Economic Outlook: Challenges and Opportunities
The International Monetary Fund (IMF) has projected a growth of 4.1 per cent for Sub-Saharan Africa this year. However, according to Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry (LCCI), this growth remains tentative due to various factors. These include high debt servicing, tight credit conditions, and the impact of climate-related disruptions.
Current Economic State
Despite the government’s claims of recorded growth, the country is battling with persistent inflationary pressures, rising global debt, and uncertain trade dynamics. Idahosa emphasized the need for fiscal prudence, transparent governance, and coordinated monetary management to sustain resilience in an increasingly volatile world.
IMF Concerns
The IMF’s recent World Economic Outlook highlights three critical concerns relevant to Nigeria: debt sustainability, revenue mobilisation, and diversification. Idahosa expressed concerns about the country’s external debt obligations and rising domestic borrowing costs. He also commended efforts to digitise tax administration but urged the need to expand the tax base, rationalise exemptions, and enhance efficiency.
Global Risks
Idahosa identified six key global risks shaping Nigeria’s external environment. These include:
- Escalating geopolitical tensions in the Middle East and Eastern Europe
- The prolonged U.S. government shutdown
- Growing protectionism and trade barriers
- Softening labour markets in advanced economies
- Persistent inflation despite disinflationary trends
- Overvalued financial assets that heighten the risk of market corrections
Recommendations
To mitigate these risks, the LCCI recommends deepening structural reforms to attract sustainable foreign investment, maintaining fiscal discipline to stabilise debt, investing in productivity-enhancing technologies, and expanding intra-African trade to maximise the benefits of the African Continental Free Trade Area (AfCFTA).
Monetary Policy Rate
Idahosa commended the apex bank for reducing the Monetary Policy Rate (MPR) from 27.5 to 27.0 per cent. However, he stressed that monetary easing alone cannot deliver growth without supportive fiscal policies, infrastructure upgrades, and security improvements.
Fiscal Environment
Although the debt-to-GDP ratio remains moderate, the rising cost of debt servicing is a huge concern. Idahosa urged governments to channel revenue and borrowing toward capital formation, such as roads, power, logistics, and human capital, rather than recurrent expenditures.
Trade Deficit
Nigeria’s importation of N815 billion worth of animals in the first half of 2025 resulted in a N763 billion trade deficit. This underscores profound structural weaknesses in local production. Idahosa also expressed concern over the 4 per cent Free-on-Board (FOB) levy on exports, which undermines competitiveness and discourages manufacturing.
Energy Security
The 13 per cent decline in gas production recorded in September 2025 poses a threat to energy security and the reliability of power generation. Idahosa urged the government to prioritise pipeline protection, community engagement, and consistent pricing frameworks to attract investment.
Conclusion
In conclusion, while the IMF’s projected growth for Sub-Saharan Africa is a positive outlook, Nigeria’s economic growth remains tentative due to various challenges. The government must address these challenges by embracing fiscal prudence, transparent governance, and coordinated monetary management. By doing so, Nigeria can sustain resilience in an increasingly volatile world and achieve sustainable economic growth.
