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INTRODUCTION
Nigeria is gearing up for a major milestone in the upstream energy sector as the 2025 Oil Licensing Round scheduled to commence on December 1, 2025, kicks off. This announcement was made by the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), during the Project 1MMBOPD Additional Production Investment Forum in London.
This licensing round is expected to open up discovered but undeveloped oil and gas fields, with a strong focus on natural gas development, reflecting the industry’s drive toward energy transition and the Country’s commitment to the UN Sustainable Development Goals (SDGs). This bid round will undoubtedly boost indigenous crude oil production, attract new investments into the upstream sector, and create more jobs for Nigerians.
The NUPRC has given firm assurance to stakeholders that the bid process will be fair, transparent, and competitive, and will be executed in full compliance with the Petroleum Industry Act (PIA) 2021, with the core objective of promoting industry stability and long-term economic growth.

The 2025 Licensing Round is expected to play a pivotal role in the shaping of the future of Nigeria’s energy and extractive industry, positioning Nigeria as a leading energy producer in Africa. It is designed to increase exploration of our oil and gas reserves, increase production, and make better use of our gas resources as the world moves toward cleaner energy. At the same time, it is expected that the process will deliver real opportunities for indigenous companies and skilled Nigerians, enhancing job creation whilst building domestic expertise. By attracting reputable international partners, the round will also assure a surge of FDI inflow, transfer of new exploration and production technology, while ensuring transparency and accountability in line with global standards. Ultimately, the Licensing Round is about creating a more vibrant, inclusive, and sustainable energy sector that delivers economic value to the country and its citizens.

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ABOUT DEALHQ
We are an Africa-focused deal advisory/boutique commercial law firm, specializing in supporting businesses and positioning them to operate efficiently within their market sphere. We are known for our quality service delivery which is focused on attention to detail, creativity, timely execution and client satisfaction.
Our service offering includes infrastructure, energy, corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support, amongst others.
The content of this Article was published by DealHQ’s Energy Practice Team. It is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice in respect of your participation in the 2025 petroleum licensing round, other aspects of this article any other related subject, you may contact our Energy Practice Team via:

Email: EnergyPT@dealhqpartners.com; clientservice@dealhqpartners.com
Telephone: +234 1 4536427 or+2348090938104 or +234 8099193674

INTRODUCTION

On the 5th of August 2025, President Bola Ahmed Tinubu assented to the Nigerian Insurance Industry Reform Bill, 2025, a landmark legislation designed to strengthen Nigeria’s financial sector and accelerate the nation’s progress towards achieving a $1 trillion economy.

The Nigerian insurance industry is on the verge of a significant transformation with the  Promulgation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 (“the Act”). This landmark legislation replaces and consolidates the Insurance Act, 2003 (Cap I17, Laws of the Federation of Nigeria 2004) and other outdated provisions into a single, modern framework designed to strengthen regulation, enhance market confidence, and align the sector with global best practices. The Act introduces far-reaching measures such as compulsory insurance coverage across critical sectors, stricter licensing requirements for agents, increased minimum capital thresholds to ensure financial stability, and robust enforcement Measures to address unlicensed operations and delays in claims settlement.

By addressing long-standing regulatory gaps and operational inefficiencies, the reforms aim to deepen insurance penetration, protect policyholders, and foster a more competitive market. These changes are expected to not only reposition the insurance sector as a key driver of Nigeria’s financial system but also contribute meaningfully to the government’s ambition of building a $1 trillion economy.

This article seeks to highlight the key provisions of the Act with a view to emphasizing the significance of the Act on the insurance industry, as well as the opportunities and risks inherent in the introduction of the Act.

BACKGROUND AND RATIONALE

Nigeria’s insurance industry has long struggled to fulfil its potential, hampered by outdated legislation, low public trust, and one of the lowest penetration rates on the continent. The Insurance Act of 2003, while an important milestone at the time, failed to keep pace with the realities of a changing economy, emerging risks, and the need for deeper consumer engagement as a result, the sector has remained underdeveloped, contributing less than 0.5% to GDP well below peers such as South Africa, Morocco, and Kenya. Weak consumer awareness, slow claims processes, and limited regulatory enforcement have reinforced public skepticism.

In recent years, however, industry has shown signs of growth. At the 54th Annual General Meeting of the Nigerian Insurers Association (NIA), it was disclosed that insurance companies in Nigeria recorded gross written premiums of ₦1.562 trillion (approximately $1 billion) in 2024, representing a 56% growth compared to the previous year.

However, Regulators and market stakeholders have identified capital adequacy as a central challenge. Many insurers lack the financial depth to underwrite large risks or respond effectively to macroeconomic shocks. As industry analysts note, a well-capitalized insurance sector not only boosts public confidence but also enables and contributes to economic stability. This understanding has informed the renewed legislative push to strengthen the industry’s regulatory framework.

The new Insurance Act is an ambitious reform by Nigeria that modernizes market oversight, raises prudential standards, promotes competition, and expands access through digital and inclusive models. Aligned with Nigeria’s march towards a $1 trillion economy goal, the Act seeks to build a more transparent and resilient insurance sector capable of mobilizing long-term capital, protecting assets, and driving sustainable economic growth.

KEY CHANGES

This section outlines the major provisions of the Act, highlighting the changes that will shape operational requirements for insurers and the significance of these changes to the industry and relevant stakeholders. The key changes in the Act are as follows:

1. Licensing and operation of insurer

The Act introduces a more structured and transparent framework for licensing insurers and reinsurers. Under the new regime, no individual or entity may commence or continue the business of insurance, reinsurance, or related activities in Nigeria without first obtaining a license from the National Insurance Commission (NAICOM).

The Act provides that Applications must be made in a prescribed form and accompanied by all supporting documents required by the Commission. Importantly, eligibility for licensing is now clearly defined. Only companies incorporated under Nigerian law as limited liability companies under the Companies and Allied Matters Act 2020 or established under another Nigerian statute can be licensed. In addition, applicants must maintain the prescribed minimum capital, make and maintain a statutory deposit with the Central Bank of Nigeria, and meet all other requirements set by NAICOM. These additional requirements now include the submission of a business plan that identifies the specific niche market the applicant intends to serve.

Another notable introduction under the Act is the requirement for NAICOM to publish a Service Charter. This document must set out the Commission’s products and services, the complete list of requirements for obtaining each one, the applicable fees, timelines for processing, and all supporting processes and documentation. By institutionalizing this Service Charter, the Act seeks to improve transparency, reduce regulatory uncertainty… (continue reading or download pdf)

ABOUT DEALHQ

DealHQ Partners is a Pan-African transaction advisory firm dedicated to enabling businesses to operate efficiently within Africa’s dynamic market. Committed to driving a connected Africa, through cutting-edge solutions, premium deal advisory, beyond-border thinking and rigorous execution.

We are Africa’s foremost “deal-only” law firm, focused on engineering transactions that unlock capital, infrastructure and trade across the continent, one client at a time.

Our service offering includes: corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support amongst others.

The content of this Newsletter is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact us.

clientservices@dealhqpartners.com   www.dealhqpartners.com

INTRODUCTION

During the recent Forum on China-Africa Cooperation (FOCAC) meetings, the Chinese government announced that it will grant full duty-free access to exports from 53 African countries with which it maintains diplomatic relations. This new policy, unveiled by President Xi Jinping, significantly expands the scope of duty-free access, previously limited to 33 least-developed African countries (LDCs), to now include 53 nations. Now, except for eSwatini, every African nation that has formal ties with Beijing will enjoy zero tariffs across all product lines. This move underscores China’s broader strategy to deepen trade and economic engagement with Africa by removing longstanding market access barriers.

Beyond tariff elimination, China is also introducing practical trade facilitation measures such as streamlined customs procedures, clearer inspection and quarantine standards, and targeted support for African exporters. The initiative includes commitments to train African trade personnel and boost the visibility of African products within the Chinese consumer market, thereby enhancing the continent’s integration into global value chains.

POLICY OVERVIEW AND IMPLICATIONS

China’s move can be seen as both economic and geopolitical; aimed at expanding markets for Chinese goods and services, securing access to raw materials, and strengthening supply chain stability. It also reflects a broader strategy to deepen its influence and footprint across Africa, positioning itself as the continent’s preferred trade and development partner. This aligns with its Belt and Road Initiative, which seeks to enhance infrastructure and connectivity across Asia and Africa. By reinforcing economic ties with Africa, China is strategically positioning itself as a key player in the continent’s development narrative.

Furthermore, China also holds a dominant position in the global critical mineral supply chain, with a significant portion of its imports from Africa consisting of fossil fuels, metals, and critical minerals resources in which Africa is abundantly endowed.

BALANCE OF TRADE DATA AND EVIDENCE FROM CURRENT DUTY-FREE BENEFICIARIES

Following the duty-free waivers granted to 33 least-developed African countries (LDCs) last year, trade between China and Africa reached $134.16 billion in the first five months of 2025, according to China’s General Administration of Customs. This represents a 12.4% increase compared to the same period in 2024. During this period, Chinese exports to Africa rose by 20.2% to $83.51 billion, while imports from Africa increased by just 1.6%, totaling $50.65 billion.

As a result, Africa’s trade deficit with China widened to $32.86 billion, with declining global commodity prices continuing to affect the continent’s export revenues.

China’s key imports from Africa remain concentrated in crude oil, critical minerals such as cobalt and copper, and agricultural commodities like cocoa and sesame. However, the Chinese market also shows demand for niche finished products, including leather goods, textiles, processed foods, and fashion items.

Despite duty-free access, African LDCs have not significantly closed up the gap in the trade imbalance. While trade volumes have grown, exports have remained largely focused on raw materials and low-value goods. Click here to read more or download pdf file

About DealHQ

We are a Pan-African transactional advisory firm dedicated to enabling businesses operate efficiently within Africa’s dynamic market. We provide stellar business solutions which help businesses navigate the unique challenges and opportunities in the African business landscape whilst enabling them to operate efficiently within their market sphere.

Our service offering includes: corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support amongst others.

The content of this Article is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact us.

For the second time in its economic history, Nigeria embarked on a comprehensive GDP and CPI rebasing exercise. For context, the last rebasing exercise in Nigeria was conducted in 2014, updating the base year for GDP calculations to 2010, from 1990. The exercise resulted in a significant jump in the nation’s GDP, driving the outcome of a more accurate representation of the economy by incorporating previously underrepresented sectors such as telecommunications and entertainment.

According to the United Nations System of National Accounts (UN SNA)-2008, the base year for calculating a nation’ Gross Domestic Product needs to be revised periodically (usually every five years) to capture structural changes in the economy, new industries emerging, and shifts in consumption patterns. While it is undeniable that Nigeria was long overdue for a rebasing of its economic indicators; this step comes with significant implications for businesses, policymakers, and everyday Nigerians.

This article examines the implications of Nigeria’s CPI and GDP rebasing efforts for businesses, focusing on its impact on the pricing of goods and services, taxation, and key sectors such as agriculture, energy, and manufacturing. It also provides insights into how businesses can effectively navigate this transition.

1. Understanding CPI Rebasing & GDP Rebasing

Consumer Price Index

A consumer price index (CPI) serves as a vital tool for understanding the economic health of any nation. Essentially, it provides a statistical estimate of goods and services procured for consumption by households in the Country. The calculation of the Consumer Price Index (CPI) involves identifying a representative selection of essential goods and services, commonly referred to as a “market basket.” The prices of these items are systematically monitored over time, and a weighted average is computed, taking into account the relative frequency of consumption for each item.

A revision of the Consumer Price Index (CPI) was concluded in February 2025 to accurately reflect evolving consumption patterns within the Nigerian economy.

Key takeaways from the 2024 CPI rebasing.

This revision involved significant adjustments to the market basket, a key component used by statisticians to quantify inflation. Specifically, the number of items included in the basket was increased from 740 to 940, whilst the weighting of the basket goods and services were adjusted to reflect their current significance. Notably, sectors like fintech and healthcare, which were previously underrepresented, now hold a more substantial position within the basket. The rebasing has also introduced a new division “Insurance and Financial Services”, expanding the total number of divisions from 12 to 13, reflecting the importance of financial products in people’s lives. It has also resulted in the feature of supplementary indexes for services, energy and farm produce.

Gross Domestic Product

The Gross domestic product (GDP) refers to a monetary measure of the total market value of all the final goods and services produced in a specific period by a country,  used to measure the economic performance of a country or region. To rebase a country’s GDP is to update the base year used to calculate economic output to a more recent year. This will enable the GDP computation take into account structural changes that have occurred in the economy between the previously adopted base year and the most recently adopted base year to provide a more realistic representation of national economic performance.

Why Nigeria is Rebasing Its Gross Domestic Product (GDP)

Nigeria’s 2014 GDP rebasing exercise dramatically reshaped its economic standing, propelling it to become Africa’s largest economy –  surpassing South Africa, with an 89% surge to USD$509 billion. This transformation was not unexpected, as the previous base year had become increasingly obsolete, failing to capture the significant diversification of the Nigerian economy over 24 years.

Now, ten years later, Nigeria’s macroeconomic landscape has witnessed momentous shifts across various sectors. Stakeholders and policymakers agree that the rebasing of Nigeria’s CPI Index and GDP, is not only overdue, but has become critical, given the growing divergence between the base year’s economic data and the rapidly evolving realities of the Nigerian economy. To address this, the ongoing rebasing effort seeks to incorporate burgeoning sectors such as technology, digital services, NSITF (Nigeria Social Insurance Trust Fund), NHIS(National Health Insurance Scheme), Modular refineries and the informal economy, with a view to enhancing the reliability of Nigeria’s economic statistics. It is important to note that Nigeria’s current GDP rebasing exercise is still in progress. Therefore, stakeholders should be aware that any preliminary data or analysis may be subject to revision upon completion of the process.

Recognizing the need for precision in both GDP and inflation tracking, the National Bureau of Statistics (NBS) has selected 2019 as the base year for the ongoing GDP rebasing. The selection of 2019 as the base year is due to its relative economic stability compared to the turbulent years that followed, which were significantly disrupted by the COVID-19 pandemic leading to global supply chain shocks, and fluctuating oil prices from which the world is only now recovering.

Whilst some schools of thought may view a GDP rebasing as a statistical facelift, in reality, it could be a blessing or a curse as it will illuminate both the growth and inherent challenges in the economic landscape. The rebasing exercise does not only adjust GDP figures, but also directly impacts key economic metrics expressed as proportions of GDP, such as fiscal deficits and debt-to-GDP ratios. Typically, a higher GDP, resulting from rebasing, lowers these ratios, presenting a more favourable fiscal outlook.

Beyond fiscal management, a rebased GDP also provides valuable support for development planning by highlighting growth trends across various sectors. These insights will prove invaluable for data-driven economic planning as it enables the Government allocate resources efficiently, target high-growth industries, and address economic gaps.

How Investors and Consumers should Interpret the rebased GDP & CPI

The rebased CPI and GDP figures present a nuanced landscape for investors. On the surface, the reported decline in inflation and an expanded GDP—driven by the inclusion of sectors like fin-tech, digital services, and formalized informal industries—may signal economic diversification and resilience. This could attract foreign investment, particularly in sectors newly reflected in the GDP, which now appear more prominent contributors to Nigeria’s economic output. A larger nominal GDP might also improve Nigeria’s debt-to-GDP ratios, potentially enhancing its creditworthiness.

However, the risks lie in the details. The GDP increase is partly a statistical recalibration which may not necessarily be backed by real growth in productivity or output. For instance, while the 2019 base year captures Nigeria’s post economic recovery, it may overemphasize Nigeria’s progress in addressing underlying structural challenges, such as infrastructure gaps or over-reliance on oil exports. Similarly, the post rebasing inflation rate shaped by updated consumption weights (e.g., reduced emphasis on volatile food prices), could mask ongoing cost pressures in utilities, transportation, or imported goods. Investors comparing pre- and post-rebased data without adjusting for methodological shifts may misallocate capital. In responding to the rebasing outcome therefore, investors would need to employ a holistic approach;  looking closely at other indicators like employment rates, currency stability, and consumer buying power to get a true sense of the economy’s health. This comprehensive approach helps avoid overestimating the positive impact of the statistical updates.

For consumers, the rebased CPI could flay a dangerous misconception that inflation has meaningfully slowed, and that prices of goods and services are stabilizing. The reported decline of food inflation to 24.48% might lead households to believe their purchasing power has improved, prompting increased spending or reduced savings. This decline, however, is largely a consequence of a re-weighted CPI basket which now assigns lower weight to staple foods like cassava or yam and higher weight to services like healthcare or streaming platforms. Prices for essential goods such as fuel, electricity, or imported rice may still be rising sharply, but their impact on the headline inflation rate is now de-emphasised.

Implication of GDP and CPI Rebasing on Pricing Strategies & Models

It is important for businesses and Investors to adjust their pricing models and strategies to align with the updated CPI basket which now emphasizes modern sectors like technology and services while reducing the weight of traditional industries such as agriculture. For example, businesses in the agricultural sector or particularly reliant on inputs (e.g., food processors) may find their rising costs underrepresented in the new CPI, as staples like cassava or maize now carry less statistical influence. On the other hand, tech firms offering digital services—now more prominently weighted—could leverage their heightened visibility in inflation metrics to justify price adjustments. This shift requires businesses to analyse their pricing strategy and structures through the lens of the revised CPI, potentially renegotiating supplier contracts or diversify supply chains to mitigate discrepancies between reported inflation and actual expenses to reflect the reported changes in consumer taste and behaviour.

Implication of GDP and CPI Rebasing on Tax Reforms

Nigeria’s 2014 GDP rebasing was a watershed moment, propelling the nation to the top of Africa’s economic rankings overnight. Yet, it revealed a glaring disconnect: while the economy looked larger on paper, its tax-to-GDP ratio remained one of the lowest in Africa.

Fast-forward to 2024, and policymakers are at a crossroads with the anticipated passage of the Tax Reforms Bill 2025. Take agriculture, the backbone of Nigeria’s economy which according to Statista, contributed 22.72% to GDP in 2023—a figure still anchored to the outdated 2010 base year. Yet, its tax contributions remain negligible, a paradox that underscores a systemic flaw. A rebased economy offers a clearer map of taxable activity, empowering policymakers to cast a wider net. Sectors like tech and financial services, now amplified by rebasing, offer a prime opportunity for the implementation of smarter taxation strategies.

2. Sector-Specific Challenges

• Agriculture, Energy, Manufacturing & Oil and Gas

For Nigeria’s farmers, manufacturers, and energy producers, rebasing feels like shifting sands beneath their feet. For example, manufacturers importing machinery may face a cruel irony: rising global costs clash with a CPI that underweights these expenses, leaving them stuck between raising prices, losing customers or assuming massive losses.

Agribusinesses who are already battling climate shocks and poor infrastructure, now risk being left in the cold. If the rebased CPI downplays food price volatility, government aid could dry up, and attention could shift to more prominent sectors of the economy.

• Banking & Finance

The banking and financial sectors must re-assess lending rates, interest rates, and credit accessibility based on the rebased economic data. This could lead to adjustments in lending rates mortgage, personal and corporate loans

• Retail and Consumer Goods

Adjustments in CPI weightings reflects reshaped consumer behaviour analytics, requiring businesses in retail to revisit demand forecasting models and consumer pricing strategies.

3. Conclusion.

Nigeria’s comprehensive GDP and CPI rebasing exercise represents a pivotal moment in the nation’s economic history. While the statistical adjustments offer a more nuanced and contemporary view of the economy, they also necessitate a strategic recalibration for businesses, investors, and consumers alike. The shift in economic indicators, driven by the inclusion of emerging sectors and updated consumption patterns, demands a proactive approach to contract renegotiation, regulatory compliance, and financial planning as the impact extends beyond mere statistical adjustments, directly influencing pricing strategies and tax reforms.

For investors, the rebased figures present both opportunities and risks, requiring a holistic assessment that transcends surface-level data. Consumers, too, must remain vigilant, understanding that reported inflation figures may not fully reflect the lived reality of rising essential costs. The need for expert legal guidance becomes paramount in navigating the complex contractual and regulatory landscapes that emerge from these changes.

Ultimately, the successful adaptation to this economic recalibration hinges on a collective commitment to transparency, data-driven decision-making, and a thorough understanding of the evolving economic terrain. By embracing these changes, Nigeria can ensure that the rebasing exercise serves as a catalyst for sustainable economic growth and expansion.

About DealHQ

We are a Pan-African transactional advisory firm dedicated to enabling businesses operate efficiently within Africa’s dynamic market. We provide stellar business solutions which help businesses navigate the unique challenges and opportunities in the African business landscape whilst enabling them to operate efficiently within their market sphere.

Our service offering includes: corporate commercial, real estate & construction, finance, capital markets & derivatives, mergers and acquisitions, private equity, infrastructure, technovation and data privacy, agriculture & commodities, business formations & start up support amongst others.

The content of this Article is not intended to replace professional legal advice. It merely provides general information to the public on the subject matter. Should you wish to seek specialist legal advice on this or any other related subject, you may contact us.

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The 2025 Budget, titled “The Restoration Budget: Securing Peace, Rebuilding Prosperity,” was presented by President Bola Ahmed Tinubu during a Joint Session of the National Assembly on Wednesday, December 18, 2024. To date, the budget is yet to receive legislative approval from the National Assembly, marking the latest start to the yearly legislative process for financial appropriation in 25 years. The Chairman of the Senate Committee on Appropriation, Senator Solomon Adeola, attributed the delay to the introduction of the Tax Reform Bill which is required to be passed concurrently with the Appropriation Bill 2025 and without which the underpinning revenue assumption will be doubtful. He further noted that the National Assembly is working diligently to pass the Appropriation Bill by January 31, 2025. In the interim, the National Assembly has approved an extension to the term of the 2024 Appropriation Act from December 31st 2024 to June 2025.

The 2025 Budget represents a significant step toward improving the overall health of the Nation’s economy, restoring macroeconomic stability, and building on the progress recorded by the current administration in the last nineteen months to give the Nigerian economy the much needed uplift.

In his Budget Proposal presentation,  President Bola Tinubu outlined the Federal Government’s key priority areas for the 2025 fiscal year, to include restructuring the economy, boosting human capital development, increasing trade and investment volumes, bolstering oil and gas production, and revitalizing the manufacturing sector to enhance Nigeria’s economic competitiveness. He emphasized that defense and internal security, infrastructure development, healthcare, education, human capital development, and agriculture remain at the core of his administration’s fiscal objectives.

The budget proposal is guided by the assumptions set out in the multi-year Medium Term Expenditure Framework (MTEF) 2025–2027 and the Fiscal Strategy Paper (FSP) which serve as a vital tool for prudent fiscal management and resource allocation. The MTEF incorporates factors such as inflation, interest rate, currency exchange rates, foreign exchange reserves, capital import flows, and the performance of the preceding year’s budget to establish the foundational assumptions influencing the fiscal plan for 2025.

Comparative Analysis of Key Budget Assumptions

 Table 1: Comparison of key assumptions underlying Nigerian budgets from 2023 to 2025

Fig 1: Key Assumptions in the 2025 budget

Key Elements of the Budget – Revenue summary

The 2025 Appropriation Bill projects a total revenue of NGN 36.35 Trillion, a 40.51% increase from the total aggregate revenue for 2024.

The total aggregate revenue of NGN36,352,202,174,299 for 2025 is therefore broken down as follows:

1. FGN Share of Net Federation revenue is projected to be NGN 27.49 Trillion – (75.56% of the total aggregate expenditure).
2. Independent Revenue is projected to be 3.47 Trillion representing – (9.51% of the total aggregate expenditure).
3. Other Dividends (less NLNG Dividend) are projected to be NGN 7.52Billion – (0.02% of the total aggregate expenditure).
4. Aids and Grants are projected to be NGN 761.9 Billion – (2.09% of the total aggregate expenditure).
5. Special Funds/Account Receipts are projected to be NGN 300 Billion – (0.83% of the total aggregate expenditure).
6. Revenue from Government-Owned Enterprises are projected to be NGN 2.87 Trillion – (7.89% of the total aggregate expenditure).
7. Other Revenue Sources are projected to be NGN 1.46 Trillion – (4.02% of the total aggregate expenditure).

The Medium-Term Expenditure Framework (MTEF) 2025–2027 and Fiscal Strategy Paper (FSP) assumes a total revenue of NGN 34.82 Trillion for 2025:

1. Oil-related sources: NGN 19.6 Trillion, representing 56.32% of the total projected revenue.
2. Non-Oil-related sources: NGN 15.22 Trillion, representing 43.68% of the total projected revenue, which includes non-oil taxes, mining revenue, GOE revenue, aids, grants, and social fund receipts.

Whilst there exists a marginal discrepancy between the projected revenue in the 2025 Appropriation Bill (NGN 36.35 Trillion) and the MTEF/FSP assumption (NGN 34.82 Trillion), the negligible margin of difference suggests alignment in the fiscal posture of the Federal Government. The almost equal ratio of oil related revenue and non-oil related emphasizes the drive to achieve a more diversified revenue pool, particularly from taxes, government-owned enterprises, and social funds, reinforcing the government’s commitment to a sustainable fiscal mix.

Figure 2: percentage-based representation of revenue projection under the 2025 budget

Key Elements of the Budget – Expenditure Summary

The Appropriation Bill 2025 projects a total aggregate expenditure of NGN49.74 Trillion, reflecting a 41.91% increase in comparison 2024, including the approved supplementary budgets.

The projected expenditure for 2025, amounting to NGN49,740,165,355,396, is allocated as follows:

1. Aggregate Capital Expenditure is estimated at NGN14.85 Trillion representing 29.85% of the total aggregate expenditure, and a 7.84% increase from the 2024 budget including the approved supplementary budgets.
2. Recurrent (non-debt) expenditure is estimated at NGN14.12Trillion representing 28.39% of the total aggregate expenditure, and a 25.40% increase from the 2024 budget including the approved supplementary budgets.
3. Total Debt service is estimated at NGN16.33Trillion, representing 32.83% of the total aggregate expenditure, and a 97.81% increase from the 2024 budget including the approved supplementary budgets.
4. Statutory transfers are estimated at NGN4.44 Trillion, representing 8.93% of the total aggregate expenditure, and a 154.60% increase from the 2024 budget including the approved supplementary budgets.

Of the total aggregate expenditure approved for the 2025 financial year, a total of NGN8.2 trillion is appropriated for the service of domestic debts and NGN7.6 trillion for the service of foreign debts, while NGN 430.268 billion is to be held in a Sinking Fund Account for the retirement of maturing promissory notes.

Fig. 3: percentage based representation of revenue allocation under the 2025 budget

Table 2:  YOY Comparison of expenditure allocation in the budgets from 2023 – 2025

Key Elements of the Budget – Budget Deficit and Deficit Financing

The Budget deficit for the 2025 fiscal year stands at NGN13.39 trillion, representing 3.9% of our National GDP and a 45.36% increment from the NGN 9.18 trillion budget deficit for 2024. This sharp increase highlights the Federal Government’s strategic decision to expand fiscal spending in response to pressing national priorities. Although this exceeds the threshold set by the Fiscal Responsibility Act, the Federal Government has represented that the need to address critical security and economic challenges validates this increased expenditure. The Budget deficit is expected to be financed primarily from the proceeds of strategic asset sales/privatization which Federal Government estimates will return circa NGN312,332,810,711 (2% of total deficit); multilateral/bilateral project-tied loans disbursements estimated at NGN3,799,281,435,450 (28% of total deficit) and other debt financing sources estimated at NGN9,276,348,934,936 (69% of total deficit).

The Federal Government’s approach to deficit financing reflects an unprecedented strategy, relying on a domestic and external borrowing threshold. Whilst this strategy will likely facilitate economic growth and development across various sectors, it leaves in its trail growing concerns about rising National debt,  layered with rising cost of debt service which could further flay inflationary pressure.

Fig 4: percentage-based representation of the allocation of the budget deficit financing under the 2025 budget

Analysis of the 2025 Budget – Key highlights

1. Macroeconomic assumptions

As with previous budgets, questions have been raised around the viability of the macroeconomic assumptions underpinning the 2025 Appropriation Bill. The USD exchange rate benchmark is set at NGN1,500/USD, whereas current market rate hovers around NGN1,535/USD. The gap between the projected and actual exchange rates signals a significant risk, especially if FX availability declines or the FX market conditions worsen. We note however that the Central Bank of Nigeria’s (CBN) Electronic Foreign Exchange Matching System (EFEMS), may likely improve transparency and efficiency in the FX market.

Furthermore, a review of the performance of the 2024 budget reveals discrepancies in inflation assumptions which was projected at 21% for 2024 and which later settled at 34.6%; oil production was pegged at 1.78mbpd, yet actual production averaged 1.4mbpd. These variances have raised significant concerns about the credibility of the 2025 assumptions, especially given persisting challenges such as oil theft, fluctuating global crude prices, and foreign exchange volatility. Critics argue that these overly optimistic assumptions could lead to higher deficits and greater borrowing to cover revenue shortfalls.

2. Ambitious Revenue Assumptions

The revenue projections for 2025 have drawn significant scrutiny from experts, with the Federal Government projecting a total revenue of NGN36.35 trillion, representing a 40.51% increase from the 2024 budget revenue projection. This includes projected oil revenue of NGN19.6 trillion, a target that many consider overly optimistic, given Nigeria’s declining oil production volumes of circa 1.6mbpd over the past two years and the persistent challenges of pipeline vandalism, oil theft, and fluctuating crude prices. However, the recent approval of major oil and gas acquisitions, such as the Seplat-Mobil Petroleum Nigeria Unincorporated (MPNU), Oando-Eni, Chappal-Equinor, and Shell-Renaissance deals are expected to increase oil and gas production capacity. These deals, which bring in critical investments for the development of new oil fields and the revitalization of existing ones, are anticipated to help Nigeria achieve higher output levels, and possibly validate the production assumptions.

In the light of the record decline in consumer spending and the growing economic hardship, many stakeholders have also adjudged the Non-oil revenue projections as ambitious. The Federal Government expects NGN15.22 trillion from non-oil sources, including VAT and Corporate taxes. It is however worthy of note that the Federal Inland Revenue Service (FIRS) exceeded its 2024 revenue collection target, realizing NGN21.6 trillion over and above the NGN19.4 trillion target, including significant gains in Company Income Tax and Education Tax.

It is our considered opinion that achieving the 2025 revenue projections hinged primarily on increased oil and gas production, Stabilization of global oil prices and production costs fluctuations in oil prices could directly impact the revenue from this sector and Significantly improve the non-oil revenue stream.

3. Debt Financing and Rising Debt Servicing Cost

Under the 2025 Budget, debt service is estimated at NGN16.33 trillion, accounting for 32.83% of total expenditure, significantly higher than the NGN8.49 trillion allocated in 2024. This increase reflects both the rising debt stock and the impact of global interest rate hikes on external borrowings. The fluctuating exchange rate, instability of the Nigerian Naira, and the rise in domestic lending rates further exacerbate the debt servicing burden, as more local currency may be required to meet both foreign and domestic debt obligations.

Nigeria’s growing debt burden continues to be of great concern to stakeholders. The 2025 Budget deficit of NGN13.39 trillion will be financed through a mix of borrowing, multilateral loans, and asset sales/privatization proceeds, further increasing the country’s debt stock. Debt-to-GDP ratio, which stood at 50.7% in 2024 is however projected to decrease marginally to 49% in 2025, highlighting concerns about long-term fiscal sustainability. The high debt-servicing costs will crowd out spending in vital sectors such as healthcare, education, and infrastructure, hindering efforts to achieve inclusive economic growth, thereby calling for an efficient long-term debt management strategy and enhanced fiscal discipline.

4. The 2025 Tax Reform Bill

The proposed 2025 Tax Reform Bill, currently undergoing the legislative approval process, is what underpins key revenue assumptions under the 2025 Budget and the Federal Government’s strategy to increase revenue generation and improve fiscal sustainability. This Bill which has been applauded by many stakeholders, shows a much longer term approach to tax reforms in contrast to the previous Buhari administration, which passed a Finance Bill alongside its Appropriation Laws to deliver strategic reforms and stimulate economic activity in priority sectors in each Fiscal Year. The Tax Reform Bill when passed, is expected to enhance tax compliance, streamline fiscal policies, expand the national tax base, and consolidate existing tax laws, whilst delivering long-term fiscal health, and addressing systemic inefficiencies in tax administration and aligning tax policies to the broader fiscal objectives of the Federal Government.

Conclusion

The 2025 Appropriation Bill is an ambitious fiscal proposal designed to restructure critical sectors of Nigeria’s economy, drive revenue growth, and tackle pressing national challenges. Its key objectives include reducing dependence on petroleum imports, promoting the export of finished petroleum products, boosting agricultural production through improved security, and increasing foreign exchange inflows through foreign investments. Further, the budget targets a significant increase in crude oil output and exports while aiming to lower upstream oil and gas production costs. However, the ongoing delay in the budget’s approval by the National Assembly poses the risk of potentially stalling progress on these vital initiatives and delaying the execution of key projects.

Achieving the objectives of the 2025 budget will require a comprehensive and strategic approach by the Federal Government. This includes the rigorous implementation of tax reforms, diversification of the economy to reduce oil dependency, substantial investment in critical infrastructure, and the strengthening of governance frameworks to enhance transparency and accountability. These measures are essential for improving fiscal discipline, attracting investments, and building a resilient economic foundation.

For businesses, subject to its timely passage, we already see key economic benefits that are likely to positively impact the business landscape in Nigeria. The significant increase in capital expenditure is expected to translate to increased infrastructure development; it is also expected that the Country will enjoy a much more stable and predictable fiscal and monetary policy direction which will restore investor confidence and promote economic growth.

The Budget also records significant allocation of revenue to education:- supporting teacher training, supporting initiatives such as the Universal Basic Education, Vocational Training Initiative, the expansion of the National Open University of Nigeria, and the promotion of equal opportunity to education through  scholarships and grants to students from disadvantaged backgrounds. This will in the long run improve the size and depth of the Nation’s skilled workforce pool which has suffered significantly on account of increased workforce migration.

In summary, the 2025 budget presents promising opportunities for sectors such as manufacturing, agriculture, education and infrastructure with the increased capital flow to be recorded in the current fiscal year and the overall impact this will have on the overall economy. Nonetheless, businesses must remain proactive and adaptable, keeping a close watch on evolving fiscal policies, potential tax reforms, and macroeconomic indices that may impact their operations. Ultimately, the budget’s success will depend on timely legislative approval, efficient policy execution, and prudent fiscal management. These factors will determine the extent to which the 2025 budget influences Nigeria’s economic trajectory and the broader business landscape.

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