By Dr. Rislanudeen Muhammad
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Nigeria’s economic reform story is at a turning point. The World Bank’s Nigeria Development Update (NDU) released October 8, 2025 in Abuja, titled “From Policy to People: Bringing the Reform Gains Home”, provides a balanced assessment of the country’s ongoing economic transition. It acknowledged encouraging macroeconomic progress but warns that these gains are yet to be felt by the average Nigerian.
Nigeria’s economy expanded by 3.9 percent year on year in the first half of 2025 compared to 3.5 percent in the same period in 2024. Growth was driven by services, ICT, manufacturing, and agriculture. Oil output also improved due to better operational coordination and renewed investor confidence. Fiscal and external indicators have strengthened. While public debt is projected to decline to 39.8 percent of GDP compared to 42.9 percent in 2024, foreign reserves now exceed USD42 billion, and the current account surplus has risen to 6.1 percent of GDP. Nigeria’s GDP is projected to grow from 4.2 percent in 2025 to 4.4 percent in 2027. The monetary tightening policy of Central Bank has worked in reducing inflation and stabilizing the exchange rate. These developments reflect the positive impact of the reforms, which is directly linked to exchange rate unification, fuel subsidy removal, and stronger revenue mobilization. However, while the federation’s fiscal deficit has narrowed to 2.6 percent of GDP, federal government’s fiscal deficit widened to 3.8 percent of GDP compared to 3 percent in 2024.
Beneath the headline numbers lies persistent hardship. Rebased inflation remains high above 20 percent, driven largely by food inflation, logistics bottlenecks and imported costs. Real household incomes continue to shrink. For most citizens, economic progress is not measured by fiscal indicators but by prices at the market, the cost of transport and the ability to afford basic necessities. While acknowledging the fact that the reforms are in the right direction, the report did state that high inflation has eroded purchasing power more sharply since 2019 as a result of significant “missteps of policy measures pre 2023 as well as external shocks”. It further pointed out that reforms must be judged not only by their macroeconomic outcomes but by their social impact with poverty rising from 40 percent or 81 million people in 2023 to a projected 61 percent or 139 million people by 2025. Without visible improvement in welfare, the public perception of reform will remain skeptical, and the political economy of progress could be undermined. Inflation especially food inflation, is evidently undermining welfare of average Nigerian.
The report calls for a deliberate effort to translate macroeconomic gains into human development. This requires disciplined reinvestment of fiscal savings and a coordinated approach to inclusive growth across the three tiers of government. Key priorities include reinvesting fiscal savings from subsidy reforms into social protection, education, and healthcare as well as expanding agricultural productivity and food value chains to ease food inflation and improve rural livelihoods. There is also the need to enhance subnational governance and fiscal transparency to ensure reforms reach communities across all states and local governments. Equally important is consistent communication and sequencing of reforms to maintain public confidence and support. This requires that positive macroeconomic gains translate into people’s welfare.
The private sector remains central to converting reform momentum into real jobs and incomes. Development finance Institutions such as the Bank of Industry and others have a vital role to play by scaling up access to finance for small and medium enterprises, promoting manufacturing diversification, and enabling value addition across supply chains. With improved macroeconomic stability, clearer policy direction, and growing investor confidence, the environment is becoming more favorable for private investment. The next challenge is to deepen institutional credibility and sustain the confidence of both domestic and foreign investors, leveraging on private sector as strong transmission belt for a more inclusive growth that support job and wealth creation.
The World Bank describes this period as a “window of opportunity” for Nigeria. I share that view. The macroeconomic fundamentals are gradually strengthening, but sustaining these gains will depend on how effectively we channel them into productive and inclusive sectors. Beyond fiscal reinvestment and private enterprise, four additional pathways deserve urgent attention. Firstly, on subnational industrialization, Nigeria’s growth must be spatially inclusive. Each state should identify and develop its areas of comparative advantage, whether it is agroprocessing, solid minerals, green financing or light manufacturing, supported by targeted financing and infrastructure, leveraging on patient capital. Secondly, on financial inclusion and innovation, there is need to expand digital financial services and lowering the cost of credit to empower millions of informal and micro entrepreneurs that can massively support employment creation and reduce social crisis. Thirdly, there is need for more impact on Human capital and productivity reforms. Investment in technical education, vocational centres, skills acquisition /upgrading and technology diffusion, must accompany fiscal and monetary discipline. These are strong enablers of sustained, broad-based growth. Last but not the least, there is the need to strengthen the social safety nets through reforms on various suspended social intervention programs, to transparently target the poor and most vulnerable to the macroeconomic policy shocks. These are by no means exhaustive.
Ultimately, the purpose of reform is not just to stabilize the economy but to energize it, to transform stability into opportunity. President Tinubu has shown that, Nigeria can make tough economic policy decisions, and this has so far paid off significantly, in terms of GDP growth (now above population growth), reduced inflation and managing disinflation, withdrawal of fuel subsidy and unification of exchange rate etc. The next test is to make those successes work for the people by addressing critical issues that will support significant reduction of poverty level. The path of reform is difficult, but it is also promising. If we align policies, investment, human development and targeted social protection programs, we can indeed “bring the gains home”, not only in numbers, but in livelihoods, dignity, and shared prosperity for all Nigerians.
Me: Dr Rislanudeen Muhammad, an economist and former MD of Unity Bank, has been a long standing friend and regular guest on several of my Business Shows on TV and Radio.