Expert: Nigeria Poised for Economic Gains in 2025, Projects Inflation Below 30%

Dike Onwuamaeze, Nume Ekeghe and Kayode Tokede

An expert in the Nigerian financial service sector, Mr. Ugodre Obi-Chukwu has projected that the Nigerian economy is poised for growth in 2025 with inflation expected to drop below 30 per cent, paving the way for improved investment prospects.

Obi-Chukwu who is the Founder/CEO of Nairametrics, in a presentation titled, “Nigeria’s Macroeconomic Outlook 2025,” which he delivered at the Finance Correspondence Association of Nigeria’s (FICAN) lecture tagged, “Outlook for the Nigerian Economy in 2025,” where he projected that Nigeria’s public debt would reach N150 trillion by the end of 2025.

According to him: “I believe that inflation numbers are going to start falling, and we think it will fall below 30 per cent borderline 29 to 30 per cent,”

He attributed the expected decline to base effects from 2024’s high inflation levels adding, “It is going to take a lot to get inflation down, but that aggressive fall in 2025 will be a relief.”

He further noted that this reduction in inflation could stimulate a more favorable environment for investments.

“With inflation tapering and looking stable, I think that investment will be a lot better this year compared to 2024. It is a good time to invest in treasury bills and fixed-income securities,” Obi-Chukwu advised.

He said the passage of the tax reform bills pending at the National Assembly would bring Nigeria businesses, especially the multinationals, under serious tax pressure by 2025. 

He said: “In 2026, taxes will go up once these tax reform bills are passed and signed into law. But it is the same people that had been paying that will keep paying. Taxes are going to be a lot more serious over the next three years because of government’s need to fund its expenditures.

“There is no way the government will meet its revenue spend without increasing taxes. So, a lot of Nigerian businesses are going to face tax pressures over the next three years. And it is going to start with the multinationals because they are businesses that are easily recognisable because it is those that are already paying taxes that they are going to start with.”

He added that some state governments are going to be more aggressive in their collection of personal income tax now that the sharing formula for VAT collection is going to be altered.

He also projected that Naira would depreciate further in 2025 because of the governments’ fiscal deficit financing.

According to him, countries that run fiscal deficits always experience exchange rate depreciation. “You cannot expect your exchange rate to be stable if you are running a fiscal deficit, which is essentially funded through borrowing that indirectly weakens the currency,” he said, adding that “Nigeria has being running a fiscal deficit for the past 10 years. And 2025 is the highest fiscal deficit to be witnessed in a single year.”

Obi-Chukwu also emphasized that the Nigerian public debt, which is now at N135 trillion, would likely go up to N150 trillion by the end of this current year.

He, however, argued that the possible increase in the size of the country’s economy that might come with the rebasing of the GDP would provide the justification that Nigeria has room to borrow more in terms of its debt to GDP ratio.

Obi-Chukwu also added that the federal government is likely to resort to borrowing to pay the Euro bond that would mature in 2025.

He also noted that Nigeria’s foreign trade performance remains strong, with a trade surplus driven by crude oil and gas exports, which account for 90 per cent of total exports.

Obi-Chukwu emphasised the risks of this heavy reliance on crude oil, particularly in the face of fluctuating global oil prices.

“Nigeria is still at risk as a monolithic economy. We can do much more from crude oil exports, but diversification is critical to reducing vulnerability,” he remarked.

Furthermore on forex market and capital flows, he reiterated that the Central Bank of Nigeria’s (CBN) forex reforms have brought a degree of stability to the market, with interventions bolstering investor confidence and inflows from International Money Transfer Operators (IMTOs) expected to further enhance liquidity.

“CBN forex reforms boost confidence for foreign investors,” Obi-Chukwu said, adding that the introduction of the Enhanced Foreign Exchange Monitoring System (EFEMS) will ensure transparency and credibility in forex transactions.”

He highlighted potential upsides, including expected cuts in U.S. interest rates, which could attract capital inflows, and Nigeria’s removal from the Financial Action Task Force (FATF) grey list, which will likely boost forex remittances.

Despite these positive indicators, Obi-Chukwu warned of significant challenges. The demand for forex remains subdued due to the massive devaluation of the naira, while the country’s large fiscal deficit poses a risk of further exchange rate depreciation.

“Nigeria still relies heavily on imports to meet local consumption, and this could impact exchange rate stability,” he noted. High borrowing costs and looming debt repayments also present fiscal risks.

Obi-Chukwu cautioned that Nigeria’s dependence on crude oil could become a liability if global oil prices fall. “We need to address our economic structure and explore diversification to safeguard against these vulnerabilities,” he said.

Despite the challenges, Obi-Chukwu sees 2025 as a year ripe with opportunities for investors. With inflation stabilising and forex reforms in place, fixed-income securities, treasury bills, and equities offer attractive options for capital allocation.

He also pointed to oil sector reforms and expected transparency in forex transactions as key drivers of growth in the upstream sector. However, he emphasized the need for fiscal discipline, sustained policy reforms, and economic diversification to secure long-term stability.

“The outlook for 2025 is promising, but strategic efforts are required to unlock Nigeria’s economic potential,” Obi-Chukwu concluded.

He forecasted that the likely trends that would be seen in 2025 would include a drop in the Japa syndrome.

He said: “I think that we are now at the beginning of the end of Japa trend because of the tightening of immigration laws across the world. Moreover, those abroad are beginning to realise that staying abroad is not as rosy as it seemed outside. The drop in Japa syndrome will have a huge effect on the workforce in the country as more competent hands would be retained within the country.”

On opportunities in 2025, he advised investors to hold their money in dollars as a buffer to anticipated depreciation of the Naira.   “Also put your money in fixed income assets. The equity market is also attractive. Today’s Nigerian stock market is not the reckless 2009 stock market. It is a lot more robust.”