AfDB pegs Nigeria’s GDP growth at 3.2% in 2025- Report
By Patience Ikpeme
The African Development Bank (AfDB) has released its 2025 Nigeria Country Focus Report (CFR) on Thursday, forecasting that Nigeria’s real GDP growth will be 3.2% in 2025 and 3.1% in 2026, a moderation from the 3.4% projected for 2024.
The continental bank acknowledged that Nigeria’s recent bold reforms are gaining ground, even as global and domestic challenges continue to influence the country’s economic expansion.
The 2025 CFR references Nigeria’s recent policy actions—including the removal of fuel subsidies, unification of the exchange rate, and tax reforms—as evidence of a commitment to long-term economic transformation.
The report notes that with a tax-to-GDP ratio of approximately 13%, Nigeria’s revenue mobilization is among the lowest in West Africa, making urgent fiscal reform a necessity. Despite recent policy progress, the report observes that revenue mobilization remains constrained by a large informal sector, weak compliance, and institutional inefficiencies.
To reduce vulnerability and increase public investment in critical sectors like health, education, and infrastructure, the report says it is essential to expand the tax base and improve fiscal governance.
The AfDB report also identifies governance shortfalls as a significant factor undermining Nigeria’s development finance potential. The CFR explains that fragmented regulatory oversight, overlapping mandates, and governance vulnerabilities persist, hindering the country’s ability to effectively mobilize and utilize domestic resources.
These challenges, it says, have diminished public trust and deterred investment, reinforcing the urgent need for institutional reforms, anti-corruption measures, and improved rule of law to unlock sustainable financing for national development.
In addition to fiscal and governance challenges, the report addresses Nigeria’s natural capital, which accounts for a substantial 37.1% of the nation’s capital wealth. The CFR observes that this vast resource is underleveraged and declining rapidly, with per capita natural capital falling by 2.1% annually since 1999, especially in sectors like agriculture and forestry.
The report calls for strategic investment in natural capital accounting, sustainable resource management, and green financing, mentioning the nascent carbon market as a potential source of up to US$2 billion in revenue.
The report also finds that Nigeria’s human capital deficit is a key obstacle to achieving its trillion-dollar economy ambition. With a human capital index of just 36%, which is below the Sub-Saharan average, the country’s underinvestment in health and education is limiting productivity and innovation. The report says it is crucial to boost public spending—currently at 7.9% for education and 5.3% for health—and to expand skills training and modernize curricula. These steps are presented as critical to equipping Nigeria’s young population to support its economic goals.
To bridge Nigeria’s estimated $31.5 billion annual financing gap for the Sustainable Development Goals (SDGs), the report notes that traditional funding sources are insufficient to meet the country’s development needs. It describes the important role of blended finance, diaspora bonds, and green finance in drawing private investment into infrastructure and social services.
The report also acknowledges that Nigeria’s fintech sector is expanding financial inclusion and that new instruments, such as naira-denominated infrastructure guarantees, are helping to attract institutional investors. It concludes that scaling these innovative solutions is vital for closing the investment gap sustainably.
The Country Focus Reports are annual publications from the African Development Bank that provide localized, data-driven economic analysis and tailored policy recommendations to support inclusive and sustainable development.
