January 26, (THEWILL) – Prominent economy and finance experts have predicted an admixture of gains and pains as the outcome of recent government policies, while navigating the macroeconomic uncertainties in 2025. They also seek robust investment channels to harness emerging opportunities.
The experts who spoke at various fora included analysts at CFG Advisory, a financial services advisory firm; Nairametrics, a business and financial data-based company; Proshare Limited, a professional investment research firm, and Arthur Steven Asset Management Limited (ASAM), a capital market investment management firm.
The experts noted in their various presentations that while the reform-induced policies of 2023-2024 would create a spill-over of stability in foreign exchange and interest rate regimes in 2025, the impact could also result in some economic challenges for the citizens.
According to Mr Ugodre Obi-Chukwu, Managing Director/CEO of Nairametrics, the economy would witness appreciable stability in 2025 after the uncertainties of recent years, but the citizens must brace themselves for the challenges.
“2025 is a year of stability after the variabilities of post-COVID-19 period, followed by the stringent reform agenda of the present Nigerian government,” Obi-Chukwu declared while delivering a lecture at the quarterly forum of the Finance Correspondents Association of Nigeria (FICAN), held in Lagos to review the 2024 economic landscape and forecast the trend in 2025.
In his lecture titled ‘Nigeria in Transition: Reforms, Global Shifts and Strategic Opportunities’, Obi-Chukwu explained that the monetary policy authorities would go extra mile to maintain a stable forex market, a move he said would attract fortune-hunters to the fixed-income market as investments boom.
The finance analyst said the foreign exchange reform would begin to yield results “as we see a stable rate of N1,700-N1,400/$1during the year on improved liquidity driven by increased oil output as non-oil revenue rises.”
However, the Nairametrics CEO pointed out that the huge fiscal deficit in the 2025 budget would lead to massive borrowing, increasing the public debt stock from N130 trillion to N150 trillion. He argued that this would result in rapid depreciation of the naira in the long run and vitiate the income status of the people.
“Forex demand is yet to pick up as Nigerians grapple with massive devaluation. Large fiscal deficit continues, suggesting more exchange rate depreciation in near future.
“Nigeria’s large fiscal deficits, growing debt burden and high inflation rate, pose more threat to exchange rate stability and could rubbish the benefits of ongoing forex reforms.
“Businesses should hedge against a worst-case scenario of N2,200/$1 and take advantage of a best-case scenario of N1,700$1,” he averred.
He added that the inflation rate would decelerate to about 26 percent, but prices will not drop.
In its report titled, ‘Nigeria 2025 Economic Forecast: From Reform Fatigue Quagmire to Sustainable Growth,’ the GFC Advisory noted that Nigeria’s 18-month economic reform programme has yielded mixed results, largely due to poor implementation and putting the cart before the horse.
It noted that the programme’s biggest impact on the economy has been the devaluation of the naira from about 450-1,700 Naira/US$. It argued that the cost-push effect of fuel subsidy removal, worsened the situation in an economy already in stagflation with sharp increases in inflation trajectory.
This led to reduced household purchasing power and high interest rates for the firms and the economy.
To exacerbate matters, it said government borrowing has exceeded the US$100 billion mark and debt service costs doubled from N8 trillion in 2024 to N16.3 trillion in the 2025 proposed budget.
“N16.3 trillion in debt servicing is not sustainable, as it exceeds the defense, security, infrastructure, education and health budgets combined at N14 trillion. The gains from the subsidy removal are now being used for debt servicing, instead of investment in capital expenditure that can create stimulus for economic growth,” the firm said in its publication seen by THEWILL, and endorsed by Tilewa Adebajo, the CEO.
“To get the economy back on track (during 2025), the government must reduce its debt burden, restore its credit rating to investment grade and tame inflation. This would reduce borrowing costs and provide stimulus for investment, sustainable growth, productivity, and employment.
“To accomplish this, the FGN must restructure its capital structure and balance sheet. Selling down its JV oil assets will raise $30-50 billion, that can be applied to reduce the debt burden, improve the foreign exchange regime, provide dollar supply for naira appreciation, restore credit rating and boost net reserves.”
On its part, Proshare demands a clear departure from rhetoric to reality, while strengthening the capital market to play its role in boosting the economy that aims at attaining the $1 trillion target.
In its work titled, ‘Nigeria’s Capital Market Outlook Report 2025: The Capital Market and the Quest for a $1 Trillion Economy’, the firm insists that the market must be repositioned for productivity.
“If Nigeria hopes to achieve a US$1trn by 2030, then the capital market needs major fixing. From US$364bn in 2023 to US$1trn in 2030 implies an annual nominal growth rate of 13 per cent – 15 per cent, with a 2025 Federal Government GDP growth projection of 4.6 per cent; hell would freeze over before Nigeria achieves its desired goal, even with the well-intentioned statistical adjustments of a rebasing of the nation’s total national output.”
The Proshare economists insisted that while the rebasing offers us the incentive of realising how closer we are to bridging the gap between our current state and the quest for a US$1 trillion economy.
According to them, the government needs to accelerate its shift from campaign ground promises to ‘strategic policy action and execution’, insisting that the miracles needed now are the opportunities we create from moments such as this – building momentum that energises markets.
On their part, analysts at Arthur Steven Asset Management Limited (ASAM) said the Nigerian stock market is poised for significant growth in 2025.
According to Olatunde Amolegbe, Managing Director of ASAM, the firm projects a 39 percent return on the All-Share Index (ASI) in 2025, as investors take position with the advent of the earning season.
Speaking at the Capital Market Correspondents Association of Nigeria (CAMCAN) 2024 market review and 2025 projection tagged ‘In-Depth Evaluation of the capital market in 2024 and prognosis for 2025’ held in Lagos, the former President of the Chartered Institute of Stockbrokers (CIS) noted that the forecast was underpinned by factors like the ongoing bank recapitalisation efforts, new equity listings, and anticipated monetary policy easing by the Central Bank of Nigeria (CBN).
Amolegbe in his presentation titled, ‘2024 Review and Outlook for 2025: Navigating Uncertainty, Unlocking Growth,’ highlighted Nigeria’s relative market attractiveness as a key factor behind increased foreign portfolio inflows (FPI), provided stable policies are maintained.
He noted that the bank recapitalization process is set to boost investor confidence, while high-profile listings such as Dangote Refinery are expected to enhance market liquidity and broaden investment opportunities.
The projected bullish trend in 2025 comes as investors position themselves ahead of 2024 fiscal year results and dividend declarations, particularly in the banking sector.
However, Amolegbe cautioned that the market’s performance will depend on critical factors such as the country’s economic growth trajectory, monetary policy direction, and corporate earnings results.
ASAM anticipates a shift toward equities as fixed-income yields decline, driven by the CBN’s likely adoption of a more accommodative monetary stance.
Despite lingering concerns over exchange rate volatility and inflation, strategic sectors such as banking, consumer goods, and industrials are expected to perform well, offering steady returns for investors.
Overall, the 2025 outlook for the Nigerian stock market remains optimistic, bolstered by strategic reforms, policy adjustments, and improving investor confidence.
While challenges such as exchange rate instability and inflation persist, key sectors are positioned to drive market performance and deliver strong returns for investors.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
