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Has the Nigerian economy stabilised? 03 Sep 2025

After her meeting with President Bola Tinubu at the Aso Rock Presidential Villa on 14 August 2025, Nigeria’s former finance minister and the Director-General of the World Trade Organisation, Ngozi Okonjo-Iweala, said the administration has “worked hard to stabilise the economy.” The respected economist also endorsed the economic reforms of the Tinubu administration, describing them as moving “in the right direction”. For her, what should now follow are policies focused on “growth” to create jobs and “social safety nets” to cushion the hardship being experienced by the populace due to the reforms.

These comments were greeted with a cacophony of reactions. Many questioned what “economic stability” could possibly mean, as the general idea conveyed by the terminology appears to contradict the economic realities of most citizens. 

Tinubu’s key economic reforms include the removal of petrol subsidies and introduction of market exchange rates, both implemented within three weeks of his presidency in mid-2023. These policies drove up prices of local and imported products significantly. Many businesses became distressed. And citizens became poorer. These issues still persist, making it difficult to accept any notion that the economy has become stable.

Three macroeconomic indicators feature prominently in technical definitions of “economic stability”: output growth, inflation, and unemployment. To achieve stability, economists generally agree that an economy requires GDP growth rate at a level considered “normal”, low inflation, and low unemployment, all sustained over time. Most advanced economies, like the United States, consider 2-3 percent annual GDP growth rate normal. However, emerging markets and developing economies, including Nigeria, typically need growth rates of 6-7 percent to attract or retain foreign investment. Annualised growth below 2 percent generates concerns about weak recovery or looming crisis.

In the 10-year period between 2015 and 2024, Nigeria’s annualised GDP growth rate averaged 1.7 percent, according to IMF data. By this measure alone, this was a period of economic instability, which encompasses the first 19 months of the Tinubu administration. The IMF projection is that Nigeria’s output growth will reach 3.4 percent in 2025. This would be the fourth year since the 2020 pandemic recession that Nigeria would achieve 3 percent or higher growth: 2021 (3.6 percent), 2022 (3.3 percent), and 2024 (3.4 percent). The exception was 2023 (2.9 percent), when policy shocks introduced by the Tinubu administration put a downward pressure on what was already weak trend growth. 

This data does not credit Tinubu with the “stability” of the economy. Rather, after his policy had slowed down the post-Covid recovery in his first year in office, he has merely returned the economy to the pre-existing level of growth. 

But what most eloquently speaks about Nigeria’s continuing economic instability is inflation. Data from the National Bureau of Statistics (NBS) shows Nigeria’s inflation rate at 21.88 percent in July 2025. In 2022, the country’s annualised inflation rate was 18.8 percent, per IMF data. Tinubu’s reform drove inflation to 24.7 percent in 2023 and further up to 33.2 percent in 2024. The current policy choices are unlikely to drive down inflation to a single digit – the long-term target of the Central Bank of Nigeria – in the foreseeable future.

Nigeria’s unemployment statistics present a complex picture. A new statistical methodology dramatically revised downward Nigeria’s unemployment rate of 33.3 percent in Q4 2020 to 4.1 percent in Q1 2023. The rate subsequently climbed up to 5.3 percent in Q1 2024 and the latest data by the NBS puts the national unemployment rate at 4.3 percent in Q2 2024. This data does not indicate an improving jobs market. But as senior World Bank economists, Jonathan Lain and Utz Pape, noted in October 2023, in “Nigeria’s dichotomy: low unemployment and high poverty rates”, the country’s new unemployment data “has proved a difficult statistic to interpret.”

Economic stability does not precede strong economic growth. But the big policy decision Nigeria will continue to grapple with is whether removal of petrol subsidy, given its high inflationary and poverty impact, represents sustainable economic policy. Empirical evidence suggests the much-abused petrol subsidy was the most effective ‘social safety net’ the country has had. Some members of the elite were profiteering from the pro-poor policy. Instead of cracking down on the fraud, many believed it was better to end the programme. Unfortunately, past and current safety net programmes designed to cushion the effect of higher petrol prices have failed to preserve living standards among the masses. 

Economic (fiscal and monetary) policymakers typically implement short-term economic stabilisation programmes to counter shocks that may undermine long-term growth. The specific measures, depending on the issues they want to address, e.g., economic slowdown, spiking inflation, or disinflationary pressure, usually have a short-term orientation with the aim of quickly restoring long-term targets. Introducing policies that would further destabilise the economy as a strategy for achieving long-term growth, the hallmark of Tinubunomics, is counterintuitive.

Achieving the long-term growth target of Tinubu’s reform is not guaranteed. It is dependent on internal political dynamics, the economic cycle, and geopolitical factors. Two years after setting a target of 6 percent GDP growth rate for his administration, the economy is growing only at half the rate. He has now set a higher target of 7 percent by 2027. 

Nigeria’s long-term economic stability depends on fiscal responsibility, lower business cost, adequate public investment in education and healthcare, improvement in power supply, and confidence in public and market institutions. None of these improvements can take place without strengthening the rule of law.

Jide Akintunde is Managing Editor, Financial Nigeria publications, and Director, Nigeria Development and Finance Forum.