Economy
Nigeria May See 4.4% GDP Growth, 17.1% Inflation in H2 2025—FSDH
By Adedapo Adesanya
Nigeria may achieve an economic growth of 4.4 per cent and a moderate inflation of 17.1 per cent if crude oil production improves, analysts at FSDH Merchant Bank have projected.
In a report released last week, the firm in its Nigeria Macroeconomic Report for the First Half of 2025, offered critical insights into the global and domestic economic environment.
The report titled Balancing on the Edge in a Fragile World dissected the complex interplay of global disruptions and Nigeria’s economic performance, while providing a forward-looking projection for the second half of 2025.
It said despite global trade tensions, geopolitical unrest in the Middle East, and fragile capital flows, Nigeria showed signs of resilience, underpinned by expanding non-oil exports, moderating inflation, and improving investor sentiment.
“Nigeria has demonstrated encouraging signs of macroeconomic stability in the face of global headwinds. Our PMI data suggests an expanding economy, inflation is decelerating, and exchange rate reforms are strengthening market confidence. However, sustaining this progress requires deep structural reforms, especially in energy, trade, and fiscal management,” the chief executive of FSDH Merchant Bank, Mrs Bukola Smith, was quoted as saying in the note.
For the first half of the year, the report noted that Israel-Iran conflict and a renewed tariff war under US President Donald Trump have triggered global uncertainty, with the IMF cutting global growth projections, adding that oil price volatility and trade disruptions are shaping Nigeria’s external outlook.
It also noted that Nigeria’s inflation has moderated following a revision in the Consumer Price Index (CPI) methodology, inflation slowed from 24.5 per cent in January to 23 per cent in May 2025.
The firm also affirmed that exchange rate reforms were working.
“The Naira showed relative stability, trading within a narrower band. FX reforms and CBN’s transparency have restored investor confidence,” it said, adding that, “Though official GDP data is pending, the Purchasing Managers’ Index (PMI) stayed above the 50-point threshold throughout H1, reflecting economic expansion across agriculture, industry, and services.”
It revealed that despite a decline in oil’s share of exports to 62.9 per cent (from 81 per cent in Q1 2024), crude oil production remains below budget benchmarks. This shortfall may affect fiscal performance unless addressed.
Other pointers include NGX All Share Index (NGX-ASI) which returned 16.6 per cent YTD, outperforming many global peers, while foreign portfolio investments surged to $5.03 billion in Q1 as well as the passage of four major tax laws in June, aiming to harmonize tax administration, increase compliance, and improve equity.
“These are expected to raise the tax-to-GDP ratio from 10 per cent to 18 per cent in three years,” it said.
The report then projects that if oil production improves and inflation continues its downward trend in the current half of this year, Nigeria may achieve GDP growth of 4.4 per cent, inflation at 17.1 per cent, and external reserves of $44.3 billion, provided oil output and reforms align in a best-case scenario.
However, Nigeria must leverage current momentum to deepen economic diversification, accelerate reforms in the power and petroleum sectors, and maintain coordination between fiscal and monetary policy.
“Investor sentiment has begun to turn positive. Nigeria’s bond and T-bill markets are attracting renewed interest, and equity markets are gaining momentum.
“At FSDH, we understand that in times like this, clarity and partnership matter more than ever. While we can’t control global events or predict every market move, we remain committed to helping you navigate the complexity with perspective, precision, and purpose,” the Executive Director for Global Markets and Institutional Banking at FSDH, Mr Hakeem Muhammed, said.
The report also noted cautious optimism in the bond and NT-Bills market, as yields softened in response to improved macro indicators, while oil sector stocks on the NGX continued to underperform due to global crude price pressures.
“With the MPR at 27.5 per cent, prime lending rates currently exceed 30 per cent, but projected downward trends in H2 2025 offer a more favourable outlook for debt-funded expansion and capital investments,” added Mrs Stella-Marie Omogbai, Executive Director, Corporate Banking and Branches, FSDH Merchant Bank, “Interest rates are expected to ease due to projections on MPC rates dropping to at least 27 per cent, supported by fresh capital inflows in the banking industry and reduced inflation concerns.”
“FSDH, in partnership with DFIs, will continue to provide funding at competitive rates to help businesses grow,” she further stated.
By Adedapo Adesanya
The Nigeria Customs Service (NCS) is seeking a reduction in import duty exemptions, which rose to N34 trillion, limiting its ability to increase its revenue generation threshold.
The Comptroller-General of the Customs Service, Mr Adewale Adeniyi, disclosed that the value of import duty exemption certificate approvals increased to that level in 2025, describing the policy as one of the major factors restricting its revenue generation.
At an investigative session of the Senate Committee on Finance with revenue-generating agencies in Abuja on Monday, Mr Adeniyi explained that government fiscal policies have continued to impact the revenue-generating capacity of the Customs Service, both positively and negatively.
“The NCS would have generated significantly higher revenue over the years if not for government-approved import duty waivers and other external factors affecting collections,” he said.
He added that the Import Duty Exemption Certificate scheme, introduced in March 2020, accounted for about N34 trillion in approvals in 2025, with nearly 60 per cent covering duty-free importation of military hardware due to Nigeria’s prevailing security challenges.
Other government-backed duty waivers, he noted, covered the importation of Compressed Natural Gas (CNG), electric and hybrid vehicles, healthcare equipment and medical supplies, industrial machinery and manufacturing inputs, as well as food import intervention programmes.
While acknowledging the impact of the waivers on Customs revenue, Mr Adeniyi argued that fiscal policy should not be assessed solely on the basis of revenue generation but also on its broader economic and social objectives.
He, however, urged the federal government to establish stronger monitoring mechanisms to ensure beneficiaries of duty waivers deliver the intended economic outcomes, including lower consumer prices, increased local production and improved healthcare access.
The committee also expressed displeasure over the absence of several heads of government agencies invited to the hearing, including the Nigerian Civil Aviation Authority (NCAA), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Industrial Training Fund (ITF), and the Federal Medical Centre (FMC), Jabi.
The Chairman of the Senate Committee on Finance, Mr Sani Musa, warned that the affected chief executives must appear at the committee’s next sitting or face severe sanctions under the Senate’s rules.
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By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 0.40 per cent on Monday, July 13, buoyed by buying interest in 11 Plc, Central Securities Clearing System (CSCS) Plc and UBN Property Plc, which offset the profit-taking in Food Concepts Plc, the parent company of Chicken Republic.
11 Plc gained N20.69 to end at N227.64 per share compared with last Friday’s price of N206.95 per share, CSCS Plc grew by N1.83 to N91.48 per unit from N89.65 per unit, and UBN Property Plc added 1 Kobo to sell at N1.81 per share versus N1.80 per share.
On the flip side, Food Concepts Plc depreciated by 24 Kobo to close at N2.45 per unit, in contrast to the preceding session’s N2.69 per unit.
As a result, the market capitalisation increased by N9.2 billion to N2.587 trillion from N2.578 trillion, and the NASD Security Index (NSI) improved by 15.33 points to 4,311.67 points from 4,296.34 points.
Yesterday, the volume of securities traded by investors surged by 615.9 per cent to 9.1 million units from the previous 1.3 million units, and the value of securities rose by 997.1 per cent to N320.4 million from the preceding session’s N29.2 million, while the number of deals decreased by 12.5 per cent to 28 deals from last Friday’s 32 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 73.9 million units exchanged for N5.2 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
