Nigeria, Africa’s most populous country, is about to begin a new year with a ₦47.9 trillion budget—its largest ever. But what does this mean for everyday Nigerians? Will it create better infrastructure and more jobs, or will it be wasted on unnecessary expenses and growing debt?
The answer depends on how wisely the government uses these funds and whether it can turn its promises into real improvements for the people.
For a country with so much potential, the 2025 budget brings hope for change, but the big question is whether it will lead to real progress or just another year of broken promises.
Economic challenges in 2023 and 2024
In 2023, reforms meant to fix Nigeria’s economy—such as removing fuel subsidies and unifying the exchange rate—left many Nigerians frustrated. Instead of fixing the economy, these changes showed how weak the country’s systems really are.
By August 2024, after almost 15 months of President Tinubu’s leadership, public frustration reached a boiling point. While the government lived well, ordinary Nigerians were asked to endure hardship and be patient. This gap between the government and the people led to a 10-day strike called “EndBadGovernance,” which spread through major cities like Lagos and Abuja. The strike showed just how deep the dissatisfaction with the slow pace of reforms had become.
Although there has been some progress in boosting income from non-oil sources and reducing costly fuel subsidies, the benefits haven’t reached most Nigerians. Inflation is still very high at 34.60 percent, the highest it’s been in nearly 30 years. Meanwhile, the cost of living continues to rise, leaving many families struggling to make ends meet.
To address long-standing issues like unequal revenue sharing and freeloading by some states, the government introduced a new tax reform. However, this has added to tensions, especially in the northern regions, where economic hardships are already severe.
Years of political instability and rising living costs have made Nigerians lose trust in the government. But despite these challenges, many still hope that change is possible and that a fairer, more prosperous future can be achieved.
A glimmer of hope
Fuel prices have slightly dropped to ₦935 per litre from ₦1,050, offering some relief. But with inflation still high and growth projections uncertain, the big question remains: Will 2025 bring recovery, or will the struggles continue?
The role of budget execution in 2025
For Nigeria, 2025 presents both a challenge and an opportunity. The country is expected to grow, with GDP projected to rise to 3.68 percent, up from 2.74 percent in 2023.
However, experts warn that this growth may only be on paper unless the government spends its budget wisely on things that will benefit the country in the long run. “Sustainable growth requires focusing on infrastructure, education, and health, not just on projects with little impact,” says Adebayo Olufemi, a development economist.
Turning this growth into real benefits for Nigerians will depend on how well the government can manage its finances. If it uses its record budget to improve infrastructure and focuses on reducing inequality, the country could make significant progress, says Oyekan Idris, a capital market analyst. This could lead to better roads, schools, and hospitals—things many Nigerians are in desperate need of.
Read also: Nigeria to hold 2025 oil licensing bid round for ‘discovered but undeveloped fields’
The shift from oil dependency
Nigeria’s economy is changing, moving away from heavy reliance on oil revenues to non-oil sources. A recent report shows that oil revenues have not met expectations due to price changes and inefficiencies in production.
In 2023, oil and gas revenues fell short of projections, generating ₦7.87 trillion instead of the expected ₦9.38 trillion. After deductions, only ₦4.93 trillion went into the Federation Account, highlighting the problems of an oil-dependent economy.
However, non-oil revenues exceeded expectations, reaching ₦9.89 trillion in 2023, a 31.2 percent increase. This was driven by strong performances in corporate income tax (₦4.27 trillion) and VAT (₦3.64 trillion), showing the potential for diversifying Nigeria’s revenue sources. But to make this progress last, the country will need sustained and smart reforms.
Despite this success, Nigeria is still under financial pressure. In 2023, total spending reached ₦23.04 trillion, with ₦8.56 trillion going to debt servicing—37 percent of total spending. Inflation, at 34.2 percent in June 2024, continues to erode purchasing power, leaving Nigerians struggling with rising costs while essential sectors like infrastructure, education, and healthcare remain underfunded.
Looking ahead, the government expects steady growth in the next few years, supported by a growing nominal GDP. However, in dollar terms, the economy is shrinking, showing that there are still major vulnerabilities. Inflation, while expected to drop, remains a key issue that needs urgent attention to make sure growth benefits ordinary citizens.
Will 2025 be the year of change?
As 2025 approaches, there’s hope, but also fear that promises won’t be kept. The outlook for 2025 is a mix of optimism and caution. Political instability and corruption are big challenges, but the real question is: how can we reduce their impact and achieve steady growth?
Sustainable growth isn’t about big jumps in GDP one year followed by sharp drops the next. It’s about steady, reliable growth that can weather setbacks. The 2025 budget shows that stable growth is possible, with non-oil sectors showing positive results.
To keep the momentum going, Nigeria needs to focus on increasing revenue. This will help reduce the burden of debt payments and allow the government to spend more on important areas like infrastructure and social services. But just having more revenue isn’t enough—it must be spent wisely. The government also needs to manage debt carefully.
This approach fits with the Domar Model, which says that for a country’s economy to stay stable, its growth rate should be higher than the interest it pays on debt. So, while government spending can help growth, it must be paired with measures to ensure the economy grows faster than debt payments, reducing the risk of a debt crisis.
For millions of Nigerians, 2025 isn’t just about numbers or policies; it’s about whether they’ll finally see better roads, schools, and hospitals. “Hope remains,” says Idris, “but the fear of another year of unfulfilled promises is just as strong.” Whether Nigeria can turn the corner on growth and stability in 2025 will depend on how well the government manages its finances and addresses the needs of its people.
Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).
