Nigeria’s economy recorded a 3.87 per cent growth rate in 2025, according to the latest data from the National Bureau of Statistics (NBS). Fourth quarter growth stood at 4.07 per cent year-on-year, marking the strongest quarterly performance since 2022.
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Growth driven by services and oil recovery
The services sector remained the largest contributor to Gross Domestic Product (GDP), supported by telecommunications, financial services and trade activities. Oil production also improved compared to previous years, strengthening export earnings and government revenue.
Despite these figures, analysts note that economic growth has not translated into lower living costs. Inflationary pressures, high energy prices and foreign exchange volatility continue to weigh on households and SMEs.
An Abuja-based economist stated, “While GDP growth is positive, the structure of the expansion matters. Growth that does not improve purchasing power or reduce operating costs offers limited relief to small businesses.”
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Cost pressures remain high
Small and medium-sized enterprises report that input costs remain elevated. Energy expenses, logistics costs and imported raw materials continue to rise, affecting profit margins. Many SMEs also face restricted access to affordable credit, limiting their ability to scale operations.
The naira’s volatility in 2025 further complicated planning for import-dependent businesses. Although reforms were introduced to stabilise the foreign exchange market, businesses continue to adjust to market-driven pricing mechanisms.
For consumers, food inflation remains a key concern. Higher transport and production costs have sustained price increases in essential goods, reducing disposable income and weakening demand for non-essential products.
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Experts argue that sustained growth must be supported by targeted policies. Improved infrastructure, stable power supply and access to low-cost financing are critical for SMEs to benefit from macroeconomic expansion.
There are expectations that continued reforms in tax administration, digitalisation of revenue systems, and industrial policy adjustments could strengthen productivity in 2026. However, stakeholders stress that inclusive growth remains essential if economic gains are to improve business confidence and consumer welfare.
The coming quarters will test whether current growth trends can translate into stronger employment levels and real income gains for Nigerians.
