The African Development Bank (AfDB) has praised Nigeria's economic reforms under President Bola Tinubu, stating that the measures implemented since May 2023 have begun yielding positive results across key sectors of the economy.
According to the African Economic Outlook 2025, released during the AfDB Annual Meetings in Abidjan on Thursday, the services sector accounted for nearly 75 per cent of Nigeria's Gross Domestic Product (GDP) growth. The report also noted improvements in oil production and agricultural output.
AfDB President, Dr Akinwumi Adesina, commended President Tinubu for approving a $500 million replenishment of the Nigeria Trust Fund (NTF), extending the facility for another 15 years.
"To President Bola Tinubu, for your support over the past two years, I am profoundly grateful. Thank you for graciously approving the replenishment of the Nigeria Trust Fund for another 15 years for $500 million," Adesina said.
Sectoral gains and inflation challenges
The AfDB report indicated that the industry sector contributed 13 per cent to GDP growth, driven by a 2.8 per cent rise in oil production to 1.56 million barrels per day (bpd). Agriculture accounted for nine per cent, aided by competitive domestic prices.
However, the economy faced inflationary pressures, with headline inflation rising to 33.2 per cent in 2024, up from 24.7 per cent the previous year. The report attributed this to rising petrol prices—up 77 per cent—as well as a 42 per cent depreciation of the naira.
To curb inflation, the Central Bank of Nigeria (CBN) raised the benchmark interest rate to 27.5 per cent.
Fiscal deficit was recorded at 3.9 per cent of GDP in 2024, slightly lower than 4.0 per cent in 2023. Non-oil revenue growth helped reduce the shortfall, though public debt climbed to 52.3 per cent of GDP from 41.5 per cent due to higher borrowing and naira depreciation.
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The report also highlighted a significant improvement in the current account balance, which increased to a surplus of 9.2 per cent of GDP in 2024, up from 1.6 per cent the previous year. This was driven by a drop in imports due to higher prices.
Financial sector repositioning
In alignment with Nigeria's push toward a $1 trillion economy, the financial services sector initiated recapitalisation processes. Non-performing loan ratios declined to 4.1 per cent by mid-2024 from 4.4 per cent in 2023, indicating improved financial sector stability.
Nigeria Trust Fund renewal
Established in 1976, the Nigeria Trust Fund (NTF) is a self-sustaining revolving facility created through an agreement between the Federal Government of Nigeria and the AfDB. It supports low-income African countries with concessional funding, targeting critical sectors like infrastructure, health, education, water, and agriculture.
The NTF operates by allocating funds to specific projects rather than to countries, enhancing the strategic deployment of resources and ensuring high-impact outcomes.
Dr Adesina noted that Nigeria's renewed $500 million commitment will enhance the Fund's capacity to deliver on transformative development goals across Africa.
"President Tinubu's leadership affirms Nigeria's longstanding role in driving inclusive growth and development on the continent," he said.
He also extended gratitude to African leaders and institutions that have supported his tenure and the AfDB's mission. "Together, we collectively joined hands around the baobab tree of Africa's challenges and opportunities. Thank you all for believing in Africa. May Africa always thrive and shine," he concluded.
The AfDB Annual Meetings bring together heads of state, policymakers, development partners and stakeholders to deliberate on Africa's economic trajectory, with this year's session focusing on resilience and homegrown solutions in a post-pandemic era.
