Nigeria’s economic outlook faces growing headwinds as CFG Advisory warns of a slowdown in growth and mounting debt pressures, calling for immediate intervention from the Central Bank of Nigeria (CBN) to prevent further strain on the economy.
The investment advisory firm, in its latest market update, revealed that Nigeria’s debt profile has now surpassed $100 billion, with significant debt servicing costs that threaten to crowd out private sector credit and limit the country’s growth potential. The firm stressed that without bold, growth-oriented reforms, economic recovery could stall, worsening unemployment and poverty levels.
According to the National Bureau of Statistics’ (NBS) Capital Importation Report, Foreign Direct Investment (FDI) into Nigeria fell sharply by 70.06% quarter-on-quarter, from $421.88 million in Q4 2024 to just $126.29 million in Q1 2025.
This slump occurred despite an overall increase in capital importation, suggesting that investors are shifting focus away from long-term, productive projects towards short-term, high-yield financial instruments.
FDI’s share of total capital inflows dropped to 2.24% in Q1 2025, down from 8.29% in the preceding quarter and 3.53% in the same period of 2024. However, year-on-year figures showed a modest 5.97% rise to $119.18 million.
While Nigeria has recorded a stabilised foreign exchange rate and a slight dip in inflation, GDP growth slipped from 3.8% in Q4 2024 to 3.1% in Q1 2025.
CFG Advisory noted that macroeconomic stability alone is insufficient without a coherent plan to accelerate growth. “The country needs proactive strategies to stimulate expansion, restore investor confidence, and drive sustainable development,” the report stated.
Policy Recommendations to Spur Growth
The advisory firm proposed a series of targeted interventions:
Interest Rate Cuts: Reduce rates by the end of Q3 2025 to ease credit conditions, boost business activity, and tame inflationary pressures.
Asset Sales: Divest oil joint venture assets to raise $35–$40 billion, cutting debt and strengthening fiscal buffers.
Non-Oil Export Drive: Scale up agricultural exports and other non-oil sectors to diversify revenue sources and reduce dependency on crude oil earnings.
Inflation Targeting: Launch a formal inflation targeting programme with a 12–14% average target, which could push growth to between 8–10% annually based on historical patterns.
Structural Reforms: Implement coordinated monetary, fiscal, trade, investment, and industrial policy measures to sustain higher growth rates.
CFG Advisory emphasised that “excessive borrowing is already squeezing out private sector credit and discouraging FDI,” warning that the current debt servicing burden could worsen if proactive measures are delayed.
Economists caution that without decisive action, Nigeria risks a deeper slowdown, as high borrowing costs, weak investor sentiment, and global economic uncertainties weigh on growth.
Dr. Bamidele Ojo, a Lagos-based financial analyst, told The PUNCH that the CBN must strike a delicate balance between controlling inflation and enabling private sector-led expansion. “Nigeria cannot afford to simply stabilise macroeconomic indicators while the real economy struggles,” he said.
Global Context and Investor Confidence
Nigeria’s economic challenges mirror broader global trends, where rising interest rates in developed markets and geopolitical uncertainties have made investors more cautious about emerging market exposure. However, analysts say Nigeria’s large market size, resource wealth, and youthful population remain strong pull factors—if policy clarity and fiscal discipline can be demonstrated.
CFG Advisory concluded its update by urging the CBN and fiscal authorities to take a coordinated approach to policy execution, combining monetary easing with structural reforms to unlock the country’s growth potential.
“Implementing these measures will restore purchasing power and lift millions of Nigerians out of poverty,” the firm stated.