In the often-polarised world of economic analysis, few endorsements carry as much weight as those from JP Morgan. The global financial giant’s latest report on Nigeria offers a striking counter-narrative to the cautious outlooks of Fitch Ratings and Chatham House, presenting instead a compelling case for the country’s accelerating recovery.
According to the April 2025 assessment, Nigeria’s economy, long hampered by fiscal imbalances and policy uncertainty, is now staging a remarkable turnaround. The report highlights five key pillars of progress:
1. A dramatic FX reserve recovery
Perhaps the most eye-catching revelation is the surge in Nigeria’s net foreign exchange reserves—from a precarious $4 billion in 2023 to $23.11 billion by 2024. This 478 percent increase reflects the success of the Central Bank of Nigeria’s (CBN) liberalisation efforts, which have reduced arbitrage opportunities and restored liquidity in the official market.
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Critics had warned that the naira’s floatation would trigger runaway depreciation. Instead, JP Morgan notes that the reforms have “enhanced market transparency”, attracting renewed portfolio inflows and stabilising the currency after initial volatility.
2. Trade surplus signals structural shift
Nigeria recorded a $6.83 billion trade surplus in 2024 (Arise), a stark reversal from years of deficits fuelled by fuel imports and weak non-oil exports. The report attributes this to:
· Higher petroleum exports due to NNPC’s operational reforms and the Dangote Refinery’s impact on product shipments.
· Declining imports as local manufacturing gains traction in sectors like cement, fertilisers, and processed foods.
This surplus has eased pressure on the naira and provided a buffer against external shocks—a critical advantage in an uncertain global economy.
“Critics had warned that the naira’s floatation would trigger runaway depreciation. Instead, JP Morgan notes that the reforms have “enhanced market transparency”, attracting renewed portfolio inflows and stabilising the currency after initial volatility.”
3. NNPC’s transformation: From fiscal drain to profit engine
JP Morgan singles out the restructuring of NNPC Limited as a “game-changer”, citing:
· Improved governance under the Petroleum Industry Act (PIA), reducing opaque subsidies and revenue leakages.
· Strategic partnerships with international oil companies, unlocking investments in deepwater and gas projects.
· Diversification into power and renewables, positioning the firm as an integrated energy player rather than a crude-dependent behemoth.
· Encouraged IPO initiative – The stakeholders urged the Ojulari-led NNPC management team and the board to expedite action towards completing the planned Initial Public Offer (IPO) of the company. (arise)
These shifts have turned Nigeria’s oil sector—long synonymous with inefficiency—into a driver of fiscal stability.
4. Frontier market momentum
The report designates Nigeria as a “top frontier market”, a label that could catalyse billions in investment flows. Key factors include:
· Policy coherence—unlike the stop-start reforms of past administrations, Tinubu’s team has maintained momentum on tax, energy, and regulatory changes.
· Debt management—while still high, Nigeria’s debt-to-GDP ratio has stabilised at 51.3 percent (World Economics), with Eurobond yields falling as default risks recede.
· Digital economy growth—fintechs like Flutterwave and Opay are expanding financial inclusion, drawing parallels with India’s UPI revolution.
5. The road ahead: Sustaining the momentum
Despite the optimism, JP Morgan cautions that Nigeria’s recovery remains “fragile but promising”. To consolidate gains, the report urges:
· Further subsidy rationalisation, particularly in electricity, to free up fiscal space.
· Accelerated power sector reforms, building on state-level initiatives like Lagos’s embedded generation projects.
· Broader tax base expansion, reducing reliance on volatile oil revenues.
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Why this report matters
Sceptics will note that JP Morgan—like any institution—isn’t infallible. Yet its assessment carries disproportionate influence in investor circles. By validating Nigeria’s reform trajectory, the report could:
· Lower borrowing costs as perception of risk declines.
· Attract equity investments in infrastructure and tech.
· Rebrand Nigeria from a “high-risk” market to a “high-reward” opportunity.
Conclusion: An inflection point, not a victory lap
Nigeria’s economic story has seen false dawns before. But with reserves rebounding, trade balances improving, and institutions like NNPC becoming more accountable, this recovery appears built on sturdier foundations.
The challenge now is execution—ensuring reforms permeate beyond Lagos and Abuja into the broader economy. If sustained, JP Morgan’s “frontier market” tag may soon give way to something even more coveted: “emerging market” status.
For a nation long accustomed to pessimistic headlines, that would be a renaissance worth celebrating.
Dr Oluyemi Adeosun is BusinessDay’s Chief Economist.
