BREAKING: Nigeria’s Economic Landscape: An Analysis Of Recent Policy Changes And Their Impact On Various Business Sectors And Investment Opportunities

In the past decades, the Nigerian economic landscape has changed in geological proportions from an agrarian country to an oil-backed economy and, more recently, to a local tech hub. However, technological and social trends tend to change faster than the policies that are supposed to back them. It explains why the country is also undergoing massive changes on that end.

Is it possible to tell how those changes will play out already? Keep reading and find out.

Main Policy Changes and Their Results

Meanwhile, the banking, telecommunications, and customs sectors must pay increased fees. The VAT has also been increased from 7.5% to 10% in an attempt to boost tax revenues. So far, the results have been questionable, at best. Instead of revitalizing the economy, verifiable results include increased inflation and cost of living.

One of the largest oil producers worldwide now has to deal with significantly higher fuel prices, while the increased VAT made goods and services more expensive, negatively impacting the living standards for most of the population.

Nigeria has the third-largest 5G network in Africa. Still, higher taxes on telecommunication companies resulted in more expensive data tariffs and off-net calls, which means that playing on that live casino software is more expensive now but has much more serious consequences.

More expensive internet means that tech companies need to pay more to operate. Hindering digital transformation is everything the country doesn’t need at the moment. After all, increased taxes make the country less attractive for companies developing tech products, ranging from baccarat software to cybersecurity.

Not long ago, Nigeria was the largest economy in Africa, surpassing South Africa and Egypt. However, due to the increased deprecation of the naira, which lost over 40% of its value last year, it occupies the fourth position.

Here’s what the continental ranking of the largest economies looks like right now.

Country GDP
South Africa USD 403.05 billion
Egypt USD 380.04 billion
Algeria USD 260.13 billion
Nigeria USD 199.72 billion
Morocco USD 157.09 billion
Investment Opportunities

It seems clear that most of these policies have backfired, but that doesn’t mean there aren’t investment opportunities available. Investors from varied industries see a lot of potential in the country and are willing to harness it. Despite the negative impacts of such policies, Nigeria’s population is rising, and its middle class is expanding. So, from an investor’s perspective, the country has a growing pool of consumers.

Here are some key areas that will likely attract more investments in 2025.

Infrastructure

There are many types of infrastructure, and Nigeria is warmly welcoming investments in all of them: housing, transportation, telecommunications, water management, waste management, etc. Indeed, investing in these fields is the key to economic growth, as it’s mandatory for attracting new industries.

It isn’t cheap to build such structures, but the potential returns are massive. After all, building infrastructure isn’t a one-time thing; it requires continuing maintenance and upgrades. Urban structures, like roads, energy grids, and water supply, are mostly state-financed; housing is pretty much open to the private sector, for instance.

Agriculture

Agriculture remains one of the most important segments of Nigeria’s economy. Its generous natural resources and large workforce can deliver even more if paired with digital technologies. Industry 4.0 advancements aren’t only for factories; technologies like artificial intelligence and blockchain can boost food production, circumvent supply chain disruptions, and greatly enhance efficiency and food safety while reducing costs. Yes, Agriculture 4.0 is now a thing, and it can change the lives of 25 million Nigerians currently battling food insecurity and malnutrition.

Energy

The federal government has removed subsidies for the oil industry, which can be great news for companies offering solutions for renewable energy. Indeed, Nigeria has a massive potential for wind and solar energies, for instance. The country is mostly powered by hydroelectric structures, but 85% of its capacity remains untapped, while most remote areas are still off-grid.

Recently, the federal government has announced a USD 500 million investment to increase the distribution of renewable energy and the creation of mini-grids in rural areas. The project Energy for All is the result of a partnership with the United Nations and companies providing scalable solutions for renewable energy production can win big in this scenario.

Healthcare

The demand for better healthcare services is rising continent-wide, and Nigeria isn’t an exception. Indeed, it’s an area that requires massive improvements, as life expectancy in the country is as low as 53 years. That’s why private healthcare providers like Africa Medical Investments have Nigeria on their crosshairs, and the number of private hospitals in the country continues to rise.

The healthcare industry is also increasingly technological, using the Internet and AI-backed systems to improve basic services. Since Nigeria has one of the largest 5G networks on the continent and wide accessibility to smartphones, those investing in this field can reap substantial returns.

Digital Economy

The digital revolution has no place for bystanders, and Nigeria is rushing to keep pace with the rest of the world. The fintech sector is already huge there, providing widely accessible banking services and financial products. Indeed, it’s great news in a country where traditional banking services have become more expensive. An increased digitized economy also calls for more digital safety, opening a vast market for cybersecurity companies as well.

FAQ

What are the main policy changes recently enacted in Nigeria?
The main changes include lifting subsidies to oil production, increased banking taxes, VAT, and fees on telecommunications.

What are the key areas for investment in 2025?

This year, most investments will be directed to agriculture, renewable energy, healthcare, infrastructure, and the digital economy.