TINUBU’S ECONOMY: TRANSLATING MACROECONOMIC STABILITY TO MACROECONOMIC TRENDS
Background
In 1973, Nigeria formally adopted its crude oil endowment as not just an economic resource but a social intervention national product with the following objectives: to foster industrialisation, promote regional development, and control inflation (Adenikinju, 2012).
At the commencement of the policy, the then Nigerian government fixed the price of crude oil at $1.93 per barrel in the domestic market. In contrast, the international price of crude oil was $3.00 per barrel, thus availing a subsidy of 35.7 per cent at consumption (Adeyeye, 1991).
However, the subsidy element was drastically reduced to 2 per cent in 1978 when the international price of crude oil rose to $14.10 per barrel. In line with the subsidy regime, the government adjusted the price of crude oil to domestic refineries to $13.80 per barrel.
Nonetheless, by 1980, it had become apparent that handling a natural commodity, especially one that was on an economic ascendancy as a social product, is akin to scratching the nose with the teeth of a viper.
The international price of oil rose to $40 per barrel, and because there was no corresponding adjustment in the cost to local refineries, the subsidy element naturally amplified to 65.5 per cent. However, when the export price of crude crashed to $15.11 per barrel in 1988, the cost of oil to local refineries dropped to $2.0 per barrel. At that price, the subsidy element increased to 86.8%. They signposted the turbulence that will characterise the national economy and the inappropriateness of the economic model derived from this policy in the future.
After 50 years of the implementation of the socialised management of crude oil resources, a commentator on the BBC radio service described the nature of the Nigerian economy in 2023, thus:
“Nigeria’s economic model is considered inappropriate due to its heavy reliance on oil, leading to a ‘resource curse’ where wealth is concentrated in the hands of a few and not benefiting the general population.
“The economy’s strong dependence on crude oil has led to neglect of other sectors like agriculture and manufacturing, creating economic vulnerability and increasing reliance on foreign markets. Government corruption and mismanagement of oil revenues contribute to the resource curse by diverting profits from public benefit.
“The narrow productive base of the economy, focused primarily on primary products, makes it susceptible to external shocks and hinders broad-based growth. Nigeria ranks very low globally in human capital, with many citizens lacking access to basic education and healthcare, thus limiting their potential productivity.
“The neglect of local industries has increased reliance on imported goods, further deepening dependence on foreign economies.” (BBC 2024)
Though this may appear as a layman’s generalisation of the state of the Nigerian economy, nonetheless, the aggregation of the various economic untowardness contained in the BBC’s description of the economy, by our understanding, is suggestive of the urgent need to redeem the situation by a total system overhaul through an appropriate economic policy-based corrective regime.
Of course, different federal administrations have acknowledged this bizarre economic model over the years. Still, none could pluck up the courage to conceive a functional and beneficial alternative to replace the old model described nebulously, even professionally, as a mixed economy. In other words, an economy without form and substance, the equivalent of the biological bacterium known as an amoeba.
During this critical period, Asiwaju Bola Ahmed Tinubu was elected president with the promise of restructuring the Nigerian economy. He publicly asserted he would abolish the troublesome fuel subsidy regime and make other economic policy changes.
After being sworn into office on May 29th, 2023, President Tinubu scrapped the long-standing petrol subsidy and removed the currency peg and multiple foreign exchange transaction windows. This move made the economy more market-driven, unlike the superficial controls that had kept the country underdeveloped over the last 50 years.
Some analysts considered these reforms radical. They unleashed the long-held-down power of market forces on the Nigerian economy and understandably disrupted it, resulting in rapidly increasing prices of goods and services.
From our perspective, these rapid price changes established the artificiality that underlines the national economy and defines its superfluity. In many ways, this has constrained growth and development over the years.
While the global community of analysts welcomed and embraced the reforms as a necessary antidote to the historical malaise that had encumbered the Nigerian economy over the years, we note the acerbic and somewhat dystopian narrations by some Nigerian analysts to cause an atmosphere of disorientation among the people by explaining the reforms in the context of economic pessimism. The pessimism stems from the belief that the future economy will be worse, directly causing decreased consumer and business spending in the present, which can lead to a slowdown in economic activity or a recession.
When consumers expect economic hardship, they tend to cut back on current spending and increase savings, while businesses respond by reducing investments in capital and new jobs. This reduction in overall demand shifts the aggregate demand curve to the left, causing lower output and prices in the short run (Di Bella & Grigoli, 2018).
Indeed, in the aftermath of the federal administration’s application of reform policies, inflation peaked in June 2024 at 34.20 per cent, hitting 34.80 in December of 2024, the highest figure witnessed since the return to democracy in 1999. This resulted in a decline in individuals’ purchasing power, which was ascribed to a decrease in household consumption, which reduced to -42.28 per cent in Q1 2024 and to -61.18% in Q2 2024, compared to the same periods in 2023. The decline was even worse quarter-on-quarter, at 45.71% in Q1 and 99.24% in Q2 2024.
This dramatic drop is among the key reasons some multinationals exited Nigeria and some publicly-listed companies declared losses (Oyadeyi, 2024).
However, we must commend the federal administration under President Bola Ahmed Tinubu for its intransigence and commitment to reforms in the face of bewildering agitations to reverse policies at the initial implementation stage.
By the first quarter of 2025, the economy started showing strong signs of momentum and alignment with the core objectives of the reforms. Further into the year, the inflation rate had dropped to 21.88 per cent in July from 34.80 per cent in December 2024 and then to 20.12 in August, 2025, the fifth consecutive month of easing. Several critics argued that the vastly reduced inflation rate resulted from the National Bureau of Statistics’ (NBS) rebasing of the inflation basket and reference year. Our calculation, which other analysts corroborate, indicates otherwise.
FROM INFLATION TO DISINFLATION
We have observed how some critics have dismissed the decline in the inflation rate as being of no consequence to the people, insisting dismissively that prices have not changed in any way to affect the mass of the Nigerian people.
We consider this an expression of the intention not to acknowledge the federal administration’s positive strides. Empirically speaking, the Nigerian economy is now in a disinflationary dispensation. Disinflation is a temporary slowing of the pace of price inflation and is used to describe instances when the inflation rate has reduced marginally over the short term (Kelly, 2023).
Nigeria recorded a rare disinflation in 2025, with inflation falling from 24.5 per cent in January to 20.12 per cent in August, about 11.02 per cent drop, the sharpest mid-year slowdown in over a decade. An analysis of 10 years of data shows that, unlike 2020–2024, when inflation accelerated, 2025 stands out alongside 2017 and 2018 as one of the few disinflationary years.
Source: NBS, 2025.
Accordingly, Nigeria’s inflation story in 2025 is taking an unusual turn because, for the first time in nearly a decade, the country is witnessing a meaningful and sustained slowdown in consumer prices. In relative terms, that is a 17.5 per cent reduction compared to the January level, a pace of disinflation rarely seen in Nigeria’s modern economic history.
So far, we have witnessed how the inflation rate, instead of climbing, has steadily declined month after month (except for a brief uptick in March), ending August below 21 per cent, the first time in 16 months that headline inflation had fallen that low. Three key factors are shaping Nigeria’s inflation deceleration in 2025:
•The CBN has kept rates at 27.50 per cent, slowing credit demands and speculative forex activities.
•Stable foreign exchange rate due to increased foreign exchange inflow into the country through oil, remittances, and non-oil export earnings. The naira now trades within the N1,501/$ and N1,530/$ band.
•Better harvests and relative calm in food-producing regions have eased food price pressure.
At 20.12 per cent in August, the apparent indication is that year on year inflation rate has fallen below the 21 per cent target set by the CBN. However, with the momentum being generated in the economy, we can also safely aver that inflation may decline to 17 per cent, in December, 2025 a target near the 15 per cent set by the federal administration. Attaining this target has huge microeconomic implications.
We can project that the Central Bank’s Monetary Policy Committee (MPC) will consider easing the current 27.50 per cent monetary policy rate (MPR) by at least 50 basis points at its next meeting and by at least, 200 basis point by December, 2025. Similarly, we also project a review of the cash reserve ratio (CRR) from 50 per cent for bank deposits to 35 per cent by December, 2025. This review will impact the cost of production, enhance business expansion, and create jobs because of cheaper cost of credit and the quantum of cash available to money deposit banks to perform their financial intermediary roles.
FLOATING OF THE NAIRA AND THE REBOUND OF LOSS-MAKING COMPANIES TO PROFITABILITY
Like the removal of fuel subsidy, in June 2023, Nigeria floated the naira, marking a historic turning point in its foreign exchange regime. Shortly after, the naira experienced a steep depreciation, falling from about N460/$ in June 2023 to N1,535/$ by year-end 2024.
This sharp depreciation exposed Nigerian companies to massive FX translation losses and rising interest burdens, which eroded shareholders’ value across the Nigerian Exchange (Ajah, 2025).
The pain was widespread but especially pronounced in the consumer goods and ICT sectors, where companies relied heavily on imported raw materials or carried substantial foreign-denominated loans. By Q1 2024, seven major listed consumer companies — BUA Foods, Cadbury Nigeria, International Breweries, Nigerian Breweries, NASCON Allied Industries, Dangote Sugar, and Nestlé Nigeria- reported a combined loss of N418 billion.
Over the two years, these companies collectively lost N867 billion, dragged down by foreign exchange exposure and ballooning interest expenses. However, by the last quarter of 2024, signs of stability began to return to the economy. The foreign exchange market grew more orderly, with the naira settling into a relatively stable band. FX volatility eased, and market liquidity gradually improved.
At the same time, companies adjusted their cost structures, refined pricing strategies, and restructured foreign obligations, creating a foundation for recovery. By the end of Q1 2025, that foundation began to yield results. After nearly two years of losses, the consumer goods sector posted a sharp turnaround in Q1 2025.
The seven companies that had reported a combined loss of N418 billion in Q1 2024 returned to a combined pre-tax profit of N289.8 billion in Q1 2025. By the end of Q2 2025, all the consumer goods companies had returned to profitability with a combined pre-tax profit of about N264 billion (Ajah, 2025).
These sharp earnings reversal highlights how currency stability and internal cost controls can quickly shift the fortunes of companies previously dragged down by macroeconomic headwinds. This captures the context in which domestic and global commentators have returned a verdict of stability for the Nigerian economy.
MTN Nigeria, Nigerian Breweries and Guinness Nigeria are on track to resume dividend payments by the end of 2025 as pressure eases after years of balance sheet strain. Cadbury Nigeria Plc and Nascon Allied Industries are also among the firms likely to pay dividends by the end of the year.
This shift signals the end of a prolonged dividend drought when many listed firms could not pay dividends due to negative retained earnings or poor performance. This would have implications for wealth creation for shareholders with a broader impact on the circular economy. The dividend freeze, which began in 2022, was rooted in macroeconomic headwinds that impacted Nigerian firms in the past years. (Michael, 2025).
Meanwhile, the Nigerian capital market is experiencing a period of rare prosperity amid the reforms. Between January and July 2025, seven months, the Nigerian bourse recorded N6 trillion worth of equities transactions, the highest since 2007. In addition, the record value of equity transactions in seven months to July doubles the N3 trillion recorded in 12 months to December 2024 (Nwachukwu, 2025).
These performances have contributed to the emergence of the Nigerian Exchange as one of Africa’s best-performing markets in 2025, with the All-Share Index soaring by 37.25 per cent year-to-date as of August 1. This rally has unlocked a staggering N26.61 trillion in capital gains, pushing the total market capitalisation from N62.76 trillion at the start of the year to N89.37 trillion. The NGX has appreciated by $17.4 billion in dollar terms, rising from $41.84 billion to $58.4 billion.
INCREASE IN THE NUMBER OF LISTED COMPANIES WITH OVER $1 BILLION VALUATION
This threshold of historical capital appreciation has propelled more Nigerian companies into the billion-dollar valuation club. Between January and July 2025, eight listed companies joined 10 companies valued at more than $1 billion as of the end of 2024. The $1billion and above companies include: MTN Nigeria – $6.6 billion, Dangote Cement – $5.8 billion, BUA Foods – $5.7 billion, Airtel Africa – $5.7 billion, BUA Cement – $3.3 billion, GTCO Holdings – $2.4 billion, Seplat Energy – $2.1 billion, Zenith Bank – $2.1 billion, Geregu Power – $1.9 billion, Lafarge Africa – $1.6 billion and Transcorp Power – $1.6 billion.
Other $1 billion-plus valued companies are Nigerian Breweries, which is $1.5 billion, International Breweries, which is $1.5 billion, Aradel Holdings, which is $1.5 billion, UBA, which is $1.3 billion, Stanbic IBTC Holdings, which is $1.05 billion, Presco, which is $1.01 billion, and Transcorp Hotels, which is $1 billion.
NON-OIL SECTOR PERFORMANCES AS REFLECTION OF ECONOMIC DIVERSIFICATION AND INCLUSIVENESS
The real test of the impact of the principal subsidy removal and harmonisation of the foreign exchange windows policies is the extent of the national economy’s diversification and inclusivity. For different administrations, a diversified and inclusive national economy has been a moving target since the crude oil exploitation became a behemoth in the hierarchy of economically significant sectors in the country.
Based on our estimates and related data, we can safely assert that this federal administration has expanded the horizon of activities in the non-oil sector.
We observe the outcome of the depreciated naira compared to the dollar on the quantum of agricultural exports, as exemplified by export earnings data.
Impressively, these exports grew by 11 per cent quarter-on-quarter (QoQ) and 65 per cent year-on-year (YoY) to N1.7trn in Q1 2025. Consequently, agriculture’s share of total exports increased to 8.3 per cent, up from 7.7 per cent in the previous quarter.
In contrast, on the import side, the total value of agricultural goods declined by -5 per cent QoQ but increased by +13 per cent YoY to over N1trn. This resulted in an agricultural trade surplus of N668.3bn, extending the positive balances that began in Q1 2024. This trend primarily reflects the impact of naira depreciation, significantly increasing the naira-denominated revenue from agricultural exports (FBNQuest Research, 2025).
Source: CBN, 2025.
Source: CBN, 2025.
The quantum increase in the volume and value of agricultural exports manifests the vigour that now characterises the classification of all non-oil exports, reaching $5.45 billion in 2024 from $4.517 billion in 2023. This is considered the highest non-oil export value in the 49-year history of the Nigeria Export Promotion Council (NEPC).
Source: NEPC, 2025.
However, the projection, in the future, is that the non-oil export performance data for the first half of 2025 at $3.225 billion from the $2.7 billion recorded in the corresponding period of 2024, is a strong indication of an increase by higher percentage points than the $5.45 billion attained in 2024. This projected leap in the non-oil sector’s fiscal returns underlines an enlarged space for the participation of people and corporates in international trade and business engagements with implications for microeconomic trends.
What is more reassuring about the sustainability of Nigerian non-oil exports’ growing profile is that they are anchored on a growing intra-African trade with a foundation in the West African region. Nigeria, for instance, shipped 663 million metric tonnes of goods to 11 ECOWAS countries in the first half of 2025. This marks a notable rise from last year, underscoring the country’s growing role in West African trade.
Beyond ECOWAS, Nigeria also exported 488 million metric tonnes of products worth $83.5 million to 21 other African nations—a 2.59 per cent increase in value from 2024. The African Continental Free Trade Area (AfCFTA) agreement opens new opportunities for Nigerian exporters, particularly small and medium-sized businesses (Eze, 2025).
The impressive returns on non-oil exports align with the $3.73 billion current account surplus recorded in the first quarter of 2025 (Q1 25). Though lower than the $3.8 billion recorded in Q4 24, it is slightly higher than the $3.69 billion recorded in 2024 (Adegbesan, 2025).
Now that the federal administration’s reforms have reordered the interface of exports and imports, it is realised that, because of Nigeria’s competitive foreign exchange market, exports are being encouraged while importations are being discouraged. This would enable the country to record a possible 70 per cent growth in Balance of Payment (BoP) in 2025 when compared to its performance in 2024.
The growth in the BoP of 2025 will be supported by the naira, which is now being traded at a competitive rate that encourages exports and discourages imports. Given Nigeria’s declining reliance on imported petroleum products, savings from reduced oil importation will also contribute to the improved BoP.
Generally, Nigeria’s BoP has been improving steadily. In 2024, the country recorded a surplus of $6.83 billion, marking a clear turnaround from deficits of $3.34 billion in 2023 and $3.32 billion in 2022. As noted earlier, in Q1 2025, Nigeria posted a current account surplus of $3.73 billion, which amounts to about 54 per cent of the total recorded for 2024.
The latest trade balance further underscores virility of Nigeria’s economy under reforms. In the second quarter of 2025, the country’s trade surplus widened by 44.3 per cent to N7.46 trillion, up from N5.17 trillion in the previous quarter. Total exports stood at N22.75 trillion in Q2, a 10.5 per cent increase from Q1 and 28.4 per cent higher than the same period in 2024. Imports, by contrast, slipped marginally by 0.9 per cent quarter-on-quarter to N15.29 trillion. This dynamic created the wider surplus that has boosted Nigeria’s external account.
Crude oil, which contributed N11.97 trillion or 52.6 per cent of total exports, posted a decline of 5.1 per cent year-on-year and 7.6 per cent compared to Q1. The fall was, however, offset by strong growth in other petroleum products, which nearly doubled year-on-year to N7.74 trillion, reflecting gains from gas exports and refined petroleum products. Non-oil exports continue to show resilience, rising to N3.05 trillion, representing 13.4 per cent of total exports.
A deeper look at sectoral performance shows that manufactured goods exports were one of the standout stories of the quarter. The sector expanded to N803.8 billion, a 173 per cent increase from Q1 and a 67 per cent rise compared with the same quarter of 2024. Key manufactured exports included vessels, floating platforms, and aluminum alloys, shipped largely to European and Asian markets.
Solid minerals also strengthened their contribution, with exports jumping by 31 per cent from Q1 to N77.3 billion, led by shipments of cement clinkers and mineral substances to destinations like China and Cameroon.
This performance highlights a gradual diversification of Nigeria’s export base beyond hydrocarbons, though oil and gas still accounted for more than 85 per cent of total exports.
BALANCE OF PAYMENT AND ACCRETION TO FOREIGN RESERVE
When this is tied to foreign exchange management, the balance of payment reflects the increasing accretion to foreign reserves, which, in more ways than one, determines the strength and rate of exchange of the naira with other convertible currencies like the dollar, pound sterling, euro, and others.
As of 9 September 2025, Nigeria’s foreign reserves were stated at $41.50 billion, but it was $36.87 billion at the same time last year. This shows a jump of more than $5 billion in accrued foreign reserves over 12 months, a direct consequence of the reform policies.
Source: CBN, 2025.
We can further project, in consideration of Nigeria’s external debt obligations, that the total coupon payments for the second half of 2025, combined with the $1.118 billion Eurobond principal, which will mature in November 2025, totalling $1.813 billion, will have little erosion on the current reserves level. This debt service threshold is covered approximately 20 times over.
Therefore, we expect external reserves to reach approximately $43 billion by year’s end, reflecting a 15.6 per cent increase from the end of June 2025 (Onwuamaeze, 2025).
Besides, with the reserves position strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market. This, in turn, should help consolidate relative stability across official and parallel markets.
In addition to a widening non-oil export base, the country is opening a new vista in manufacturing. Despite the usual challenges outlined against efficient manufacturing processes, Nigeria has been ranked third in Africa’s Manufacturing Powerhouse Report behind South Africa and Egypt. This recognition highlights Nigeria’s growing industrial base, driven by significant contributions from key players such as Dangote Group, BUA Group, Nestlé Nigeria, and Unilever Nigeria.
This ranking is credited, among other things, to the country’s large population, natural resource wealth, and recent policy reforms to boost industrial capacity. This manufacturing boom is expected to further contribute to job creation, export diversification, and economic resilience.
A significant pointer to the success of the Tinubu reforms is the exponential increase in revenue available to be shared among the three tiers of government. At its August 2025 meeting in Abuja, the Federation Account Allocation Committee (FAAC) shared a total sum of ₦2.001 trillion as July 2025 distributable revenue among the Federal Government, State Governments, and Local Government Councils. The total gross revenue in July 2025 was ₦3.836 trillion (Inokotong, 2025).
The N2.001 trillion FAAC allocation is a record high over the last 24 monthly accrued revenue shared among the federating units. The increase in revenue shared to states and local government council areas has made it possible for these tiers of government to pay the N70,000 minimum wage salary bills without recourse to borrowing from commercial banks, as obtained before the implementation of the critical twin policies of subsidy removal and harmonisation of the foreign exchange windows.
Besides, twelve states have increased the minimum wage to between N73,000 and N104,000 per month for their workers. This will reflect in a higher standard of living for workers in the affected states.
INDICATIONS OF NIGERIA’S ECONOMIC RESILIENCE
Following the National Bureau of Statistics’ (NBS) release of Nigeria’s rebased GDP figures, which placed nominal GDP for 2024 at approximately ₦372.8 trillion (US$242.64 billion), the economy recorded a real GDP growth rate of 3.13 per cent in Q1 2025, a marked improvement over the 2.27 per cent achieved in Q1 2024. The services sector was the principal driver, expanding by 4.33 per cent, underpinned by robust growth in the Financial Services (15.03 per cent). The larger GDP has lowered the debt-to-GDP ratio to 39.4 percent from 52.13 percent, below the government’s 40 percent threshold and the World Bank’s 55 percent guideline.
The increasing federal revenue has also attenuated Nigeria’s debt service-to-revenue ratio. According to the Federal Minister of Finance, Mr Wale Edun, the government’s revenue grew by 34.7 per cent in the first half of 2025 compared with the corresponding period of last year. This translates to expanding fiscal space for investments in priority sectors, which has implications for job creation, increased production, and enhanced productivity.
The 2025 fiscal framework targets N36.35trillion in total revenue, anchored on an expanded tax base, enhanced customs operations, higher returns from government-owned enterprises, and robust oil receipts based on a crude benchmark of $75 per barrel, a daily production target of 2.06 million barrels, and an exchange rate of N1,500 to the dollar.
Six months into the implementation of the 2025 budget, fresh figures have shown that five key revenue-generating agencies have collectively earned over N21.22trillion, generating a substantial amount of their revenue target and putting the Federal Government more than halfway towards meeting its full-year revenue target.
Source: Budget Office of the Federation, 2025.
Data analysis of revenue-collecting agencies showed that the Federal Inland Revenue Service (FIRS) collected a record N13.76 trillion between January and June 2025. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) followed with N5.21 trillion in oil royalties and related earnings. At the same time, the Nigeria Customs Service (NCS) contributed N2.02 trillion by collecting import duties and tariffs.
In the same vein, the Ministry of Solid Minerals generated N32.39billion, while the Nigerian National Petroleum Company Limited (NNPCL) disclosed that it had remitted N6.96trillion in statutory payments in the same period. The combined amount represents about 42.23 per cent of the N50.2 trillion revenue target set for FIRS (N25.2trillion), NUPRC (N15trillion), and NCS (N10trillion). It is also 58 per cent of the government’s N36.35trillion projection for 2025, indicating that the administration is on track to surpass its fiscal year targets if the momentum is sustained (Aina, 2025).
Source: Federal Ministry of Finance, 2025.
Deriving from the incremental revenue generation orbit of the Nigerian federation is FIRS’s announcement that, after several years of struggle, it has met the oil and gas sector revenue benchmark for 2025 for the first time in many years. Accomplishing this milestone was attributed to the sustained peace in the Niger Delta region (Nwisi, 2025).
This fiscal landmark is directly linked to the 22 per cent increase in operational oil rigs. Following recent government reforms, upstream activities have rebounded strongly, underscoring renewed investor confidence.
Data from the Organisation of the Petroleum Exporting Countries (OPEC) show that the country operated 11 rigs in June 2025, up from 9 in May. This meant that June was the month the country had its second-highest rig count this year, after January’s peak of 12 rigs (Ibrahim, 2025).
This results from Nigeria’s leading indigenous oil companies increasingly turning to the revival of idle oil wells rather than embarking on costly new drilling campaigns as they look to squeeze more value from existing assets in a volatile market environment. This shift is driven by cost-efficiency, execution speed and a desire to maximise existing infrastructure.
PURCHASING MANAGERS’ INDEX AND MICROECONOMIC TREND
The monthly Purchasing Managers Index (PMI) issued by the Central Bank of Nigeria and Stanbic IBTC Bank for July and August 2025, respectively, validates the momentum driving the Nigerian economy. This is evidence of the emerging economic ecosystem redefining the Nigerian national economic landscape, especially the private sector, under the President Tinubu-led federal administration. The PMI is a diffusion index summarising whether market conditions are expanding, staying the same, or contracting, as viewed by purchasing managers.
As a reflection of the initial contraction of the macroeconomic space in the aftermath of the implementation of the reform policies, between October 2023 and July 2024, the PMI for those months were below 50, indicating economic contraction, meaning that the economic sectors measured were declining rather than expanding.
Specifically, a reading below 50 signals that factors like new orders, production, employment, and purchases are worsening compared to the previous period, suggesting a potential economic downturn.
However, in October 2024, the PMI returned to the more than 50 index points threshold at 50.2, signifying expanding business activities across sectors measured: agriculture, manufacturing, services, and construction.
By August 2025, Nigeria’s PMI was 54.2, indicating continued private sector expansion for the ninth consecutive month.
Up from 54.0 in July, this figure marked the most substantial improvement in business conditions since April 2025, driven by robust customer demand and increased new orders. The August uptick reflects sharper increases in output and new orders, driven by rising customer demand and a greater willingness among clients to commit to new projects (Ojoko, 2025).
According to the survey, outputs increased across three sectors: services, construction, and agriculture, with manufacturing being the only laggard. Firms responded to higher demand by expanding staffing levels for the third consecutive month, although the pace of job creation softened compared to July. Purchasing activities also slowed, but input buying remained strong as businesses accumulated inventories, anticipating future growth.
Companies were able to clear backlogs for the first time in five months, indicating improved operational efficiency. Firms remain cautiously optimistic, citing plans to open new branches and ramp up marketing efforts as key drivers of future output growth (African Tech Start-ups, 2025).
A notable feature of the August report was the continued moderation of inflationary pressures. Input costs rose at the slowest pace since March 2023, while output price inflation declined for the fourth consecutive month, reaching its lowest since April 2020. Staff cost inflation also eased to a three-month low. Where wage increases occurred, they were attributed to incentives for faster project delivery and cost-of-living adjustments.
The August PMI results paint a picture of resilience and optimism. Nigeria’s private sector is steady and showing signs of acceleration, particularly in demand and output. If inflationary pressures continue to ease, businesses and consumers alike could breathe easier, and the economy may yet surprise on the upside in 2025 (Oluka, 2025).
HOUSEHOLD CONSUMPTION AND ECONOMIC REVIVAL
The recovery in consumption expenditure is at the heart of the resurgent PMI and other macro and microeconomic indicators. Consumption expenditure relates to what people, acting either individually or collectively, spend on goods and services to satisfy their needs and wants. A household’s material well-being can be expressed through access to goods and services.
Measuring consumption expenditure might be a way of measuring material well-being and, therefore, microeconomic impact. In national accounts, households’ final consumption expenditure is the most significant component of the expenditure approach to GDP. Its evolution allows for the assessment of household purchases, reflecting changes in wages and other incomes, employment and savings behaviour (Eurostat, 2024).
In tandem with the changes observed in the performance of the PMI between 2024 and 2025, we see a contraction in household spending in 2024. Nigeria’s real household consumption expenditure experienced a significant decline, with the most drastic drop occurring on a quarter-on-quarter basis: a 45.71 per cent decrease in Q1 2024 and a massive 99.24% decrease in Q2 2024.
This collapse in spending was attributed to the effects of the economic reforms, including the removal of fuel subsidies and the depreciation of the naira. These reduced consumers’ purchasing power and led to a focus on basic consumption and reduced food intake, which impacted businesses and the overall economy. Household consumption’s share of Nigeria’s GDP fell considerably in 2024, from over 58% in Q1 2023 to 32.70% in Q1 2024 (NBS, 2025).
The narration is, however, changing in 2025, as shown by indicators such as inflation rate, foreign exchange rate, job opportunities, and expanded business activities, which collectively suggest recovery in the economy. To signify recovery in consumption, it is forecast that total consumer spending in Nigeria will amount to $122.07 122.07billion in 2025, with household disposable income per capita growing to $604.10, while consumer spending per capita on food and non-alcoholic beverages is forecast to amount to $318.89 in 2025 (Statista, 2025).
We are already perceiving these expenditure movements on the balance sheets of companies in different sectors of the Nigerian Exchange.
CONCLUSION
From our standpoint, it is clear that the federal administration has undone the economic error that continued to haunt the national economy from 1973 until the second half of 2023. President Tinubu’s Federal Administration, through the twin policies of fuel subsidy removal and harmonisation of foreign exchange transaction windows, has realigned the economy for market efficiency, increased revenue generation momentum, and productivity.
We can already assert the many substantive evidence of an economy that creates jobs, expands production, enhances revenue and provides critical infrastructure. These form the bedrock of the growing but buoyant microeconomic trends now becoming observable in the Nigerian national economy.
We are even more enamoured by the Federal Administration’s varied efforts to empower the very poor and vulnerable through different social intervention programmes as part of its strategies to grow the economy through the integration and inclusiveness of all economic cadres. This emerging and vast social intervention ecosystem will form the subject of our next policy statement.
Omoniyi M. Akinsiju, PhD
Chairman,
Independent Media and Policy Initiative (IMPI)
September, 2025
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