2025 Nigeria Economic Review: What Businesses Need to Know

Nigeria’s economy in 2025 reflects a year of adjustment, reform, and cautious optimism. Following significant shifts in monetary, fiscal, and foreign exchange policies, the economy continues to rebalance amid ongoing inflationary pressures and currency volatility. For entrepreneurs, SMEs, and business organizations, 2025 is a pivotal transition year that reshapes business models, investment strategies, and growth expectations as companies adapt to the economic shocks of previous years.

GDP Growth and Economic Performance

In 2025, Nigeria’s GDP growth remained modest yet showed improvement. The real GDP growth reached 3.13% in Q1 2025, up compared to 2.27% in Q1 2024, indicating early positive momentum. The following quarter saw an even higher GDP growth of 4.23%, compared to 3.48% in Q2 2024 and stronger than Q1 2025, signaling robust mid-year performance. The third quarter also displayed higher performance, and Q4 2025 is projected to exceed 4%. Economic growth in 2025 appears more robust and resilient compared to 2024, driven by expansion in services, agriculture, and industry, as well as increased oil output and businesses’ adaptability to economic reforms.

Inflation and Cost Pressures

Inflation remains one of the biggest economic challenges in Nigeria in 2025, although conditions are slightly more stable than in previous years. Rising fuel and energy costs, a weak naira, and persistent food price pressures have kept the cost of living elevated, while high interest rates have increased borrowing costs for businesses. By November 2025, headline inflation had dropped to 14.45% year-on-year, a significant decline compared to 34.60% in November 2024, indicating easing price pressures, although still high by global standards.

Monetary Policy and Interest Rates

In 2025, Nigeria’s central bank adopted a hawkish monetary policy, maintaining interest rates around 27% throughout the year to control inflation. High borrowing costs persisted in 2025, making it difficult for businesses and lenders to secure affordable credit, particularly for SMEs.

Exchange Rate and Naira Performance

The naira was volatile in 2025 but became more aligned with market forces following the liberalization of foreign exchange markets. Throughout much of the year, the official USD/NGN exchange rate remained within a range of approximately ₦1,430 to ₦1,600, significantly narrower than the wide fluctuations observed in 2024. This stability allows businesses and investors to plan more effectively as the exchange rate becomes more predictable rather than experiencing sudden jumps.

Fiscal Policy and Government Reforms

In 2025, fiscal policy focused on increasing government revenue and implementing structural reforms. The removal of fuel subsidies remained a key factor influencing public spending. The year also saw the introduction of a tax reform bill aimed at strengthening revenue collection and broadening the tax base. Nigeria’s fiscal policy in 2025 reflected a continued transition toward stability, expanded revenue sources, and structural reforms to achieve resilient growth.

Looking ahead, Nigeria’s economic growth will depend on consistent policies, a stable naira, and lower inflation. Businesses and investors will need to remain flexible, manage costs carefully, and position themselves strategically. Despite ongoing risks, the country’s large market and ongoing reforms present significant long-term opportunities.