Dear Subscriber,
First steps of 2025
2025 has begun on strong footing, with projected GDP growth of 3.6%, a stable naira at N1,660/$, and a current account surplus of 5.2% of GDP driven by trade gains. However, beneath these figures lies a stark reality. Inflation wiped out 35% of household income in 2024, pushing 10 million Nigerians into extreme poverty. With a survival threshold of N103,000 monthly ($2.15/day), the yet-to-be-implemented N70,000 minimum wage offers little relief, while corps members earned just N33,000 as of December 2024.
Inflation may ease, but the pressure remains. Resilience, however, is emerging from Nigeria’s informal sector and tech-driven innovation. Fintech, e-commerce, and digital platforms are filling economic gaps and driving growth. To sustain this, Nigeria must prioritize digital infrastructure and policy reforms to unlock the full potential of its most dynamic sector. The digital economy is no longer optional—it’s essential.
Are Imports a Drag on the Economy?
In the past three decades, Nigeria has clung on to the notion of the three in one silver bullet which is reducing imports will increase domestic production, accelerate exports, and strengthen the naira—a magic wand of some sort! This mercantilist view (imports are harmful while exports are beneficial) which has led to extensive use of import restrictions seems to have done more harm than good to the economy.
Admittedly, the structure of Nigeria’s imports is worrisome. For example, in FY2023, fuels and food imports accounted for 52% of Nigeria’s imports while telecommunications equipment and industrial chemicals amounted to 1.8% and 9.5% of merchandize imports, respectively. The big question is, “why?”
It was Phaedrus that said, “Things are not always what they seem; the first appearance deceives many.” Import dependency is only symptomatic of production deficiency. Thus, what Nigeria needs is not import restrictions but a boost in productivity and export diversification. To achieve this, Nigeria needs to address supply-side constraints, improve trade infrastructure, and enhance competitiveness through deep reforms. In addition, the structure of Nigeria’s imports will need to shift from consumer goods to producer goods
In this latest edition of FDC Prism, the Think Tank provides an in-depth analysis of Nigeria’s evolving economic landscape, shedding light on what lies ahead for the country in the new year.
Enjoy your read!
