Major Economic Issues to Watch in 2025
Beyond the promises of President Bola Tinubu to turn Nigeria around for good, analysts said Nigerians will be the judge in 2025 the way the current administration handles issues like the new Tax laws, the proposed tariff increase in the telecoms sector, the 2025 Budget, Oil production, banks’ recapitalisation, aviation issues, and agriculture, among others, Festus Akanbi, Chinedu Eze, Emma Okonji, Nume Ekeghe, Peter Uzoho and Kayode Tokede write
Amid the Nigerian economy’s lacklustre performance in 2024, experts said anything short of a bumper economic trajectory in the new year, which began on Wednesday, may stress Nigerians beyond the limit.
2025 Budget
However, apart from Budget 2025, which is christened ‘Budget of Restoration: Securing Peace, Rebuilding Prosperity,’ which is currently awaiting the National Assembly’s approval, other government programmes for next year remain in the realm of conjectures. This prompts THISDAY analysts to draw attention to key sectoral issues that need urgent attention if the government is serious about its desire to rebuild prosperity.
According to President Bola Tinubu, the 2025 budget, with an expenditure programme of N49.7 trillion, is designed to retool and revamp the country’s socio-economic fabric.
However, rather than rekindle hope, the 2025 budget is being trailed by controversies largely caused by its over-ambitious assumptions, with the Lagos Chamber of Commerce and Industry (LCCI) saying the budget is too optimistic and fragile to work with given the economic realities in the country.
According to LCCI, “The assumption of an exchange rate at N1,500 is too fragile to work with against the current average of above N1,600 to a dollar in both the official and parallel markets.”
The chamber argued that assuming an inflation rate of 15.8 per cent does not reflect the unabating factors pushing up both the headline and food inflation, adding that with inflation rising to 33.88 per cent as of October 2024, it is unrealistic to assume a steep 51 per cent crash within a year. Meanwhile, the budget is predicated on a base crude oil production assumption of 2.06 million barrels per day (mbpd).
Nigerians will therefore want to know how the government plans to go about the sharp reduction in the inflation rate as promised.
There is also concern about the rising debt profile, which has made the government commit about N15 trillion to debt payments in the 2025 budget. Analysts said the current debt situation has put the economy at a big risk.
Agriculture
With reports putting the number of people to face acute hunger in 2025 at a staggering 33 million people, Nigerian has no choice but to take decisive steps to tackle food insecurity in the new year. In response to this, the Minister of State for Agriculture and Food Security, Dr. Aliyu Sabi Abdullahi said the federal government is poised to develop Nigeria’s agriculture, which was the reason for changing the name from Federal Ministry of Agriculture and Rural Development to Federal Ministry of Agriculture and Food Security.
The current astronomical increase in food prices amid record-high transportation costs merely underscores the call for a total turnaround of Nigeria’s agricultural sector.
New Tax Bill
Right from October 14, 2024, when the Tax Reform Bills which comprise the Nigeria Tax Bill, Nigeria Revenue Service (Establishment) Bill, Nigeria Tax Administration Bill, and Joint Revenue Board (Establishment) Bill were presented to the National Assembly, the document has been trailed with controversies. However, speaking at his maiden presidential media chat two weeks ago, President Tinubu described the bills as a fait accompli although he indicated his willingness to dialogue more on some aspects of the new tax laws. So the new tax bill will be a major issue in 2025.
New Electricity Act
The year 2025 promises to be eventful for the Nigerian Electricity Supply Industry (NESI) following the implementation of the Electricity Act of 2023, which decentralised the power sector by empowering states to play as both operators and regulators.
So far, about eight state governments have established their independent electricity regulators to regulate and oversee activities of the power industry in their jurisdictions. Also, some states have or are in the process of creating their own distribution companies to compete with the existing Discos in their locality.
However, the searchlight will be on how well or otherwise these states can manage, coordinate, operate, and steer the electricity sector in their areas in a manner that reflects better performance by ensuring improved power supply to their people.
Oil Production
In the area of local refining and marketing of petroleum products in Nigeria, the entrance of the 650,000 barrels per day (bpd) Dangote Refinery into the equation and the resumption of operation of the old 60,000 bpd section of the Port Harcourt and Warri Refineries have started changing the dynamics of the sector, leveraging on the deregulation of petrol pricing and subsidy removal by the current administration.
Currently, competition is forcing the Nigerian National Petroleum Company Limited (NNPCL) and the Dangote Refinery to cut down prices of petrol. Amid the price war, Dangote has partnered with MRS Oil to sell petrol at the pump at N935 per litre, while the NNPCL has also brought its retail prices down to N965 in Abuja and N925 in Lagos from the previous N1,020 per litre.
With Dangote Refinery’s capacity expected to grow further and the new 150,000 bpd Port Harcourt Refinery and Warri Refinery resuming operation, Nigeria is anticipated to be able to exit the importation of fuels by next year.
In the upstream oil and gas industry, oil production is expected to rise further to 2 million barrels per day (bpd) or even more, from the current 1.8 million bpd including crude and condensates. This is going to be driven by some policy steps taken and measures put in place by the government to achieve incremental production growth.
Operating and optimisation of the latest assets divested by Eni, Shell, ExxonMobil, and TotalEnergies are also expected to help in achieving oil production growth starting from 2025 as the new operators – Oando, Renaissance, Seplat and Chappal Hills swiftly move into the assets with the needed investments. Similarly, the year 2025 will witness the conduct of another oil licensing round by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) where more oil blocks will be put on offer, a move that is aimed at expanding Nigeria’s oil and gas reserves and also ramping up production.
Aviation
One of the factors that will shake the aviation industry is how far the Nigerian government will go in facilitating the ease of aircraft acquisition and access to credit from international financiers by domestic airlines. The Tinubu government was commended in 2004 for meeting the conditions of the Cape Town Convention (CTC) which removed Nigeria from the blacklist.
Nigeria’s aviation global rating rose from 49 to 70.5 following the country’s full compliance with the Cape Town Convention on the dry-leasing of aircraft. Later, it moved up to 75.5 from 70.5 on dry leasing of aircraft when Nigeria prepared and signed the Practice Direction that enables lessors, with the full support of the Nigerian courts, to take away their aircraft from Nigerian carriers in the case of non-compliance with lease agreements. So, as a result of this, the Aviation Working Group (AWG) removed the country from its watchlist.
Also, in 2025, it is expected that the federal government will firmly kick off the concession of airports to bring in the private sector to fund airport infrastructure.
The Minister of Aviation and the National Security Adviser in 2025 will conclude with the plan to weed Nigerian airports of corrupt security operatives in Immigration, Customs, the National Drug Law Enforcement Agency (NDLEA), and others who extort money from passengers and damage the image of Nigeria and leave passengers with gory experiences, as they travel through Nigerian airports.
Telecoms
Telecom operators have demanded an urgent review of service tariffs to reflect the economic realities of delivering telecom services for industry sustainability.
Without this, they said quality service and its availability could not be guaranteed and the economy would suffer for it.
The chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, made the call on behalf of all operating companies at an end-of-the-year event of the industry stakeholders in Lagos on Sunday, a statement by ALTON said on Monday.
Adebayo said the sector was under siege and tariffs must be reviewed urgently to avoid the collapse of the sector.
“Once telecoms tariff is reviewed upward in 2025, it will address the issue of improper pricing of telecoms services, as witnessed in 2024. Once that is achieved, we expect that there will be more lifelines in the sector and there will be more investments in the sector. We’ll have better penetration of 5G. We’ll have improved delivery on 4G services. We’ll have wider network coverage that will lead to better quality of service in 2025.
Another area that will determine telecom growth in 2025, is government support for startups and small businesses that are driven by technology.
Banks’ Recapitalisation
The Nigerian banking sector is poised for a transformative year in 2025, with significant activities expected around capital raising, product diversification, and structural changes to meet regulatory requirements and enhance profitability.
Recently, Access Holdings Plc said it has secured the full regulatory approvals of the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission of its recently closed Right Issue of 17,772,612,811 Ordinary Shares of 50 Kobo each at N19.75 Kobo per share and has raised the target amount of N351,009,103,017.25. This development has positioned the company’s flagship subsidiary, Access Bank Plc as the first bank to meet the CBN’s N500 billion minimum capital requirements for banks with International authorisation well ahead of the March 2026 regulatory deadline. According to the Head of Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle Olubunmi “Raising the shortfall and seeking regulatory approvals are expected to dominate the first half of the year. As of today, almost all of the banks, except for a few non-interest banks, are yet to meet the minimum paid-up capital.” He added that the second half of 2025 is expected to shift focus to the profitable deployment of the newly raised capital.
Furthermore, he noted that recapitalisation efforts could also set the stage for mergers and acquisitions (M&A), although these deals may not fully materialise within the year.
Capital Market
The stock market section of the Nigerian Exchange Limited (NGX) will be closing positive in 2024, setting an all-time high in NGX ASI of 101,000 basis points as of December 23, 2024. The market for the fourth consecutive year has maintained positive momentum and outperformed analysts’ expectations. With the federal government’s N49.7 trillion 2025 budget, more FGN bonds are expected to be listed on the NGX as the government bridges the N13.39 trillion budget deficit using the Nigerian capital market. The estimated N16 trillion on infrastructure development means the cement makers quoted on the exchange would drive revenue and declare impressive corporate earnings, a follow-up to nine months ended September 2024 result and accounts. The recent Investments and Securities Bill (ISB) 2024 passed into law by the Senate would be in full force come 2025. However, by 2025, the Central Bank of Nigeria (CBN) banking sector recapitalisation will continue to drive activities as some banks in 2024 have not accessed the market to raise fresh capital.
Perhaps, the capital market may witness the insurance sector recapitalisation by 2025, while the current reforms in the oil & gas sector are expected to boost listed oil & gas companies, revenue, and dividend payout to shareholders.
Insecurity
Another important issue is the current state of insecurity which is forcing many farmers away from their farms. As kidnapping becomes a thriving sector in the country, analysts said Nigerians may not achieve their economic goals unless the government comes up with urgent solutions to the problem of insecurity which is not only killing existing businesses but also discouraging foreign investors from committing their resources into the country. The military needs to be encouraged to tackle insecurity. State governors also need to redouble their efforts to bring peace to their domains. They need to explore the option of amnesty to lure away criminals from their hideouts.
Fixing the Roads
One more pressing issue is the urgent need to fix the nation’s deplorable roads. Economists said the proposed solutions include providing adequate and appropriate road designs, decongesting traffic from roads by removing obstacles, and regularly maintaining roads through activities like grading, paving, repairing damage, and cleaning. The high cost of moving goods and services due to the dilapidated condition of many of the Nigerian roads has largely been blamed for the high cost of living in the country. It is the consensus of many observers therefore that rather than deploy the current meagre resources to the Lagos-Calabar Coastal Highway, priority should be given to the federal and state roads to make life meaningful to the people.
