When Nigeria’s economic expansion fails its people

Currently, the numbers from the Nigerian economy suggest recovery, yet the lived reality of millions of citizens tells a different story. On paper, the economy is expanding at its fastest pace in three years. In reality, households continue to sink deeper into hardship, squeezed by a cost-of-living crisis.

According to the National Bureau of Statistics, Nigeria’s economy grew by 3.87 percent in 2025, with fourth-quarter output rising by 4.07 percent year-on-year. It is the strongest yearly performance since 2022 and, by conventional economic standards, a sign that the nation may finally be turning the corner after years of instability. For many Nigerians, this recovery remains largely statistical.

 “On paper, the economy is expanding at its fastest pace in three years. In reality, households continue to sink deeper into hardship, squeezed by a cost-of-living crisis.”

The economic reforms introduced by President Bola Tinubu in 2023 were designed to correct deep structural distortions. The removal of fuel subsidies and the unification of the exchange rate were bold decisions long recommended by economists and international financial institutions. By allowing the naira to float and dismantling the opaque multi-tier currency system, the government signalled its willingness to confront longstanding economic inefficiencies.

There are signs that these reforms have begun to stabilise key macroeconomic indicators. External reserves have climbed to roughly $50 billion, the highest level in about 13 years, while the naira has strengthened modestly this year. Inflation, though still high, has begun to trend downward before the recent Gulf War, and investor confidence has shown some signs of improvement.

Despite the improving statistics, living standards have continued to deteriorate. Inflation over the past two years has eroded purchasing power, leaving both low-income households and the once-resilient middle class struggling. Basic necessities, particularly food and energy, have become increasingly unaffordable.

The price of staple foods illustrates the scale of the crisis. Meanwhile, wages have remained largely stagnant. Even as food inflation begins to moderate statistically, millions of Nigerians are still unable to afford adequate meals. The result is a painful disconnect between economic growth and human welfare.

A recent report by PwC projects that Nigeria’s poverty crisis will deepen further in 2026. The number of people living below the poverty line is expected to rise from 139 million to 141 million, about 62 percent of the population. That figure would represent the highest poverty level ever recorded in Nigeria.

Such projections underscore a troubling reality: economic growth that does not create jobs or raise incomes will do little to improve the lives of ordinary citizens.

At the heart of the problem lies Nigeria’s weak productive base. While sectors such as finance and telecoms continue to expand, the industries that traditionally absorb large numbers of workers remain stagnant.

Manufacturing provides a telling example. According to the Manufacturers Association of Nigeria, the sector accounts for roughly 80 per cent of employment opportunities across the value chain. Yet its contribution to real economic output remains painfully small.

In the fourth quarter of 2025, manufacturing accounted for only 1.13 percent of GDP in real terms, down from 1.25 percent in the preceding quarter. This decline reflects a broader loss of investor confidence in the sector.

Foreign investment in manufacturing plunged by more than 54 percent during the first nine months of 2025, even as overall capital importation into the nation rose sharply. Investors appear increasingly wary of structural obstacles such as high energy costs, poor infrastructure, currency volatility, and an unpredictable policy environment.

The consequences are predictable. When manufacturing slows, job creation suffers, and when jobs disappear, poverty expands. On the other hand, when poverty rises, economic growth becomes disconnected from the welfare of the people it is supposed to serve.

Nigeria’s challenge, therefore, is not merely to grow but to grow in a way that creates broad-based prosperity.

Adetilewa Adebajo, an economist, has argued that Nigeria must achieve sustained growth of between 8 and 10 percent yearly to significantly improve living standards. Such expansion cannot be driven by consumption or extractive industries alone. It must be anchored in productivity, industrialisation, and large-scale job creation.

Therefore, reviving the manufacturing sector should be a national priority. Reliable electricity, affordable credit for producers, improved logistics infrastructure, and stable trade policies are essential for restoring investor confidence. Industrial zones and export-processing hubs must move from policy documents to practical implementation.

Agriculture also requires urgent modernisation, as food insecurity remains one of the biggest drivers of inflation and poverty. Investment in storage facilities, irrigation systems, rural roads, and agricultural technology could dramatically increase food supply while creating millions of jobs across the value chain.

Equally important is the need for targeted social protection. Economic reforms often impose short-term pain before long-term gains materialise. Without safety nets, such as cash transfers, food subsidies for vulnerable households, and employment programmes, the poorest citizens will continue to bear a disproportionate share of the burden.

The real test of success will not be measured in GDP figures or foreign reserves but in whether ordinary Nigerians can afford food, find meaningful work, and regain hope.

Growth that exists only in statistics is not prosperity. For Nigeria, the task ahead is to ensure that economic expansion finally translates into economic relief for all.