Experts have expressed the need for policy reforms for Nigeria to meet the $1tn economic target by the end of the decade.

This came to light following the release of the Gross Domestic Product figures for the fourth quarter of 2024.

The National Bureau of Statistics reported that Nigeria’s economy expanded by 3.84 per cent YoY in Q4 2024, marking the strongest growth since Q4 2021. This performance was primarily driven by expansions in both the oil (+1.48 per cent) and non-oil (+3.96 per cent) sectors. The oil sector grew by 1.48 per cent YoY, supported by a 6.54 per cent increase in crude oil production to 1.63 mbpd (from 1.53 mbpd in Q3:2024). However, this represents the sector’s weakest growth since its recovery in Q4 2023. Meanwhile, the non-oil sector demonstrated resilience despite persistent macroeconomic headwinds, expanding by 3.96 per cent YoY—the highest growth in seven quarters (compared to 3.37 per cent YoY in Q3:2024 and 3.07 per cent YoY in Q4:2023).

In a macroeconomic update, Nigerian financial expert and Chief Executive Officer of the CFG Advisory, Adetilewa Adebajo, said that while Nigeria’s economy showed signs of growth in the final quarter of 2024, there was a significant ‘output gap’ that must be addressed through strategic policy reforms to achieve the nation’s ambitious $1tn economy vision.

Adebajo said, “According to recently released NBS data, Nigeria in 2024 ended with an overall annual GDP growth rate of 3.40 per cent from 2.74 per cent reported in 2023. The 2024 year-end GDP came in at $195bn, a decline of $168bn from the 2023 GDP of $363bn. The impact of the massive devaluation and free fall of the currency from N500 to N1600/$. The GDP growth numbers are suboptimal for a 200 million population growing at three per cent as GDP per capita has fallen to an all-time low, with an economy struggling with stagflation.

“This highlights ‘The Output Gap’ problem in the Nigerian economy, where we are falling short of our productivity and growth potential. FGN has to revamp its trade policy and reform HS Codes and the realignment of industrial policy to address the declining productivity in manufacturing, industry, and agriculture in an effort to boost growth. Investment policy incentives also need to be amplified.”

Furthermore, Adebajo advocated “deliberate industrial policies to achieve import substitution in targeted sectors of the economy,” urging Nigeria to “replicate the success with cement, fertiliser, and petroleum refining.”

“The direction of government should be to enact policies that will enhance productivity, create employment, close the output gap, and grow the economy. Relative stability has been achieved in the economy. To build on this, we must implement deliberate industrial policies to achieve import substitution in targeted sectors of the economy. We must replicate the success with cement, fertiliser, and petroleum refining.

A suggestion is to put in place a roadmap for the three massive sugar refineries in Nigeria owned by Dangote, BUA, and FMN to stop importing raw sugar. This is a potential FX earner and AfCFTA project, as the three refineries have the capacity to meet regional demand. Deliberate policies, therefore, must be put in place to develop a local supply chain with Nigerian farmers in an effort to boost local sugarcane production, increase agricultural productivity, and create employment along that value chain. Closing the output gap is the only way to achieve the desired trillion-dollar economy,” he said.

In their report on the GDP, Meristem Research said, “The oil sector is expected to maintain its growth trajectory into 2025, hinged on sustained government efforts to enhance security in oil-producing regions, such as the implementation of the data-driven security framework. Furthermore, increased investment in infrastructure and policies aimed at attracting investors could foster the introduction of new oil blends, further boosting production levels.

“Overall, we anticipate improved economic growth in the coming year, underpinned by a stable interest rate environment, favourable government policies, and exchange rate stability, which are expected to drive sustained expansion across key industries.”