Nigeria is in trouble economically. Therefore, those in charge at the federal, state, and local government levels should buckle down and tackle the cost-of-living crisis tormenting Nigerians.
The new numbers from the IMF graphically resonate with the misery of the populace. In its report, the IMF says Nigeria’s GDP per capita has fallen to its lowest level of $835.49 in 2025 from $877.07 in 2024, indicating a 4.74 per cent dip.
The GDP per capita is a country’s economic output per person and is calculated by dividing the GDP value of a country by its population.
Over the past decade, Nigeria’s GDP per capita has plummeted by 74.08 per cent, falling from $3,222.7 in 2014 to its current level.
This means the economy is growing at a pace not fast enough to match the rapid population growth. That is a recipe for economic disaster.
A combination of naira devaluation and soaring inflation has reduced the purchasing power of an average Nigerian. Even though the economy grew 3.46 per cent in the third quarter of 2024, most Nigerians hardly took notice because, in their personal lives, they have not seen any improvement economically speaking.
Indeed, Nigeria’s GDP per capita remains one of the lowest in Africa. Comparative data for 2025 places South Africa at $6,517.1, Morocco at $4,470.6, Tunisia at $4,396.2, Egypt at $3,160.1, Ghana at $2,189.3, and Kenya at $2,186.6.
Luxembourg, Singapore, Ireland, and Norway have the highest GDP per capita globally in the order.
These figures indicate that Nigeria is among the least economically prosperous countries in sub-Saharan Africa, falling within the lower GDP per capita bracket of $500 to $2,500.
However, the IMF projects a gradual improvement in Nigeria’s GDP per capita, expecting it to rise to $940.2 by 2026, $1,001.3 by 2029, and $1,047.08 by 2030. This is not good enough.
This slow recovery suggests Nigeria will only cross the $1,000 threshold again by 2028, far behind many of its regional and global counterparts.
Aside from the sharp fall in GDP per capita, Nigeria has also dropped from being the largest economy in Africa to the fourth position behind South Africa, Egypt, and Algeria. Nigeria’s GDP is $362.8 billion, falling from a high of $509.97 billion in 2014.
As of December 2024, Nigeria’s inflation stood at 34.88 per cent, a 30-year high. For inclusive prosperity, the inflation rate needs to drop considerably.
President Bola Tinubu has said that his government is targeting a 15 per cent inflation rate in 2025, but analysts have cautioned that it may only drop below 30 per cent. The naira exchange rate to the dollar depreciated by 40.9 per cent by December.
Tinubu, after taking over from the ineffectual President Muhammadu Buhari (2015-2023), has targeted a 6.0 per cent annual growth. He did not achieve that in 2024, and he is not likely to achieve it in 2025.
The President has also targeted an 18 per cent tax-to-GDP ratio by 2026 and a $1 trillion GDP by 2030.
Notwithstanding, the drop in per capita income largely shows Nigeria’s dwindling fortune.
Ordinarily, a large population is supposed to be an advantage because it provides a big market for domestic output. In Nigeria’s case, the population is not being used advantageously to push the economy to greater heights because of poor policies.
Tinubu has made some bold but controversial reforms. These reforms have created the current cost-of-living crisis in Nigeria. One area that he has not touched is the sheer humongous waste at the federal level that has continued to push up recurrent expenditures in the annual budgets. The cost of governance must go down.
The recurrent expenditure in the 2025 budget is N13.64 trillion. There should be concerted efforts to prune it down by taking measures to reduce the size of recurrent spending at the federal level.
The United States – the largest economy in the world with a GDP of $27 trillion – has seen the need to cut costs at the federal level by setting up the Department of Government Efficiency, headed by the richest man in the world, Elon Musk. So, it makes a lot of sense for an economic crisis-ridden Nigeria to also take steps in that direction.
The federal, state, and local governments should stop behaving as if the country is rich. The country is poor, and modesty must be reflected in expenditures to show the public that austerity is not only for the masses.
Furthermore, it is highly illogical for poor countries to increase running costs when rich countries are cutting costs.
Also, for it to be prosperous, Nigeria needs to make the states very productive. Most of the states are still dependent on federal allocations to run their budgets, which is unsustainable. A country cannot grow when the sub-national units depend on the centre and are unproductive. Nigeria will greatly benefit from a far-reaching political and economic restructuring that would make the country much more prosperous.
It is noteworthy that the initial VAT sharing formula of 20 per cent equality, 60 per cent derivation and 20 per cent population, as proposed by the Presidential Tax Reform Committee in the tax reform bills, was rejected by governors for a revised VAT sharing formula of 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.
However, Nigeria needs to quickly get to a level where those who produce more get more or a fair share as an incentive for productivity and engendering healthy competition among the federating units rather than a dependency mentality.
Efforts must be increased to reduce the country’s dependence on imports, while corruption in government offices must be reined.
Although the economic situation is dire, and most Nigerians live from hand to mouth, it has not been all doom and gloom for the country.
First, the crude refining sub-sector of the oil industry is growing substantially as the Dangote Refinery says it will ramp up production to a full capacity of 650,000 barrels per day in a few months.
With the Port Harcourt and Warri refineries coming on stream, it is envisaged that the crude refining sector will continue to expand, and exports from the refineries will continue to earn Nigeria some much-needed foreign exchange to bolster the economy.
There has also been an increase in Nigeria’s oil production. The latest Monthly Oil Market Report of the Organisation of Petroleum Exporting Countries shows that Nigeria’s crude oil production rose above 1.5 million bpd in January.
According to the report, Nigeria produced an average of 1,539,000 bpd in January, slightly higher than the 1,485,000-bpd recorded in December.
With the rising oil production, there will be more inflow of foreign exchange, which should shore up the country’s external reserves and strengthen the naira.
The government should work hard to reduce inflation in 2025 and strengthen the naira.
The Nigerian Economic Summit Group has forecast naira appreciation and a reduction in inflation in 2025, provided the government implements effective stabilisation measures.
The government must be wary of removing subsidies from essential services. Every country subsidises one product or the other. All economic reforms must be geared towards one goal: making life better for the citizenry.
