Nigeria set an ambitious three-year growth target that leans heavily on the non-oil sector in Africa’s biggest oil-producing nation.
Growth is forecast to edge up to 4.7% next year from 4.6% in 2025 before advancing to 6% in 2027 and 7.9% the following year, according to projections by the Ministry of Budget and Economic Planning presented to the cabinet on Wednesday evening and seen by Bloomberg.
Economic reforms since President Bola Tinubu took office in 2023 and the orthodox monetary policy pursued by central bank Governor Olayemi Cardoso have begun to bring inflation under control, stablize the naira and earned the West African nation a recent shift to a positive outlook for its credit rating.
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Still, the nation faces significant challenges including unreliable power supplies, poor infrastructure and security issues in parts of the country that hurts farming output. Almost doubling the growth rate over the next three years looked optimistic to analysts.
“There is scope for Nigeria to grow at a solid pace, but an expansion of nearly 8% in 2028 seems a bit unrealistic,” said Brendon Verster, senior economist at Oxford Economics Africa.
Domestic demand is expected to benefit from easing inflation and a firmer naira, leaving the economy “in a good position to weather subdued global oil prices,” said Verster.
The government’s projections show inflation, which slowed to 16.1% in October, at 18% next year and just under 20% in 2027 and 2028.
Crude production is seen rising to 2.06 million barrels per day in 2026 and 2.10 million barrels in 2027, from 1.64 million barrels in the third quarter, according to the government forecasts. The non-oil part of the economy is projected to generate almost 99% of economic output by 2028, compared with 89% this year.
Growth in Nigeria downshifted to 4% year-over-year in the third quarter from 4.2% in the previous three months, which was slightly better than expected as the country weathered weaker oil prices and trade tariff-related disruptions.
“We are seeing a clear ceiling on GDP growth of 4%, due to the various structural limitations on the Nigerian economy,” said Joachim MacEbong, a senior analyst at Control Risks. “Removing these limitations is dependent on the extent to which the government can support domestic and foreign investment in Nigeria by addressing insecurity, providing cheap and available electricity as well as stable regulations in multiple sectors.”
But the service sector was the fastest-growing part of the economy in the third quarter, driven by telecommunications and real estate, and that reliance could be constraining.
“Services are doing most of the heavy lifting, while manufacturing is lagging — the sector has grown at less than 2% for the past three years, held back by poor power supply, weak logistics that slow distribution nationwide, and high borrowing costs,” said Yvonne Mhango, Africa economist at Bloomberg Economics. “Unless those bottlenecks and structural constraints are addressed, investment will stay low and growth will remain steady at best.”