Midway Through Reform: Nigeria is making real progress despite the pain, Says Adedipe

By Josiah Nkemakolam

Three years after Nigeria embarked on its most ambitious economic reforms in decades, the country is beginning to record measurable macroeconomic improvements, although the benefits have yet to spread widely enough to ease the hardship facing millions of citizens, economist and policy adviser Prof. ‘Biodun Adedipe said this at the Business Hallmark Virtual Policy Dialogue held recently.

Delivering a presentation titled “The Issues, The Drivers and The Prospects: Nigeria Midway Through Reform – Are We Seeing Progress or Just Enduring Pain?”, Adedipe argued that the country’s reform programme has moved beyond crisis management into a phase where resilience is gradually taking shape, even as policymakers face mounting domestic and global challenges.

According to the economist, Nigeria’s economy was already under severe strain before the current administration launched sweeping reforms in May 2023, making difficult policy choices unavoidable.

“The reforms of the last three years are real, tangible progress,” Adedipe said. “The trickle down needs to be deepened.”

His presentation assessed Nigeria’s economic journey against an increasingly volatile global backdrop marked by geopolitical tensions, climate risks, artificial intelligence-driven disruptions, supply chain vulnerabilities and renewed inflationary pressures arising from the conflict involving the United States, Israel and Iran.

He noted that while the COVID-19 pandemic introduced the world to the “VUCA” era,volatility, uncertainty, complexity and ambiguity—the global economy has now entered what analysts describe as the “BANI” environment, characterised by brittleness, anxiety, non-linearity and incomprehensibility.

Against this backdrop, Nigeria’s reforms were designed to move the economy from survival to stability and eventually to sustainable growth.

Reform agenda beginning to yield results

Adedipe identified the removal of fuel subsidy, exchange-rate unification, fiscal consolidation, financial sector recapitalisation, tax reforms and institutional strengthening as among the most significant policy changes undertaken since May 2023.

He argued that the elimination of fuel subsidies removed an estimated annual fiscal burden of $10.7 billion while helping create a more competitive downstream petroleum market.

Similarly, exchange-rate reforms and the introduction of the Electronic Foreign Exchange Matching System (EFEMS) and the FX Code were aimed at eliminating arbitrage opportunities and restoring confidence in Nigeria’s foreign exchange market.

The reforms have also included recapitalisation plans for banks, insurance companies and development finance institutions, the establishment of the Nigerian Education Loan Fund, expansion of consumer credit, and initiatives to improve agricultural financing and mortgage availability.

According to the presentation, these measures are gradually strengthening Nigeria’s macroeconomic fundamentals.

Real GDP growth accelerated from 2.71 per cent in 2023 to 3.38 per cent in 2024 before improving further to 4.07 per cent by the fourth quarter of 2025. Growth remained resilient at 3.89 per cent in the first quarter of 2026, higher than the 3.13 per cent recorded in the corresponding period of 2025.

Inflation, which peaked at 34.8 per cent in December 2024, moderated significantly to 15.15 per cent by the end of 2025, although it edged up slightly to 15.93 per cent in May 2026 following renewed global energy price pressures.

Meanwhile, Nigeria’s external reserves climbed steadily from $40.88 billion at the end of 2024 to over $51 billion by June 2026, providing import cover exceeding 12 months,well above international benchmarks.

The naira has also shown signs of stability after experiencing sharp depreciation in the early stages of the reforms. By June 2026, both the official and parallel market exchange rates had appreciated relative to their 2025 levels, with the premium between both markets narrowing to below two per cent.

Foreign investment has equally responded positively. Capital importation rose from $3.91 billion in 2023 to $12.32 billion in 2024 before reaching $23.22 billion in 2025. First-quarter 2026 capital inflows were already significantly ahead of the corresponding period of the previous year.

Nigeria’s stock market also recorded strong gains, with market capitalisation rising from N62.76 trillion at the end of 2024 to N154.48 trillion by June 2026.

Global uncertainties remain major risk

Despite the improving domestic outlook, Adedipe warned that external developments continue to pose significant risks to Nigeria’s recovery.

He identified geopolitical conflicts, particularly the ongoing Gulf crisis involving Iran, as a major source of uncertainty capable of disrupting global oil markets, fertiliser supplies and inflation trends.

According to him, many central banks have delayed monetary easing because of renewed inflationary pressures, while international institutions have revised down global growth forecasts.

The World Bank and International Monetary Fund now project global economic growth of approximately 3.1 per cent in 2026 amid heightened geopolitical risks, energy market disruptions and financial vulnerabilities.

For Nigeria, however, the outlook remains comparatively positive.

The Central Bank of Nigeria projects economic growth of about 4.49 per cent in 2026, while the Federal Government expects 4.78 per cent. The World Bank and IMF have revised their forecasts to around 4.1 per cent, while Adedipe’s consultancy projects 4.51 per cent growth.

Diversification gathering momentum

One of the encouraging developments highlighted in the presentation is the gradual diversification of Nigeria’s economy.

Although crude oil still accounted for over half of the country’s foreign trade in 2025, its contribution to GDP remained below four per cent, reflecting stronger growth across non-oil sectors.

The services sector has now overtaken agriculture as the largest contributor to Nigeria’s GDP, with manufacturing ranking third.

Adedipe noted that Nigeria now offers investment opportunities across all 19 economic sectors and 43 activity groups, underscoring the country’s increasingly diversified production base.

He also pointed to improving domestic refining capacity, expanding fertiliser exports and stronger external reserves as important buffers that have enhanced Nigeria’s resilience against external shocks.

Reform pain acknowledged

While defending the reforms, Adedipe acknowledged that Nigerians have experienced significant hardship during the transition.

However, he rejected arguments that the policy changes have produced only pain without measurable benefits.

“There have been several arguments that the reforms have caused only pains. I disagree,” he said. “No doubt, there have been birth pangs but also some measures of trickledown.”

He cited ongoing construction activities across federal and state governments, the elimination of salary and pension arrears in many jurisdictions, expanded access to consumer credit, funding support for indigent students through the education loan programme and improved stability in public university academic calendars as evidence that some benefits are beginning to emerge.

Tax relief measures targeting vulnerable households and businesses have also helped cushion parts of the adjustment process, he added.

Debt must remain productive

On Nigeria’s borrowing strategy, Adedipe maintained that sovereign debt remains necessary for development but stressed that borrowing must be undertaken with greater discipline and transparency.

He argued that governments should prioritise concessionary financing for productive projects capable of generating economic returns sufficient to repay the loans.

“It must be disciplined, transparent, productive and accountable,” he said.

He urged policymakers to focus on the debt-service-to-revenue ratio as one of the most important indicators of fiscal sustainability while ensuring borrowed funds are directed toward self-liquidating or productivity-enhancing investments.

Deepening the gains

Looking ahead, Adedipe argued that Nigeria’s next challenge is not whether reforms should continue but how to ensure their benefits reach more citizens.

He identified economic diversification, industrialisation, manufacturing, fiscal reforms, exchange-rate stability, capital market development, job creation and poverty reduction as priority areas requiring sustained policy attention.

He also stressed that maintaining exchange-rate stability would remain critical to achieving lower inflation, attracting investment and ultimately reaching Nigeria’s long-term ambition of building a $1 trillion economy.

“The conversation should be how to deepen these and not to completely ignore them,” Adedipe said.

He concluded that future economic policy must strike a careful balance between efficiency, equity, social welfare and sustainability, arguing that these ethical considerations will ultimately determine whether Nigeria’s reform programme succeeds in delivering inclusive prosperity.

Despite lingering domestic hardship and an increasingly uncertain global environment, Adedipe maintained that the country’s reform journey has begun producing tangible economic gains.

“The time to new equilibrium can be shortened by accelerated and wider-spread growth, and continued efforts towards single-digit inflation,” he said. “The key factor in all these is stable exchange rate.”