Nigeria, a country long plagued by economic instability, is finally showing signs of recovery, thanks to a series of bold reforms and a boost in oil production. After enduring nearly two years of painful economic measures that triggered a cost-of-living crisis for millions of Nigerians, there seems to be a light at the end of the tunnel. From a surge in oil revenue to an impressive rebound in its stock market, the country’s economic outlook is brighter than it has been in years. But with many challenges still on the horizon, the question remains: Is the worst behind Nigeria?
A New Dawn for Nigeria’s Oil Industry
For years, Nigeria’s oil industry—its most important economic sector—has faced challenges ranging from militant attacks in the Niger Delta to dwindling production levels. But January 2025 saw a marked improvement, as Nigeria’s crude oil output hit a four-year high, averaging 1.54 million barrels per day. This surge in production is particularly significant because crude oil accounts for about 80% of Nigeria’s foreign exchange inflows, meaning that increased oil exports are essential for the country’s economic recovery.
“Security in the Niger Delta has improved significantly, and this has led to a substantial increase in oil production,” says Dr. Amina Bello, an energy economist based in Lagos. “The stability is helping boost investor confidence and allowing Nigeria to reap the benefits of higher crude prices.”
This improvement in oil production, which exceeds Nigeria’s OPEC+ quota, is a welcome development. After years of underproduction and attacks on oil facilities, the country is now positioned to capitalize on its resources. Increased revenue from oil is breathing life into Nigeria’s struggling economy.
Stabilizing the Naira
Another sign of Nigeria’s economic recovery is the recent stabilization of the naira, the national currency. In June 2023, the Central Bank of Nigeria (CBN) made the controversial decision to allow the naira to trade more freely on the market, a move that led to a sharp depreciation, with the naira losing nearly 70% of its value against the US dollar.
However, as oil revenue streams have picked up, the naira has started to stabilize, offering relief to Nigerian citizens and businesses alike. As of February 2025, the naira has gained ground, strengthening its position in the foreign exchange market. This has, in turn, helped reduce the cost of imports, offering some relief to businesses and easing inflationary pressures.
A Shift in Investor Sentiment
The signs of recovery have not gone unnoticed by international investors. The extra yield that investors demand to hold Nigerian dollar-denominated debt has fallen to a five-year low. This drop in the yield premium signals a growing confidence in Nigeria’s economic future, a dramatic turnaround from the heights of the 2023 crisis.
“Nigeria has certainly caught the attention of investors,” says Bankole Adeyemi, an economist with a focus on African markets. “The recent improvements in oil production and the stabilization of the naira are sending positive signals to the market. Nigeria is beginning to look like a more attractive investment destination again.”
The Nigerian stock market has also benefitted from the uptick in investor sentiment. The Nigerian Stock Exchange’s main index has risen by 11% since the start of December, outperforming the MSCI Emerging Markets Index, which has only gained 3%. While some analysts caution that the rally could be temporary, the trend is nonetheless encouraging.
Nigeria’s GDP: A New Era
Another key factor contributing to optimism is Nigeria’s upcoming rebasing of its Gross Domestic Product (GDP) data. The national statistics agency is expected to release revised figures next month, which will see Nigeria regain its position as Africa’s largest economy. Current estimates suggest that the country’s GDP could be revised upward to nearly $500 billion, surpassing South Africa, which has held the top spot for several years.
The rebase is expected to reflect Nigeria’s growing digital economy, with sectors like fintech, e-commerce, and mobile services contributing significantly to overall economic output. According to financial experts, this rebased GDP will present a more accurate reflection of the country’s economic size and potential.
Dr. Kola Okunoye, an economist and former director at Nigeria’s National Bureau of Statistics, explains: “The rebasing will give a more accurate picture of the economy. It will include sectors that were previously underrepresented, such as technology and services, which are growing rapidly.”
A Small Victory in Inflation
Inflation has been one of the most persistent challenges facing Nigeria, pushing up food and fuel prices and exacerbating poverty. However, the latest inflation data has shown promising signs of improvement. The country’s inflation rate fell to 24.5% in January, down from nearly 35% the previous month. This decline, albeit modest, is a significant achievement after months of soaring prices.
For many Nigerians, this drop in inflation is a welcome relief. With food prices, which account for a significant portion of household expenses, continuing to rise, the reduction in inflation offers some hope for the future.
“The decline in inflation is a positive sign that the economy is stabilizing,” says Adebayo Olufemi, a Lagos-based financial analyst. “While it is still high, this reduction gives the central bank some room to maneuver. We could see interest rates come down in the coming months, which would give the economy a much-needed boost.”
President Tinubu’s Challenge
While the signs of recovery are clear, President Bola Tinubu’s administration still faces significant hurdles. The economic reforms that have been implemented, while necessary for long-term growth, have come at a steep cost. Food and fuel prices have skyrocketed, and many Nigerians continue to suffer from the impacts of the cost-of-living crisis. With more than half of Nigeria’s population living below the poverty line, the road to recovery will require careful management and additional support for vulnerable citizens.
Tinubu, who assumed office in May 2023, has made stabilizing the economy one of his top priorities. His administration has implemented controversial policies, including the removal of fuel subsidies and the devaluation of the naira. These moves have led to widespread hardship but have also paved the way for the improvements seen in recent months.
However, the question remains: Can the momentum continue? With the global economy facing uncertainties and domestic challenges still present, Nigeria’s path to economic prosperity is far from guaranteed.
