According to a report from CFG Advisory, a Lagos-based research and
advisory firm, Nigeria’s economy lost its position as the largest
economy in Africa due to a combination of factors, primarily driven by
the prolonged devaluation of the Naira, low productivity, and
stagflation. Stagflation, a troubling economic condition marked by high
inflation, stagnant economic growth, and elevated unemployment, has
significantly eroded the nation’s economic standing. CFG Advisory said that these
challenges have collectively led to a massive $310 billion reduction in
Nigeria’s Gross Domestic Product (GDP) over the last decade.
Nigeria’s economy, which stood at $510 billion following the GDP rebasing in 2014, had shrunk to $199.7 billion by 2024, according to data from the International Monetary Fund (IMF). This contraction pushed Nigeria down to the fourth-largest economy in Africa, now trailing South Africa, Egypt, and Algeria. The devaluation of the naira has been identified as a key driver of this decline, as the currency lost significant value over the years, affecting the dollar-measured size of the economy despite nominal growth in naira terms.
Adeola Adenikinju, president of the Nigerian Economic Society, emphasized the need for Nigeria to reclaim its economic dominance by diversifying its economy and boosting productivity. He explained that rebasing the GDP would result in an immediate increase in its nominal value since it would account for the growth of new sectors over the last decade. However, this technical adjustment alone cannot sustain long-term growth unless the structural issues dragging the economy are addressed.
The report by CFG Advisory titled "From Reform Fatigue Quagmire to Sustainable Growth" pointed out that persistent policy inconsistencies since Nigeria’s recovery from the COVID-19 recession have exacerbated economic vulnerabilities. Exchange rate instability, in particular, played a critical role in shrinking the dollar-denominated GDP. In 2014, the naira exchanged between 168 and 199 to the dollar, but by January 2025, it had depreciated to 1,549.65, representing a staggering sixteenfold devaluation over a decade.
Muda Yusuf, director and CEO of the Centre for the Promotion of Private Enterprise, reiterated that exchange rate depreciation was the primary factor behind the $300 billion GDP loss. He explained that if Nigeria had maintained a more favorable exchange rate, the dollar value of its GDP would have been significantly higher. Yusuf acknowledged that while Nigeria’s economic activities have not contracted drastically, the devaluation has distorted GDP when measured in foreign currency terms. He highlighted that the upcoming GDP rebasing might capture more sectors, potentially boosting the GDP figure, but noted that structural reforms would be essential to regain Nigeria’s top position.
To return to the forefront of Africa’s economies, Yusuf recommended policies focused on improving productivity, encouraging investments, expanding exports, and enhancing infrastructure. He also stressed the importance of regulatory reforms to create a conducive business environment. CFG Advisory’s report proposed specific measures for economic revitalization, including reducing debt burdens, restoring credit ratings to investment grade, and controlling inflation. These steps would lower borrowing costs and stimulate sustainable growth.
One bold recommendation from CFG Advisory was for the government to sell down its joint venture oil assets to raise between $30 billion and $50 billion. This capital infusion could be strategically used to reduce the nation’s debt, stabilize the foreign exchange regime, improve net reserves, and strengthen the naira. Such a move would help restore investor confidence and boost economic resilience.
Economic analysts are cautiously optimistic about 2025 due to potential positive developments in Nigeria’s refining capacity and external borrowing strategies. Uche Uwaleke, director of the Institute of Capital Market Studies at Nasarawa State University, highlighted that new refineries coming online could significantly reduce the need for fuel imports, easing demand pressure on foreign exchange and improving the naira’s value. Razia Khan, an economist at Standard Chartered Bank, noted that the parliament’s approval of external borrowing through Eurobonds and sukuk issuances could boost foreign exchange reserves and stabilize the currency.
Nigeria’s economy, which stood at $510 billion following the GDP rebasing in 2014, had shrunk to $199.7 billion by 2024, according to data from the International Monetary Fund (IMF). This contraction pushed Nigeria down to the fourth-largest economy in Africa, now trailing South Africa, Egypt, and Algeria. The devaluation of the naira has been identified as a key driver of this decline, as the currency lost significant value over the years, affecting the dollar-measured size of the economy despite nominal growth in naira terms.
Adeola Adenikinju, president of the Nigerian Economic Society, emphasized the need for Nigeria to reclaim its economic dominance by diversifying its economy and boosting productivity. He explained that rebasing the GDP would result in an immediate increase in its nominal value since it would account for the growth of new sectors over the last decade. However, this technical adjustment alone cannot sustain long-term growth unless the structural issues dragging the economy are addressed.
The report by CFG Advisory titled "From Reform Fatigue Quagmire to Sustainable Growth" pointed out that persistent policy inconsistencies since Nigeria’s recovery from the COVID-19 recession have exacerbated economic vulnerabilities. Exchange rate instability, in particular, played a critical role in shrinking the dollar-denominated GDP. In 2014, the naira exchanged between 168 and 199 to the dollar, but by January 2025, it had depreciated to 1,549.65, representing a staggering sixteenfold devaluation over a decade.
Muda Yusuf, director and CEO of the Centre for the Promotion of Private Enterprise, reiterated that exchange rate depreciation was the primary factor behind the $300 billion GDP loss. He explained that if Nigeria had maintained a more favorable exchange rate, the dollar value of its GDP would have been significantly higher. Yusuf acknowledged that while Nigeria’s economic activities have not contracted drastically, the devaluation has distorted GDP when measured in foreign currency terms. He highlighted that the upcoming GDP rebasing might capture more sectors, potentially boosting the GDP figure, but noted that structural reforms would be essential to regain Nigeria’s top position.
To return to the forefront of Africa’s economies, Yusuf recommended policies focused on improving productivity, encouraging investments, expanding exports, and enhancing infrastructure. He also stressed the importance of regulatory reforms to create a conducive business environment. CFG Advisory’s report proposed specific measures for economic revitalization, including reducing debt burdens, restoring credit ratings to investment grade, and controlling inflation. These steps would lower borrowing costs and stimulate sustainable growth.
One bold recommendation from CFG Advisory was for the government to sell down its joint venture oil assets to raise between $30 billion and $50 billion. This capital infusion could be strategically used to reduce the nation’s debt, stabilize the foreign exchange regime, improve net reserves, and strengthen the naira. Such a move would help restore investor confidence and boost economic resilience.
Economic analysts are cautiously optimistic about 2025 due to potential positive developments in Nigeria’s refining capacity and external borrowing strategies. Uche Uwaleke, director of the Institute of Capital Market Studies at Nasarawa State University, highlighted that new refineries coming online could significantly reduce the need for fuel imports, easing demand pressure on foreign exchange and improving the naira’s value. Razia Khan, an economist at Standard Chartered Bank, noted that the parliament’s approval of external borrowing through Eurobonds and sukuk issuances could boost foreign exchange reserves and stabilize the currency.
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