By Ahmed Usman
As the year 2025 draws to a close, moments of reflection naturally set in, especially for an economy that has endured sharp shocks, painful adjustments, and cautious reforms. In an era of global economic turbulence marked by uneven commodity prices, persistently tight financial conditions, rising geopolitical tensions, regional insecurity, and an international retreat from development aid, many emerging economies have suffered currency instability, capital flight, and fiscal distress.
For Nigeria, however, the year presents an unusual picture. Amid global uncertainty and domestic strain, key economic indicators are beginning to stabilise, prompting a deeper question about whether the country is merely ending the year on a fortunate note or finally turning a policy-driven corner.
The International Monetary Fund (IMF) projects that Nigeria’s economy will grow by about 3.9 per cent in 2025, with growth expected to strengthen modestly to around 4.1 per cent in 2026, driven by macroeconomic stabilisation and reform efforts across key sectors. While these numbers may not yet place Nigeria among the world’s fastest-growing economies, they mark a notable improvement from the passive growth of recent years and signal a gradual return of confidence.
One of the most significant recent developments is Nigeria’s GDP rebasing, which revealed that the economy is about 30 per cent larger than previously estimated. This adjustment is not merely a statistical exercise. It reflects the growing importance of services, digital trade, creative industries, and telecommunications, sectors that employ millions of Nigerians, particularly young people.
For households, a larger and more diversified economy is essential because it reduces overdependence on oil and expands opportunities for income outside traditional sectors. For policymakers, it improves Nigeria’s standing in global markets and provides a clearer picture of where growth is coming from, enabling more targeted policies.
The rebasing has also reshaped Nigeria’s debt profile. The debt-to-GDP ratio now stands at about 40 per cent, well below the levels seen in many peer emerging economies. More importantly, debt service as a share of government revenue has fallen to below 50 per cent, from much higher levels in previous years. This easing of fiscal pressure means the government now has slightly more flexibility to allocate resources to infrastructure, education, healthcare, and social protection. However, the challenge remains that Nigeria’s revenue base remains among the weakest globally, making sustained revenue mobilisation critical.
Perhaps the most tangible improvement for households and businesses has come from the foreign exchange market. After years of volatility and sharp depreciation, recent months have seen a reduction in exchange rate volatility, a narrowing of the gap between official and parallel market rates, and a gradual buildup of external reserves, now estimated at over $36 billion. This stabilisation has practical consequences. It helps slow imported inflation, reducing pressure on food, fuel, and medicine prices. Foreign portfolio inflows have also picked up, reflecting renewed investor confidence.
Nigeria’s capital markets are also telling a positive story. The stock market is enjoying its strongest rally in nearly two decades, with the All-Share Index posting record gains. This surge reflects expectations of improved corporate earnings and better macroeconomic coordination. Similarly, Nigeria’s bond market has entered a bullish phase, with falling yields and strong demand from both domestic and foreign investors. Lower bond yields reduce government borrowing costs and can eventually translate into lower interest rates for businesses and households seeking credit.
After reaching painful highs, inflation (food inflation) has begun to ease, FX conditions have improved, and supply pressures have eased. Although prices remain elevated, the slowdown in food prices offers some relief to households whose purchasing power has been severely eroded over the past two years.
Perhaps the most encouraging fiscal development is the sharp rise in government revenue. This improvement reflects tax administration reforms, subsidy removal, and better compliance. Higher revenue is central to Nigeria’s long-term stability. It reduces reliance on borrowing, strengthens public services, and allows targeted social spending to cushion vulnerable households from reform-related shocks.
Despite these gains, Nigeria’s resilience should not be mistaken for strength. The economy remains vulnerable to oil price swings, climate shocks, global financial tightening, and domestic security challenges. Monetary pressures, fiscal constraints, and external risks continue to interact in ways that could quickly reverse progress.
However, resilience built on sound fiscal management, credible monetary policy, and structural reform is fundamentally different from resilience driven by temporary luck. Strengthening domestic revenue, managing debt prudently, investing in human capital, and deepening diversification are not optional; they are essential.
Is the question whether Nigeria’s current resilience is the product of good policies or good luck? The evidence increasingly points toward policy-driven stabilisation, though aided by favourable timing and improved coordination.
The fundamentals are improving, confidence is returning, and the economy is stronger than it has been in years. The challenge now is to convert this fragile resilience into inclusive and durable growth, growth that raises living standards, creates jobs, and restores hope for millions of households.
Ahmed Usman wrote via ahmedusmanbox@gmail.com.