A recent projection by Africa Sovereign Credit on Nigeria’s GDP growth paints a picture of renewed momentum and structural transformation. It revealed that the country’s GDP is expected to grow by 3.8% in 2025, up from 3.4% in 2024, indicating cautious optimism supported by solid trends in the country’s economic structure. At the heart of this projected growth is the robust performance of the services sector, whose dominance over the past quarters has become increasingly evident, alongside the high anticipated impact of comprehensive Tax reforms. Throughout 2024, the services sector emerged as the central driver of Nigeria’s economic expansion.
According to the National Bureau of Statistics (NBS), real GDP grew by 3.84% in the fourth quarter of 2024, a significant rise over the 3.46% growth at the same time in 2023. This expansion was largely driven by the services sector, which grew by 5.37% and made a remarkable 57.38% contribution to the overall GDP. These figures highlight the sector’s expansion as well as its vital role in maintaining the nation’s output. Throughout the year, the trend remained constant.
Growing role of service sector in Nigeria’s economic future.
In the third quarter of 2024, GDP growth stood at 3.46%, up from 2.54% in Q3 2023. Once more, the services sector led the way, rising by 5.19% and contributing 53.58% of GDP. Even in the second quarter, when GDP grew by 3.19%, the services sector maintained its pace with a 3.79% growth rate and a dominant 58.76% contribution to total output. On an annual basis, Nigeria’s GDP increased from 2.74% in 2023 to 3.40% in 2024, with the services sector’s growing importance being largely responsible for this development.
Given its steady dominance in the past year, it is hardly surprising that the services sector has emerged as a cornerstone in the 2025 GDP growth projections. Its versatility and robustness across banking, fintech, telecommunications, healthcare, education, and other professional services make it a solid basis for financial planning. Its growing GDP share suggests that the country is moving toward a more service-oriented economy, which is both deliberate and significant. Another crucial factor supporting the 2025 growth forecast is the ongoing tax reform agenda.
Expected impact of tax reforms on fiscal deficit and growth.
It is believed that the federal government’s dedication to restructuring Nigeria’s tax system is essential to raising public Revenue and reducing budget deficits. Among the legislative initiatives in motion are the Joint Revenue Board (Establishment) Bill, the Nigeria Tax Bill, the Nigeria Tax Administration Bill, and the Nigeria Revenue Service (Establishment) Bill. These measures seek to make the tax climate more predictable and business-friendly by reducing the burden of double taxation, streamlining Tax Collection procedures, and expediting dispute resolution.
These measures, if effective, are expected to raise government income, expand the tax base, and lower the fiscal deficit, which is predicted to drop from 5.2% in 2024 to 4.3% in 2025. Increased public spending on social services and Infrastructure may be made possible by improved revenue collection, which would boost Economic Development and Productivity even more. Furthermore, macroeconomic stability and investor confidence will also be improved by a stronger fiscal balance. Adding to the optimistic outlook is the expected improvement in Nigeria’s external position.
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The current account surplus is expected to increase significantly from 1% of GDP in 2024 to 5% of GDP in 2025. A predicted rise in the Trade surplus is responsible for this expected spike, which may give the Economy an extra buffer and lessen its susceptibility to external shocks. All of these elements suggest that Nigeria’s economic structure would become more stable and growth-oriented. The services sector’s sustained rise, coupled with reforms that aim to unlock the full potential of government revenue, positions the country to meet—and potentially exceed—the 3.8% GDP growth projection for 2025.