriculture, and some parts of the service sector because so many issues are affecting their performance, ranging from structural issues to fiscal issues.”

Calling for a redistribution of the gains of the federal government’s reforms, he said it must not translate only into revenue for the government but also into supporting the real sector.

 “When all the sectors are doing well, it shows and trickles down to other areas. The subsidy has been removed from petrol and FX; let us take those gains to other sectors and develop them. Rather than give these funds to the government, they should be released to the private sector and entrepreneurs or used to subsidise key public sectors like public transportation, education, health and agriculture. Investing in these sectors will have a significant effect on the economy.

“Palliatives cannot deal with the level of poverty in Nigeria now, and we should not be talking about palliatives this year again. Government must develop a policy approach that will restructure the economy so that key sectors can grow and thrive this year.”Touching fiscal challenges, he lamented the country’s growing debt, saying it poses a danger to this year’s budget.

“The debt service component in the proposed budget is over N15 trillion, over 30 per cent of the total budget. This is crowding out investments in key sectors like manufacturing and agriculture. If you do not marry the fiscal side well, there is a risk of a high deficit level, and debt also grows as the deficit grows. A high deficit also overheats the economy, creates more pressure on FX and shoots up inflation. This year, we must reduce our deficit, bring down debts and reduce borrowing as much as possible; the economy can no longer afford it. The government should look at how it can better attract FDI and slash its expenditure. Inflation is the worst enemy of the poor and we must tame it this year as well as ramp up our productivity. This is the only way to save the economy in 2025,” he said.
 
Bank capitalisation and capital gains
OPERATORS predict a sustained rally in equities in 2025 on banks’ recapitalisation, among other factors.
Closing year 2024 with an all-share index (ASI) of 102,926.40, culminating in a 37.7 per cent gain, the operators noted that the boom in the primary market segment will be propelled by the continuation of banking sector recapitalisation exercise while the secondary market rally is hinged on the realisation of the 15 per cent inflation rate.

Vice president of Highcap Securities Limited, David Adonri, said corporate recovery by major companies that suffered foreign exchange losses will positively impact the secondary market for equities in 2025.

However, he stated that yield on debt is expected to decline if the inflation target of 15 per cent is achieved.According to him, this will lead to an increase in debt issuances and possible migration to equities.

“2025 may see the listing of digital assets in the Nigerian Capital Market as issuers take advantage of the favourable environment created by new SEC rules.”
 
As the eve of the bank recapitalisation year, 2025 will significantly change the number of banks as reconsolidation heats up. 
Rebooting the decade of telcos  

FOR telecom sector executives, investments and policies are critical for the survival of the $76 billion industry. Checks showed that Foreign Direct Investments (FDIs) into the sector plummeted by $99.02 million in quarter three of 2024, according to data from the National Bureau of Statistics (NBS).
According to the NBS Capital Importation report, the telecoms sector attracted $14.4 million in Q3, a sharp decline from the $113.42 investments recorded in Q2.

But the Minister of Communications, Innovation and Digital Economy, Dr Bosun Tijani, informed that $2 billion in investments are coming into the fibre segment of the country that will bring in about 90,000km of fibre layouts to boost connectivity and enhance the performance of the digital economy.
The Association of Telecommunications Companies of Nigeria (ATCON) wants the Federal Government (FG) to address the infrastructural deficit, economic constraints and systemic challenges of broadband Internet expansion.

The association’s president, Tony Emoekpere, speaking on ways to address the barriers and gaps in broadband connectivity in the New Year, especially in pushing the frontiers of the Nigerian National Broadband Plan 2020-2025 agenda, observed that urban regions like Lagos are enjoying faster and more reliable connectivity compared to underserved rural areas, where infrastructure gaps persist.

“The barriers to broadband Internet expansion in Nigeria reflect a combination of infrastructure deficits, economic constraints, and systemic challenges. Addressing these is critical for achieving equitable digital inclusion and supporting the country’s economic growth,” Emoekpere said.

The ATCON president affirms the gap in the deployment of broadband infrastructure, particularly in rural and underserved areas.
Regarding policy, players and mobile network operators (MNOs) hope they will have the opportunity to increase tariffs on their services.

The Chairman of ALTON, Gbenga Adebayo, asserted that the survival of the telecoms sector demands immediate and bold reform for its sustainability.
In the address, titled: ‘Before the Final Call – Telecom – As Sector under Seige’, he said: “This not a time for further deliberation or delayed decisions.

“The survival of the telecoms sector demands immediate and bold reform for its sustainability, and our tariffs must be reviewed to reflect the economic realities of delivering telecoms services at a minimum for industry sustainability. Without this, operators cannot continue to guarantee service availability.”

Adebayo reiterated, even with greater urgency, that Nigeria is in the last days for the survival of the telecoms sector, sternly warning that if immediate and decisive action is not taken, the hope for a better 2025 will never materialise.

Cutting the spread of poverty  
THE Civil Society Legislative Advocacy Centre (CISLAC) and Transparency International in Nigeria called on the Federal Government to adopt bold and decisive reforms to address Nigeria’s escalating socio-economic challenges as the country heads into 2025.

The Executive Director, CISLAC and Head of Transparency International Nigeria, Auwal Musa Rafsanjani, expressed concern over the lingering socio-economic challenges that plagued the nation throughout 2024, saying 2025 should end the misery. He pointed out that the Executive and Legislature must adopt a holistic economic blueprint to address Nigeria’s socio-economic challenges, noting that economic diversification through targeted public-private partnerships in agriculture and industry is crucial for sustainable growth.

“Throughout 2024, a series of macroeconomic decisions by the current administration negatively impacted Nigerians’ standard of living, financial capacity, and purchasing power. CISLAC/TI-Nigeria feels duty-bound to draw the government’s attention to several unresolved critical challenges. These issues require urgent policy intervention in 2025 to ensure sustainable development,” he said.

Rafsanjani emphasised that amid widespread poverty and inequality exacerbated by harsh policies, Nigeria continues to grapple with an excessively high cost of governance, which led to wasteful expenditures and unnecessary duplications despite the Orosanye Report on cost reduction recommendations.
He stressed that high governance costs have constrained resources that could be directed towards critical sectors capable of driving national development.

“The growing issue of terrorism financing has placed Nigeria among the top ten countries most affected by terrorism, according to the 2024 Global Terrorism Index. Weak border security has allowed terrorists, small arms, and illicit funds to flow into the country unchecked. Reports indicate that 137 out of 261 borders in the North-East and North-West remain unguarded, further enabling terrorist activities.

“To combat this, Nigeria must strengthen financial regulations and enhance the capacity of anti-corruption and regulatory agencies. The banking sector and other financial platforms must be closely monitored to curb terrorism financing, money laundering, and illicit financial flows,” he said.
He added that the government must prioritise the security of lives and property in 2025 and beyond, which requires adopting international best practices in intelligence gathering, research, sabotage, espionage, and psychological operations as enhanced inter-agency cooperation among defence and security agencies is essential to complement ongoing reforms and improve tactical implementation.

“While CISLAC/TI-Nigeria welcomes the focus on national security reforms in the 2025 Appropriation Bill, the government must allocate adequate resources to the defence and security sectors to achieve meaningful results. Given the intensity of ongoing attacks, kidnappings, and other security threats, the administration must double its efforts to restore safety and stability, encourage investments, and reclaim unlivable communities.”

“Radical reforms are urgently needed, including implementing Early Warning/Early Response systems, sanctioning human rights abuses by security personnel, and reviewing recruitment and deployment processes. Enhanced remuneration for police and civil defence personnel is also critical for motivation and performance,” he said.

He stressed that to safeguard Nigeria’s democratic progress and ensure sustainable governance, there is an urgent need for comprehensive constitutional amendments, political party reforms, and electoral system overhauls to address systemic flaws that perpetuate inefficiency, injustice, and political
instability.

“A judiciary that lacks focus and independence undermines the very foundation of democracy. By implementing these critical reforms, the government can strengthen institutions, foster accountability, and create a more inclusive and transparent political framework that reflects the aspirations of all Nigerians,” he added.