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In 2024, Nigeria’s economy experienced its strongest growth in a decade, expanding by 4.6% year-on-year in the fourth quarter, according to the World Bank. This growth experienced by Nigeria was fueled by fiscal improvements and bold reforms implemented by the government, including the removal of petrol subsidies, reduction in electricity allowances, and two devaluations of the naira.
These measures led to a significant increase in government revenue, rising by 4.5% of GDP in 2024, and enabled a reduction in the fiscal deficit from 5.4% in 2023 to 3% in 2024. Additionally, foreign exchange reforms have created a market-reflective, unified, and stable exchange rate, allowing the Central Bank of Nigeria (CBN) to rebuild official reserves, now exceeding $37 billion.
Despite the positive growth trajectory, inflation remains a significant concern. The World Bank projects Nigeria’s inflation rate to average 22.1% in 2025, as the Central Bank’s tight monetary stance begins to anchor inflation expectations and restore confidence in macroeconomic management.
Inflation has been driven by several factors, including the removal of fuel subsidies, exchange rate unification, high logistics and energy costs, and food supply disruptions. These elevated inflation rates have had a tangible impact on the cost of living, affecting households and businesses alike.
1. Purchasing Power Erosion
High inflation diminishes the value of money, meaning that consumers can buy less with the same amount of income. This scenario necessitates prudent financial planning and budgeting to maintain living standards.
2. Investment Considerations
Investors need to be cautious, as inflation can erode real returns on investments. It’s advisable to consider investment options that offer returns above the inflation rate, such as certain equities or inflation-linked bonds.
3. Savings Strategy
Traditional savings may lose value in real terms during high inflation periods. Exploring savings instruments with higher interest rates or alternative investment vehicles can help preserve capital.
4. Business Planning
Businesses must account for increased costs of goods and services, which can impact profit margins. Strategic pricing, cost management, and efficiency improvements become essential under such economic conditions.
For large corporations, Nigeria’s economic rebound presents both opportunities and risks.
For small businesses, especially informal traders and local vendors, the cost of doing business has risen sharply.
Stay Informed: Regularly monitor economic indicators and policy changes to make informed financial decisions.
Diversify Income Streams: Consider multiple income sources to mitigate financial risks associated with inflation.
Financial Planning: Engage with financial advisors to develop strategies that align with the current economic climate.
Advocate for Policy Engagement: Participate in dialogues and forums that influence economic policies, ensuring that the voices of citizens are heard.
The World Bank projects that Nigeria’s inflation rate will average 22.1% in 2025, assuming the Central Bank maintains a tight monetary policy stance. While this indicates a potential easing of inflationary pressures, the rate remains high, necessitating continued vigilance and adaptive financial strategies by individuals and businesses.
Nigeria’s economy is evolving fast. Growth is real, but so is the squeeze on day-to-day finances. This isn’t the time to sit still—it’s the time to reposition. Whether you run a large enterprise or a small business, the winners in this new economy will be those who stay nimble, digitize their operations, and build financial discipline into their daily systems.
Track your money. Organize your sales. Own your customer relationships. Automate where you can.
Inflation punishes the disorganized and rewards the strategic. The question isn’t if there’s opportunity in this moment—there is. The question is whether you’re structured enough to seize it.
If you’re not, start today.
If you are, double down.
The economy may be volatile, but your response doesn’t have to be.