Nigeria’s GDP per capita has fallen to $835.49 in 2025, marking a significant decline and illustrating economic struggles. High inflation, poor government spending efficiency, and increased reliance on federal allocations pose significant challenges. While there are positives in oil production, extensive reforms are necessary to promote local productivity and stabilize the economy.
Nigeria’s economy is facing significant challenges as evidenced by its declining GDP per capita, which has dropped to $835.49 in 2025 from $877.07 in 2024. This 4.74% decrease illustrates how the country’s economic growth isn’t keeping pace with its population growth, leading to worsening living conditions for citizens. The GDP per capita has declined 74.08% since 2014, reflecting a troubling downward trend.
The IMF data reveals that Nigeria’s GDP per capita is one of the lowest in Africa compared to South Africa’s $6,517.1 and Ghana’s $2,189.3. Meanwhile, the country’s nominal GDP fell from $509.97 billion in 2014 to $362.8 billion, marking Nigeria’s shift from being the largest economy in Africa to the fourth position. The growing disparity raises concerns about Nigeria’s economic health and trajectory.
Inflation soared to a 30-year high of 34.88% as of December 2024, significantly eroding Nigerians’ purchasing power. President Bola Tinubu has set ambitious targets for reducing inflation to 15% by 2025, yet analysts remain skeptical, projecting it could remain above 30%. To stir the economy, Tinubu aims for a GDP growth of 6% annually, but such targets may be unrealistic given current trends.
The government’s recurrent expenditure for 2025 is projected at N13.64 trillion, highlighting a need for spending cuts. This urgent need for cost management parallels strategies adopted by wealthier nations, such as the U.S.’s recent governmental reorganization to enhance efficiency. Nigeria’s leadership must acknowledge the nation’s economic reality instead of perpetuating an illusion of wealth.
Encouraging productivity at the state level is essential, as many depend heavily on federal allocations. The shift from reliance to local productivity would stimulate growth. Moreover, proposed revisions to the VAT sharing formula could provide more equitable rewards for production, fostering competition and reducing dependency on federal support.
Despite economic difficulties, some sectors show potential. The crude refining sector, led by Dangote Refinery, plans to boost production significantly, enhancing foreign exchange earnings. Additionally, rising oil production figures, now surpassing 1.5 million barrels per day, promise a positive impact on Nigeria’s external reserves.
The government must prioritize inflation control and naira strength in 2025, aided potentially by increased oil production. The Nigerian Economic Summit Group forecasts that, with effective measures, the naira may appreciate, and inflation could decrease. Substantial reforms should focus solely on improving citizens’ lives, balancing necessary subsidies with economic stability.
Nigeria’s declining GDP per capita, soaring inflation, and government spending highlight a critical economic crisis. While there are glimmers of hope in oil production and potential reforms, the government must implement effective measures for economic recovery. A commitment to reducing dependency, promoting local productivity, and managing fiscal responsibility is crucial for improving the living conditions of Nigerians and ensuring sustainable economic growth moving forward.
Original Source: punchng.com
