A Year of Reforms, Strain, and Fragile Recovery

2025 unfolded as a year of uneasy recalibration for Nigeria’s economy, where bold reforms met stubborn realities and progress came in fragile steps. Between tightening policies and everyday survival, the nation’s business landscape was reshaped by strain, adaptation, and cautious hope, writes Festus Akanbi

By any fair and historically grounded measure, 2025 will be remembered as a hinge year in Nigeria’s economic story. The country stood between painful reform and cautious hope, attempting to stabilise an economy long distorted by dependence on subsidies, weak revenue mobilisation, and policy inconsistency. What shaped the business and economic landscape was not a single defining shock, but the cumulative impact of policy decisions, structural weaknesses, and tentative institutional responses.

Every sector felt the pressure. Households battled high prices and eroding purchasing power. Businesses struggled with soaring costs, insecurity, and tight credit. Government, meanwhile, tried to repair a broken fiscal and monetary framework while contending with limited trust and shrinking room for manoeuvre.

Tax Reforms

At the centre of the economic conversation were tax and regulatory reforms that exposed Nigeria’s long-standing fiscal dilemma. Entering 2025 with one of the lowest global tax-to-GDP ratios, the country faced rising debt-service obligations and declining oil revenues. The federal government’s push for controversial tax reform bills reflected a recognition that delay was no longer viable.

Officially, the reforms were presented as pro-poor and pro-business, promising relief for low-income earners and small businesses while improving compliance among larger taxpayers. In practice, they provoked intense resistance. State governments concerned about revenue sharing and fiscal autonomy, labour unions feared that indirect taxes would worsen the inflationary impact on workers, and business groups questioned the timing of new tax measures amid high energy costs, weak demand, and elevated interest rates.

Oil and Gas Sector Reforms

The tension between reform ambition and structural weakness was most visible in the oil and gas sector. Although hydrocarbons remained Nigeria’s fiscal backbone, their capacity to deliver stable revenue had been undermined by underinvestment, theft, and governance failures. One of the year’s most consequential institutional events was the removal of the NNPC Limited board, including its Group Chief Executive Officer, Mele Kyari. This move signalled an attempt to reset governance, restore accountability, and align the national oil company more closely with the Petroleum Industry Act’s reform objectives.

Equally significant was the resumption of NNPC Limited’s Monthly Financial and Operations Report. After a prolonged absence that fuelled mistrust, regular disclosures on crude production, revenues, and remittances marked a meaningful step toward transparency. While transparency alone did not resolve operational challenges, it helped rebuild confidence among investors, analysts, and civil society groups.

Operational improvements briefly yielded tangible results. Nigeria met its 1.5 million barrels-per-day OPEC quota, a milestone not achieved in years. Although not sustained, it reflected better coordination, security, and stakeholder engagement in oil-producing regions. Oil theft reportedly declined to about 5,000 barrels per day, down from industrial-scale levels. The reduction increased export volumes and foreign exchange inflows during a period of severe fiscal strain, although it did not eliminate the problem.

Dangote Refinery

Downstream petroleum dynamics shifted sharply with the growing influence of the Dangote Refinery. The naira-for-crude arrangement, which exchanged domestic crude for refined products priced in naira, fundamentally altered fuel supply structures. As the refinery ramped up production for domestic use and export, traditional fuel importers faced shrinking dominance. For policymakers, the scheme promised reduced foreign exchange demand and greater price stability; for the market, it brought short-term disruptions and margin pressures. The transition highlighted the complexity of moving from an import-dependent system to domestic-scale refining.

Regulatory changes added to the sense of flux. The resignations of the heads of both the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), followed by new appointments, reflected ongoing recalibration of oversight structures. These shifts coincided with upstream investment signals that offered cautious optimism. Shell’s Final Investment Decision on the Bonga North deepwater project, Nigeria’s first major offshore FID in years, suggested renewed investor confidence. In addition, approvals of multiple Field Development Plans valued at over $18 billion indicated a revival of project momentum despite tight global financing conditions.

Gas infrastructure remained central to long-term strategy. Work continued on the Ajaokuta–Kaduna–Kano gas pipeline, intended to unlock domestic gas for power and industry. In contrast, the brief resumption and subsequent collapse of operations at the Port Harcourt and Warri refineries reinforced doubts about the viability of state-owned refining assets, underscoring governance and efficiency challenges.

Monetary Policy

Beyond energy, monetary policy emerged as one of the most decisive forces shaping business outcomes. The Central Bank of Nigeria maintained a tight stance throughout 2025, keeping interest rates elevated to curb inflation and stabilise the naira. While consistent with orthodox policy, the impact on the real economy was severe. Borrowing costs surged, constraining working capital and investment. A Central Bank survey showing that about 75 per cent of businesses struggled primarily due to high interest rates captured the depth of the credit squeeze. For many firms, especially small and medium-sized enterprises, survival replaced growth as the priority.

Fiscal policy unfolded under this monetary tightening. The 2025 budget sought to reset the framework through stronger revenue assumptions and expenditure rationalisation. Structural measures aimed at boosting non-oil revenue and improving discipline were embedded in the budget. Yet critics argued that the fiscal stance offered little immediate relief to households and businesses grappling with rising food, energy, and transport costs—the unresolved tension between consolidation and social relief shaped policy debates throughout the year.

Naira Stability

The naira displayed relative stability in 2025, though volatility persisted. Improved transparency, tight monetary conditions, and increased inflows from oil exports and portfolio investment helped calm markets compared to previous years.

Banks, Insurance Firms’ Recapitalisation

The financial system underwent gradual reform. Banks and insurance companies pursued recapitalisation to strengthen balance sheets, alongside broader Central Bank-led efforts to restore credibility and transparency. Inflation, though easing intermittently, remained high enough to shape consumer behaviour and planning.

GDP Rebasing

Macro adjustments included GDP rebasing, which updated sectoral weights and headline figures but did little to change lived realities, highlighting the gap between statistics and daily experience. International partners remained engaged, with IMF support continuing and Afreximbank’s leadership transition reinforcing Nigeria’s regional financial role.

Aviation Sector

The aviation sector illustrated uneven adjustment. Growth slowed sharply to 2.88 per cent as airfares surged due to fuel, foreign exchange, and maintenance costs. Passenger volumes fell, routes were rationalised, and airlines struggled to balance survival with safety. At the same time, approval of a N712 billion contract to rehabilitate Lagos airport signalled long-term commitment amid short-term pain.

Ports

Ports and logistics remained significant constraints. Congestion, inefficiency, and poor access roads raised trade costs, increased delays, and weakened competitiveness. Combined with nationwide road failures, these challenges underscored infrastructure’s central role in economic performance.

Taken together, Nigeria’s business and economic story in 2025 was one of transition under strain. Reforms advanced, transparency improved, and some long-standing problems eased. Yet structural weaknesses, insecurity, and high costs continued to weigh heavily. The year did not deliver a dramatic turnaround, but it laid foundations that would shape Nigeria’s economic trajectory beyond 2025, for better or worse.

Power Without Light: Nigeria’s Grid of Promises and Persistent Darkness

Nigeria’s power sector has become a symbol of promises made but rarely kept, where official optimism consistently collides with lived experience. Under President Bola Tinubu’s administration, Nigerians were assured of improved stability and higher electricity output. Yet, for most households and businesses, darkness remains routine, reinforcing the gap between policy declarations and the reality on the grid.

On paper, Nigeria boasts an installed capacity of over 13,000 megawatts. In practice, supply frequently hovers between 3,000 and 4,000MW, undermined by repeated grid collapses, weak transmission networks, and inefficient distribution. 

The shortfall has forced the economy to depend heavily on self-generation, raising operating costs for businesses and deepening the financial strain on households.

In response, some state governments have begun pursuing alternative paths, launching independent power projects and mini-grids to secure electricity for public facilities and local communities. Initiatives in Lagos, Ogun, and Sokoto, alongside federal programmes such as the Nigeria Electrification Project, signal growing subnational efforts to escape national grid failures.

Still, the Christmas 2025 blackout, triggered by an explosion on the Escravos–Lagos gas pipeline, exposed how fragile the system remains. Official assurances of swift restoration rang hollow as repairs dragged on. Ultimately, Nigeria’s power crisis is no longer merely technical. It reflects deep market failures, weak governance, and chronic liquidity problems. 

Until these structural issues are resolved, improved supply will remain elusive, and the economy will continue to suffer in the dark.

Trapped on Crumbling Roads

As Nigerians embarked on journeys home for the Christmas season, the long-awaited joy of reunion was overshadowed by frustration, danger, and exhaustion on the highways nationwide. While the South-east bore the brunt, with the Lagos–Benin–Agbor bypass, Onitsha-Owerri Road, and Enugu-Abakaliki Road marred by deep potholes, flooding, and cracked surfaces, similar scenes played out elsewhere. Travellers on the Abuja–Lokoja Highway, the Benin–Warri corridor, and major routes in the North and South-west faced gridlocks, stalled vehicles, and roads degraded by years of neglect.

The ordeal went beyond the poor tarmac. Motorists reported illegal checkpoints, extortion, and nightmarish diversions through village tracks, exposing commuters to further risks and delays. Families were forced to spend unplanned nights in hotels or even motor parks, highlighting the human toll of infrastructural decay.

These roadways are more than pathways; they are lifelines for trade, tourism, and cultural homecomings, yet they remain ignored, mainly despite repeated warnings. Calls for immediate action from the federal government and state authorities underscore the urgent need for coordinated, nationwide interventions. Without significant investment and proper maintenance, festive travel will remain a test of endurance, turning what should be moments of celebration into episodes of stress, danger, and economic loss for millions of Nigerians.