Nigeria, Africa’s most populous nation and a major oil producer, is grappling with a severe and protracted economic downturn, the worst in a decade. The country’s GDP per capita, a key indicator of economic well-being, has plummeted by a staggering 72.35% between 2014 and 2024, falling from $3,022 to a mere $835.49, according to International Monetary Fund (IMF) data. This dramatic decline signifies a significant contraction in the average economic output per person, reflecting a diminished standard of living for the average Nigerian. The overall GDP, representing the total value of goods and services produced, has also suffered a substantial decline, shrinking by 65.71% from $568.5 billion in 2014 to $194.96 billion in 2024. This drastic reduction underscores the depth and breadth of the economic challenges facing the nation. Furthermore, real GDP growth, which measures economic expansion adjusted for inflation, has slowed considerably, dropping from a robust 6.3% in 2014 to a meager 2.9% in 2024.
The economic crisis has been exacerbated by a series of policy reforms implemented in 2023 under President Bola Tinubu’s administration. The removal of fuel subsidies, a key component of these reforms, triggered a sharp escalation in petrol prices, fueling an inflationary surge that reached a staggering 34.8% in December 2024. This policy, intended to address fiscal imbalances, has inadvertently intensified the economic hardship faced by ordinary Nigerians. Concurrently, the devaluation of the naira, the national currency, has further eroded purchasing power, driving up import costs and adding to inflationary pressures. This combination of factors has created a perfect storm, pushing more Nigerians into poverty and exacerbating economic inequalities. Nigeria’s struggles extend to its oil production, a critical source of foreign exchange earnings. The country has consistently failed to meet its production targets under the Organisation of Petroleum Exporting Countries (OPEC), further straining government revenue and limiting its ability to address the economic crisis.
Despite claims by government officials and political allies of economic recovery, leading economists paint a bleak picture of the nation’s economic reality. They argue that official pronouncements of progress are detached from the lived experiences of ordinary Nigerians who continue to grapple with soaring inflation, a depreciating currency, and rising unemployment. Critics point to the escalating cost of living, with essential commodities becoming increasingly unaffordable for many. The rapid depreciation of the naira against the dollar, despite government interventions, further underscores the depth of the economic malaise. The surge in fuel prices, from below N200 per litre in May 2023 to nearly N1,000 per litre in December 2024, provides further evidence of the persistent economic decline. The widening gap between official pronouncements and the economic realities on the ground fuels skepticism and erodes public trust in government assurances.
Economists argue that while the planned rebasing of the country’s GDP and Consumer Price Index by the National Bureau of Statistics in January 2025 might provide a more updated economic assessment, it could also create a misleading impression of progress. They caution that manipulating economic indicators will not address the underlying structural challenges plaguing the economy. The rebasing exercise, while technically necessary, should not be misinterpreted as a sign of genuine economic recovery. The focus should remain on addressing the root causes of the economic downturn, not on cosmetic adjustments to statistical measures. The continued rise in federal allocations, often touted as a sign of economic improvement, has not translated into tangible benefits for the average Nigerian. The rising cost of essential goods, despite increased government revenue, highlights the disconnect between macroeconomic figures and the lived experiences of the population.
The dominance of oil in Nigeria’s economy, accounting for over 90% of total export value, leaves the country vulnerable to fluctuations in global oil prices and production challenges. While recent reports indicate that Nigeria briefly met its OPEC production quota in January 2025, analysts caution that structural issues, including pipeline vandalism and underinvestment, continue to threaten production stability. This dependence on a single commodity exposes the Nigerian economy to significant risks and underscores the urgent need for economic diversification. The persistent depreciation of the naira is also a major contributor to the low GDP per capita. The dramatic fall in the naira’s value against the dollar, coupled with the decline in dollar terms of the 2025 budget compared to 2024, highlights the financial strain facing the country.
Reversing this negative trajectory requires a comprehensive and multifaceted approach. Boosting domestic production across various sectors, diversifying the economy away from its overreliance on oil, improving security to attract foreign investment, and ensuring food and energy security are crucial steps towards achieving sustainable economic growth. Addressing these fundamental issues is essential to improving the GDP per capita and enhancing the living standards of Nigerians. Without decisive action on these fronts, the economic outlook remains bleak, and the country risks further decline, with potentially severe social and political consequences. The current economic crisis demands a fundamental shift in policy direction, focusing on long-term sustainable growth rather than short-term fixes that mask the underlying structural weaknesses.
