• Reforms under President Tinubu are at least showing positive results. Inflation is declining, investors are pledging billions, and key business indices are showing sustained growth.
• Although positive signs exist, inflation remains high for the region, and a substantial public debt threatens the government's ambitious economic growth targets.
• Beyond the headlines, deep structural issues persist. Over half the population lives in poverty, struggling with food insecurity and infrastructure gaps.

As of October 3, 2025, Nigeria ended the week with positive signs pointing toward a stabilizing economy and renewed investor confidence. These developments are a direct result of the bold reforms that President Bola Tinubu has introduced since 2023, including the end of fuel subsidies, the liberalization of the foreign exchange market, and the Central Bank's stricter monetary policies. Yet, while progress is evident, deep-seated challenges still cast a long shadow over the nation's outlook. 

Investor Confidence and Economic Activity

Three major announcements drove the week's optimistic tone. First, Afreximbank projected that inflation could fall to a more manageable 14% by the end of 2026, provided the current reforms are implemented. This forecast is supported by official data showing annual inflation dropped to 20.1% in August 2025, its fifth consecutive monthly decline.

The Central Bank's decisive move to raise interest rates to 27.5% has helped absorb excess cash in the economy and curb price hikes. While this brings relief to savers and investors, households are still struggling without robust social safety nets, unlike countries like Egypt or Ghana, which offered targeted support alongside their reforms. Second, investor morale got a significant lift when Bayo Ogunlesi, a prominent investor at BlackRock, pledged billions of dollars for Nigeria’s energy, aviation, and port sectors.

Ogunlesi praised the reforms as "fundamental" and called Nigeria an "exciting place to invest." Such endorsements are crucial for securing long-term private funding for infrastructure, a longstanding obstacle to growth. However, Nigeria has a history of such pledges failing to become reality, highlighting the need for consistent policies and effective follow-through.

Finally, the private sector demonstrated continued strength, with a key business index (the PMI) reaching 53.4 in September, marking its tenth consecutive month of expansion. This growth, along with a 4.2% GDP increase in the second quarter, suggests that the reforms are beginning to stimulate genuine economic activity beyond the oil industry.

The slowdown in inflation is the most encouraging development. Headline inflation, which fell to 20.1% in August, its lowest point in over three years, has been helped by a stronger naira and improved access to imported goods. Business surveys also indicate that companies are becoming increasingly optimistic that price pressures will continue to ease.

Major institutions, such as the IMF, predict that inflation could average between 17% and 21% in 2025, with further declines expected in 2026 if the government's reforms continue. Still, when compared to its neighbors, Nigeria's inflation remains high. Ghana expects its rate to fall to 15-16% in 2025, while Egypt’s could stabilize around 12-14%.

The Central Bank projects that the economy will grow by 4.2% in 2025, a forecast that is primarily in line with those from the IMF and the World Bank. A recovery in oil production, a stronger service sector, and the establishment of new domestic refineries are all expected to drive this growth. With the global economy also projected to expand, Nigeria could benefit from stronger exports.

Persistent Structural Challenges

President Tinubu has presented these results as proof that his administration is "turning the page" after three difficult years. However, achieving the government's ambitious goal of a $1 trillion economy by 2030 would require growth rates nearly five times higher than those currently being achieved. Reaching that level will demand enormous investments in infrastructure and education, along with better governance.

In the immediate future, Nigeria faces severe financial pressure: public debt climbed to around $100 billion by early 2025, and paying the interest on this debt now consumes most of the government's revenue. Furthermore, oil prices are still below the budget's target, widening the financial gap. Despite the encouraging signs, the reality for most Nigerians remains stark. Over 54% of the population still lives below the poverty line, food insecurity has worsened, and chronic electricity shortages continue to hinder progress and social stability. At the same time, political and security risks across the country add further uncertainty to the investment climate.

Idriss Linge