Nigeria’s economy posted a modest 3.98% year-on-year GDP growth in the third quarter of 2025, according to the latest report from the National Bureau of Statistics (NBS). This marks a slight improvement from the 3.86% recorded in Q3 2024, but falls short of the 4.23% achieved in Q2 2025, signaling a slowdown in momentum. The non-oil sector, which dominates with a 96.56% contribution to real GDP, expanded by 3.91%, driven by robust performances in agriculture (up 3.79%), information and communication (up 5.78%), real estate, financial services, trade, construction, and manufacturing. The services sector alone accounted for 53.02% of aggregate GDP, underscoring its pivotal role in the economy.
A key bright spot has been the manufacturing sector’s contribution to fiscal revenues. In the first half of 2025, it led Value Added Tax (VAT) collections with N584.63 billion – 26.6% of the total N2.197 trillion in local non-import VAT – outpacing information and communication (17.51% in Q1) and mining and quarrying (17.02% in Q1). This performance highlights manufacturing’s resilience despite headwinds like high inflation, volatile exchange rates, and infrastructure deficits, including erratic power supply and rising unsold inventories. Overall VAT revenue for H1 2025 climbed 37.7% year-on-year to N4.12 trillion, reflecting post-subsidy and exchange rate unification gains since Q3 2023.
Yet, beneath this veneer of progress lies a troubling undercurrent of vulnerabilities that threaten to erode hard-won gains. Public debt ballooned to N152.39 trillion as of June 2025 – equivalent to $99.68 billion – the highest on record in naira terms, per the Debt Management Office (DMO). This surge, fueled by fresh borrowings and naira depreciation, has pushed the debt-to-GDP ratio to around 36.38% for the year, per IMF projections, though the World Bank anticipates a dip below 40% by year-end due to tighter fiscal management. External debt alone stands at N70.63 trillion (47.28% of total), amplifying risks from global interest rate hikes and currency fluctuations.
The naira, meanwhile, has continued its downward spiral, weakening further against major currencies. As of December 1, 2025, the parallel market rate hovered at N1,470 per US dollar, while the Canadian dollar traded at N1,030–N1,040, exacerbating import costs and fueling imported inflation. This depreciation has compounded the pain for households and businesses reliant on dollar-denominated inputs, from raw materials to machinery.
The Nigerian Exchange (NGX) mirrored these pressures, suffering its worst monthly loss in history with a N6.54 trillion evaporation in market capitalization during November – a 6.69% month-on-month plunge to N91.29 trillion. The All-Share Index tumbled 6.88% to 143,520.53 points, driven by panic selling ahead of the 30% Capital Gains Tax (CGT) implementation on January 1, 2026, alongside broader concerns over tax hikes and elevated interest rates. Despite year-to-date gains of N28.57 trillion (45.45%), the rout underscores fragile investor confidence amid policy uncertainties.
Analysts, including those from the Institute of Capital Markets at Nasarawa State University, describe Q3’s performance as “broadly positive but mixed,” with non-oil momentum offsetting oil sector contractions (-5.53% quarter-on-quarter). The International Monetary Fund (IMF) has revised its 2025 growth forecast upward to 3.9%, citing higher oil production (1.64 million barrels per day in Q3) and fiscal reforms. However, the World Bank warns of persistent inflation at 16.05% in October and a 27% benchmark interest rate stifling activity.
These macroeconomic strains are hitting everyday Nigerians hardest, amplifying discussions on social media and public forums about tangible impacts. Daily petrol consumption hit a one-year high of 56.74 million liters in October – up 31.86% from September’s 43 million – with Dangote Refinery supplying 18.03 million liters (34% of demand), per the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Yet, imports still cover 27.6 million liters daily, keeping pump prices volatile and transport costs elevated. Over the past year, monthly averages reached 661.5 million liters, alongside 17.13 million liters of diesel and 6,095 metric tonnes of LPG, highlighting entrenched energy dependence.
Inflation, at a three-decade peak of 34.8%, has eroded purchasing power, with food prices – a major driver – squeezing household budgets. Youth unemployment, while down to 6.5% in Q2 2024 (from 8.4% in Q1), remains disproportionately high at 7.8% for young women versus 5.4% for men, per ILO data. Overall unemployment stands at 4.3%, but informal employment dominates at 93%, leaving 4.18 million youths (15-34 years) jobless and vulnerable. The ILO emphasizes that women, youth, and persons with disabilities are most excluded from decent work, with 12.5% of youths neither in employment, education, nor training.
Experts are sounding the alarm: without targeted expenditure reforms, these pressures could spiral into deeper social unrest. The Centre for the Promotion of Private Enterprise (CPPE) has warned against a proposed excise duty hike on non-alcoholic beverages (soft drinks), labeling it “counterproductive” in the current climate. The tax, justified for public health amid rising non-communicable diseases, could trigger factory closures, job losses, and reduced VAT/CIT revenues – potentially N197 billion in foregone income over 2022-2025, per past analyses. CPPE urges nutrition education and industry collaboration over punitive levies, noting the sector’s thin margins and Nigeria’s low per capita soft drink consumption globally.
As Nigeria navigates this precarious balance, the call for reforms grows louder. Prioritizing youth skills via programs like the 3 Million Technical Talent initiative, bolstering domestic refining to cut import reliance, and streamlining taxes to restore investor trust are non-negotiable. With GDP at N113.59 trillion nominally (up 18.12% year-on-year), the economy has room to pivot – but only if policymakers act decisively to channel growth into jobs, affordability, and inclusion. Failure risks turning flickering progress into outright stagnation, leaving millions further behind.
Nigeria’s Economy: Growth Flickers Amid Debt Surge, Currency Woes, and Jobless Youth – Reforms Urged Before It’s Too Late
