Nume Ekeghe
A new report by ThinkBusiness Africa has stated that Nigeria’s economy was growing at roughly twice its pre-reform trajectory, noting that the challenge facing policymakers was no longer restoring growth momentum but ensuring that growth translates into stronger public revenues, fiscal strength, poverty reduction and job creation.
The report, titled “Nigeria’s Fiscal Transition: Growth, Debt and the Revenue Reform Test,” obtained yesterday, stated that recent economic data showed a significant improvement in growth performance since the commencement of major macroeconomic reforms in 2023.
According to the report, real Gross Domestic Product (GDP) growth accelerated from 2.31 per cent in the first quarter of 2023 to 2.98 per cent in the first quarter of 2024, rising further to 3.13 per cent in the first quarter of 2025 and 3.89 per cent in the first quarter of 2026.
Highlighting the significance of the improvement, the report stated: “The Nigerian economy is growing at roughly twice its pre-reform trajectory. The challenge facing policymakers is no longer restoring growth momentum but ensuring that growth translates into sustainable public revenues and fiscal strength, reduction in poverty, and the creation of jobs in millions.”
It further noted that the trend becomes clearer when viewed against Nigeria’s performance before the reforms.
“Between 2015 and 2022, the economy expanded at an average rate of roughly 2 per cent annually, barely keeping pace with population growth. Investment levels remained subdued; foreign exchange shortages constrained productive activity, and significant distortions reduced the economy’s capacity to attract capital and support expansion,” the report stated.
The report reiterated that the acceleration recorded since 2023 was not accidental.
“The acceleration observed since 2023 did not occur in isolation. It has been driven by a combination of reforms that addressed longstanding structural constraints, including exchange-rate liberalisation, subsidy removal, improved fiscal transparency, monetary tightening, and measures aimed at restoring confidence in the foreign exchange market.”
The report noted that the reforms were initially accompanied by significant adjustment costs but also removed distortions that had constrained investment, reduced productivity and weakened economic competitiveness for more than a decade.
As a result, it said, there has been “a visible improvement in macroeconomic activity.”
It added that “Oil production has recovered from historic lows, services activity has expanded, foreign exchange liquidity has improved, and private-sector confidence has gradually strengthened.”
According to the report, the available evidence increasingly suggests that the improvement in economic activity is linked to the broader reform programme initiated in 2023.
“While no single reform can fully explain Nigeria’s growth recovery, the evidence increasingly suggests that the acceleration in economic activity is a direct consequence of the broader reform programme initiated in 2023,” it added.
The report argued that the debate has now moved beyond whether reforms have generated growth.
“The more important policy question today is no longer whether reforms have generated growth. The question is whether that growth can now be translated into stronger fiscal capacity, poverty reduction, and creation of jobs for millions of Nigerians.
“This is where the next phase of reform begins.”
Despite the stronger economic activity, they warned that government revenues continue to trail expenditure needs.
“Despite stronger economic activity, government revenues continue to lag expenditure requirements. Consequently, fiscal conditions remain considerably tighter than macroeconomic indicators alone would suggest,” the report stated.
The report also examined Nigeria’s debt position, arguing that headline debt figures often fail to reflect the factors responsible for the increase in the country’s debt stock.
It noted that Nigeria’s public debt stood at approximately N159 trillion at the end of 2025, but stressed that naira-denominated debt figures provide only a partial picture of developments.
The report further noted that exchange-rate reforms significantly altered the naira valuation of Nigeria’s external debt obligations, leading to a substantial increase in the domestic currency value of existing foreign-currency debt.
“The more accurate interpretation is that reported debt growth reflects a combination of new borrowing, enhanced fiscal transparency, and exchange-rate revaluation,” it stated.
It added that the more relevant fiscal question was “whether revenues and growth are expanding sufficiently to sustain” debt obligations over time.
In its closing note, ThinkBusiness Africa stated that both optimism and concern remain valid perspectives on Nigeria’s fiscal transition.
“Growth is strengthening. Investment conditions are improving. Reform momentum remains significant. At the same time, debt service obligations are rising, fiscal space remains constrained, and revenue mobilisation has yet to fully catch up with the scale of the economy.
“The defining question for the next phase of Nigeria’s economic story is therefore not whether growth will occur.
“It is whether that growth can be successfully converted into fiscal capacity, reduction in poverty, and the creation of jobs in millions.”
