This week, we examine the core of President Bola Tinubu’s statement at the recently concluded BRICS summit in Brazil, where he projected that Nigeria’s real GDP growth would reach 7.0% by 2027, and that by 2030, the economy would be four times its current size of $251.0bn (using FX rate of ₦1,533.12/$) to reach $1.0tn.
The declaration came on the back of the rebased GDP and strings of reforms since mid-2023 aimed at eliminating macroeconomic deadweight. Following the rebasing, Nigeria’s nominal GDP for 2024 was estimated at ₦372.8tn (in real terms: ₦217.8tn), representing 34.4% improvement compared to pre-rebased figure of ₦277.5tn.
However, owing to the dynamics in exchange rate since mid-2023 the dollar equivalent of Nigeria’s GDP as of 2024-end, $251.0bn, is about 50.0% lower compared to the levels before the administration kickstarted its reforms. In real term, growth in 2024 printed at 3.8%, the second highest since post-2014.
While the rebasing improved key ratios such as debt-to-GDP (now 39.6% from 52.1% in 2024), it does not mask the reality that economic expansion remains moderate. The latest figures from the National Bureau of Statistics (NBS) show Q1:2025 GDP growth at 3.13% y/y, well below the pace required to meet the government’s new target. Moreover, projections from the IMF and World Bank point to growth in the range of 3.4 – 3.6% in 2025, rising only marginally to an average of about 3.8% in 2026 – 2027.
Macroeconomic Realism
Since assuming office in May 2023, President Tinubu has moved quickly to implement reforms designed to correct long-standing structural imbalances. The removal of subsidy on Premium Motor Spirit (PMS) and the liberalisation of the FX market in mid-2023 marked significant policy shifts, restoring a degree of macroeconomic realism but also triggering a sharp cost-of-living squeeze as inflation climbed to multi-decade highs.
In the fiscal space, the administration initiated a review of revenue-retention practices at key agencies, proposed tax reforms to widen the base & improve efficiency and strengthened efforts to reduce leakages in public finance. On the monetary side, the new leadership installed by President Tinubu at the CBN – Dr. Olayemi Cardoso – maintained a tight policy stance since Q1:2024 to rein in inflation while working to restore FX market credibility, culminating in the clearance of a long-standing FX backlog. Also, partial adjustments to electricity tariffs and the commissioning of the Dangote refinery (in the energy sector) signaled progress toward reducing structural bottlenecks in power and petroleum supply.
These efforts have created a platform for stronger growth in certain segments of the economy. The services sector, led by ICT, financial services, and transport, has been the main driver of output expansion in recent quarters, benefiting from both structural trends and the rebound in urban economic activity. Also, increased revenue mobilisation (gross and net revenue available for budget grew by 126.5% and 124.4% in 2024 to ₦34.7tn and ₦28.6tn), if sustained, could provide fiscal space for targeted infrastructure investment, while the ramp-up of domestic refined fuel production and elimination of round tripping activities by the CBN could help reduce FX pressures over time.
Ambitious Growth
However, the ambitious road to 7.0% growth remains fraught with obstacles. Inflation, particularly in food prices, remains elevated despite the rebasing of the CPI basket, eroding household purchasing power and constraining private consumption. The power sector continues to operate below potential, with liquidity constraints, tariff inconsistencies, and arrears to suppliers deterring investment.
Oil production is still below capacity due to theft, pipeline vandalism, and underinvestment, leaving fiscal projections vulnerable to both price and volume shocks. Fiscal space is limited, with non-oil revenue as a share of GDP still among the lowest in SSA (9.2% in 2024 vs average of c.13.0%).
Notwithstanding the ongoing effort of the administration vis-a-vis mixed outcome of reforms thus far, the president’s call of a 7.0% GDP growth by 2027 and the quadrupling of the current GDP size to $1.0tn by 2030 lacks fundamental drivers. For context, for a 7.0% real growth from 2027 to push the economy to $1.0tn by 2030, nominal GDP size must have surpassed $800.0bn by 2026-year-end – implying nominal growth of no less than 40.0% in each of 2025 and 2026.
Alternatively, assuming a real GDP growth cap of 5.0% for 2025/2026 (based on world bank and IMF estimate), naira/USD rate would need to strengthen to above ₦500.00/$ level from 2027 for the President’s call to crystalise.
As such, it is imperative that the leadership focus on accelerated growth across multiple fronts simultaneously for the country’s fundamentals to support the President’s ambition. This includes lifting oil output to 2.0mbpd baseline, enforcing cost-reflective electricity tariffs alongside targeted subsidies for vulnerable households, maintaining FX market stability and transparency, fully implementing the tax reform agenda, and addressing food security through both targeted social safety nets and security interventions in agricultural regions.
Headline Inflation
Elsewhere, in line with our forecast, Nigeria’s headline inflation rate moderated for the fourth consecutive month in July 2025, to 21.9% y/y (Afrinvest forecast: 21.6%) from 22.2% in June. The decline was underpinned by a softer core inflation reading, which eased to 21.4% y/y from 22.4% in June. In contrast, annual food inflation accelerated to 22.7% y/y from 22.0% in the prior month, underscoring persistent pressures in the food basket despite the overall disinflation trend. However, on a monthly basis, headline inflation rose to 2.0% from 1.7% in June, driven largely by elevated food prices.
Food inflation remained the main source of price pressure, with the m/m rate at 3.1%, only marginally lower than June’s 3.3%, reflecting seasonal lean-period shortages, flooding in key agricultural zones, and lingering logistics challenges. Core inflation, which excludes volatile food and energy prices, moderated slightly to 1.1% from 1.2% in June, suggesting some relief in non-food categories but still elevated underlying inflationary pressures.
The continued y/y moderation in headline inflation reflects the impact of high base effects from last year’s elevated inflation levels, relative FX stability, reduction in fuel distribution costs, softer global commodity prices, particularly in wheat and diesel, and the structural change in the CPI basket composition post-rebasing. However, the uptick in annual food inflation and stronger monthly headline print point to ongoing supply-side challenges, including insecurity in farming regions, transportation bottlenecks, and weather-related disruptions to harvests.
Looking ahead, we expect inflation to maintain a gradual easing trajectory in the near term, supported by continued FX stability, early harvest inflows, and relatively subdued global commodity prices. Nevertheless, persistent food supply constraints and seasonal factors could limit the pace of disinflation, keeping monthly inflation elevated in the months ahead. Hence, our forecast for August places headline inflation at 21.3% y/y.
Domestic Equities Market: Bearish Outing on Customs Street… ASI down 0.8% w/w
This week, the domestic bourse ended its eleven-week positive run with a loss of 0.8% w/w, pulling the NGX-ASI lower to 144,628.20 points. Resultantly, YTD return declined 1.1% to 40.5% (previously 41.6%), while market capitalisation shed 0.8% w/w to ₦91.5tn. Likewise, activity level weakened as average volume and value traded fell 38.0% and 57.1% to 1.4bn units and ₦13.9bn, respectively. The top traded stocks by volume were UNIVINSURE (1.1bn units), LINKASSURE (984.5m units) and AIICO (605.0m units), while ZENITH (₦7.2bn), GTCO (₦6.9bn), and ACCESSCORP (₦6.4bn) were the top traded by value.
Across sectors under our coverage, performance was broadly negative as five indices lost while the Insurance index rose 8.2% w/w due to price appreciation in SUNUASSURE (+23.8%) and MBENEFIT (+31.8%). Leading the laggards, the AFR-ICT and Oil & Gas indices declined 1.7% and 1.4% w/w, respectively, owing to selloffs on MTNN (-3.3%), OANDO (-6.9%), and SEPLAT (-1.3%).
Following, losses in UNILEVER (-10.3%), HONYFLOUR (-8.5%), WAPCO (-5.2%), and BERGER (-14.7%) dragged the Consumer and Industrial Goods indices lower by 0.9% and 0.8% w/w, respectively. Similarly, profit taking on ZENITH (-3.0%) and GTCO (-2.3%) pulled the Banking index lower by 0.2% w/w.
Investor sentiment as determined by market breadth weakened to 0.0x (previously 0.5x) as 48 stocks gained, 47 lost, and 47 closed flat. The top gainers for the week were MBENEFIT (+31.8%), TRIPPLEG (+30.2%) and SUNUASSURE (+23.8%) while UPDC (-17.7%), LIVINGTR (-16.0%), and BERGER (-14.7%) were the top losers. We expect mixed sentiment to dominate trading on the bourse next week, with a bias towards bearish performance.
Afrinvest
