Nigeria’s economic outlook for 2025 shows promising growth, with Africa Sovereign Credit forecasting an acceleration of the country’s GDP growth to 3.8%, up from 3.4% in 2024. This expansion is expected to be fueled by significant tax reforms and strong performance in the service sector.
The growth forecast is underpinned by anticipated improvements across the services and industrial sectors, alongside the informal sector, which is expected to be more accurately captured following the rebasing of Nigeria’s GDP. According to the National Bureau of Statistics (NBS), Nigeria’s economy saw a solid 3.84% expansion in real terms during the fourth quarter of 2024. This marked an improvement compared to the 3.46% growth recorded during the same period in 2023, as well as the performance in the preceding quarter.
The services sector emerged as a key driver of this growth, expanding by 5.37% and accounting for 57.38% of Nigeria’s GDP during the fourth quarter. This continued strong performance within the services sector is expected to remain a major contributor to the country’s economic growth in the coming year.
In addition to sectoral growth, Africa Sovereign Credit also predicts a substantial improvement in Nigeria’s current account surplus, estimating it will reach 5% of GDP in 2025, up from an expected 1% in 2024. This improvement is largely attributed to an anticipated surge in Nigeria’s trade surplus.
Another area of focus is Nigeria's fiscal deficit, which is forecasted to narrow from 5.2% of GDP in 2024 to 4.3% in 2025. The anticipated reduction in the deficit could be more pronounced if the proposed tax reform bills currently under deliberation are successfully implemented.
The ongoing tax reforms include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. These reforms aim to create a more equitable and efficient tax administration system, leading to improved tax collection. Should these bills be approved, the country could see a more transparent and streamlined tax system, providing a boost to national revenue.
In February, the Nigerian Senate held a two-day public hearing at the National Assembly to discuss these crucial reforms. The event brought together key stakeholders, including Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), and Mele Kyari, Group CEO of the Nigerian National Petroleum Company Limited (NNPCL). Members of the Federal Executive Council, heads of relevant agencies, and the Comptroller General of Customs, Adewale Adeniyi, also participated in the discussions.
The tax reform bills, which were submitted by President Bola Tinubu to the National Assembly, have undergone extensive consultations over a period of five months before being passed for a second reading in the House of Representatives. The bills are designed to restructure Nigeria’s tax system, enhancing transparency, improving efficiency, and boosting revenue collection.
Discussions during the public hearings emphasized the need to harmonize tax administration, eliminate the burden of multiple taxation, and establish a structured framework for resolving tax disputes. One notable proposal is the creation of an ombudsman system aimed at resolving tax-related conflicts between taxpayers and government agencies, further streamlining the nation’s tax processes.
If successful, these tax reforms, combined with continued growth in the service sector, will play a pivotal role in driving Nigeria’s economic expansion to 3.8% in 2025, setting a positive trajectory for the country’s future.