The African Development Bank has launched its 2025 Nigeria Country Focus Report (CFR), projecting that real GDP growth will moderate to 3.2 per cent in 2025 and 3.1 per cent in 2026. The figure is down from 3.4 per cent in 2024,

The report titled “Making Nigeria’s Capital Work Better for Its Development,” highlighted the urgent need to improve how Nigeria mobilises, manages, and invests all forms of capital: fiscal, financial, human, natural, and business capital to accelerate structural transformation and foster inclusive growth.

The report also called for a more strategic and coordinated approach to capital mobilisation as Nigeria advances its economic reform agenda.

The launch comes amid bold economic reforms in the country, including the removal of fuel subsidies, the unification of exchange rates, and tax reforms. It emphasised that the measures reflect the government’s commitment to long-term macroeconomic stability and self-reliant development.

AFDB Director General in Nigeria, Dr. Abdul Kamara, in his opening remarks, emphasised the significance of the report, saying, “This report is both timely and practical. Nigeria is demonstrating bold leadership through difficult but necessary reforms. Its capital is more than financial; it includes human, natural, and institutional assets.”

He said, “What this report shows is the need for integrated strategies that make every form of capital work together to drive inclusive and sustainable transformation.”

Prominent among the report findings is the urgent need to enhance domestic resource mobilisation to close Nigeria’s annual development financing gap of USD 31.5 billion.

It noted that while tax reforms and non-oil revenue expansion are beginning to yield results, the informal sector remains large, tax compliance is low, and the tax-to-GDP ratio is among the lowest in the region.

The Head of Fiscal and Tax Reforms Implementation Division at the Federal Inland Revenue Service (FIRS), Mr. Olufemi Olarinde, officially launched the report on behalf of the Federal Government, noting its relevance to Nigeria’s current fiscal trajectory:

“We appreciate the efforts of the African Development Bank in contributing to this important report, which reflects our ongoing work in fiscal and tax reforms. It accurately captures both the strides we are making and the challenges we face as we strengthen Nigeria’s public finance system,” he said.

To meet development goals, the CFR recommends broadening the tax base and improving compliance, reducing tax expenditures, and investing in the institutional capacity of revenue-generating agencies, while ensuring that public spending is both efficient and impactful.

The report also highlights governance constraints as key obstacles to effective capital mobilisation. Fragmented oversight, overlapping mandates, and limited institutional coordination continue to undermine public trust and investment confidence.

In this context, Dr. Jacob Oduor, Lead Economist for West Africa at the AFDB, emphasised that policy tools like market-based exchange rate systems can support Nigeria’s economic resilience but only when backed by credible institutions and disciplined macroeconomic management.

Reinforcing this, Peter Engbo Rasmussen, Country Economist for Nigeria, noted: “Nigeria’s commitment to fiscal reform is crucial to building a resilient economy. The CFR reveals that strengthening non-oil revenue and improving public financial management will not only reduce reliance on volatile oil markets but also provide the fiscal space needed to invest in people and infrastructure.”

Beyond fiscal policy, the CFR aligns with private-sector perspectives. Dr. Joseph Ogebe, Head of Research and Development at the Nigeria Economic Summit Group (NESG), echoed the report’s attention to inflationary pressure and the role of productivity:

“The CFR’s findings resonate with our position at NESG. Price stability remains a pressing concern, with inflation disproportionately affecting micro and medium-sized businesses. We continue to advocate for a productivity-led deflation strategy and recommend a growth with depth approach that prioritises sustainable economic expansion over reliance on borrowing.”

The 2025 Nigeria Country Focus Report is part of the bank’s annual analytical series that mirrors the African Economic Outlook at the country level.

These reports provide localised, evidence-based analysis tailored to national priorities. They are designed to support the implementation of reform, policy dialogue, and development planning across the bank’s Regional Member Countries.