Nigeria’s $1trn economy target lagging behind – Report
A recent report by foremost Financial Group, Norrenberger has shown that Nigeria’s current nominal Gross Domestic Product Figures as well as the current exchange rates indicated that the country is still lagging behind in meeting its $1trillion economy target by 2030. The report tagged “Is Nigeria still on track for the $1 trillion economy,” also […]
Gross Domestic Product (GDP)
A recent report by foremost Financial Group, Norrenberger has shown that Nigeria’s current nominal Gross Domestic Product Figures as well as the current exchange rates indicated that the country is still lagging behind in meeting its $1trillion economy target by 2030.
The report tagged “Is Nigeria still on track for the $1 trillion economy,” also highlights economic projections for the second half of the year 2025.
Norrenberger noted that the Nigerian government has set a bold ambition of becoming a $1 trillion economy by 2030, but current economic figures show that more needs to be done.
“However, as of 2024, the country’s nominal GDP (rebased figure) stands at approximately $237.5 billion, significantly lower than the $589.6 billion and $341.2 billion recorded in 2022 and 2023, respectively.
“This sharp decline, despite moderate growth in naira terms, is largely attributed to the significant depreciation of the local currency. With just five years left to meet the 2030 target, Nigeria’s current growth trajectory which averages around 4% (real) and 15% (nominal) annually, falls far short of the pace required.
“Our analysis suggests that to realistically attain a $1 trillion economy by 2030, Nigeria would need annual nominal growth of at least 22% while also stabilizing the exchange rate at or below N1,200/$.
“Achieving this ambitious goal will require more than just optimistic projections, it demands coordinated and transformative policy action, especially between the public and private sectors,” Norrenberger explained in the report.
Citing instance with Indonesia, the report noted that “Over the past 25 years,
Indonesia transitioned from a volatile emerging economy into a $1 trillion market, averaging nearly 9% growth annually.”
The success was underpinned by a range of targeted reforms and pragmatic policies that Nigeria could emulate, some of which include exchange rate management, massive investments in infrastructure, export diversification and industrial policy, human capital development, as well as strong institutions and anti-corruption drive. Daily Trust reports that the Naira currently trades at N1,537 to $1.
GDP to average at 4.05% in H2
The report highlighted that growth was observed across the three major sectors: industry, services, and agriculture. The industrial sector benefited from increased output in mining, cement production, and construction, signaling renewed momentum in infrastructure and raw material extraction.
“The National Bureau of Statistics (NBS) recently released the rebased GDP figures for Q1 2025, showing that the Nigerian economy grew by 3.13% in real terms, an improvement from the 2.27% growth recorded in the corresponding period of 2024.
“For 2025, we project average real GDP growth of approximately 4.05%. This outlook is underpinned by several positive factors, excluding the GDP rebasing exercise, which is likely to uncover new growth drivers,” it forecast.
Furthermore, it stated that increased economic activities across key sectors is expected to sustain momentum.
These include: the banking sector, which is undergoing recapitalization; the agricultural sector, benefitting from favorable weather conditions; the telecommunications sector, with revenue gains from increased tariffs; and the construction sector, which is set to receive a boost from large-scale government infrastructure investments.
For sectors to look out for in H2 2025, the report listed Agriculture, Telecommunication, Entertainment, Trade, Banking and Insurance, Oil refining.
Naira to exchange between N1,500-N1,600 to $1
Further breakdown of the Norrenberger report by Daily Trust show although Nigeria has experienced improvement in foreign exchange (FX) inflows in recent months, driven by renewed Foreign Portfolio Investments, resilient diaspora remittances, the sustainability of these inflows remains a critical consideration as the country heads into the second half of 2025.
It noted that Ratings upgraded Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘B-’ to ‘B’, citing the government’s return to more orthodox economic policies as a key driver. Similarly, Moody’s raised Nigeria’s sovereign rating from Caa1 to B3.
“However, Key factors that could weigh on FX inflows in H2 include the anticipated monetary policy easing by the CBN, which may result in reduced Foreign Portfolio Investments Attraction.
“Additionally, seasonal demand for foreign exchange is expected to rise, particularly due to summer travel and increased payments for foreign education, a period traditionally associated with pressure on the naira.
“Despite these headwinds, the naira is expected to trade within a relatively stable band of N1,500–N1,600 per USD in the near term, supported by ongoing reforms and market interventions aimed at improving confidence,” Norrenberger said.
Inflation to further moderate
The report forecast that headline inflation will continue on a downward trajectory in the coming months, supported by a combination of factors.
“These include the impact of a high base effect from the previous year, relative stability in the exchange rate, and some moderation in energy prices.
“Additionally, the anticipated decline in interest rates is likely to ease cost pressures on consumer goods, while improved seasonal harvests could support a slowdown in food price inflation.”
It noted that However, the outlook is not without risks. Both global and domestic factors continue to pose significant upside pressures on inflation.
The report said Geopolitical tensions particularly the ongoing conflict between Iran and Israel, as well as renewed trade frictions, such as the U.S.-led tariff measures against other economies, could disrupt global supply chains and stoke imported inflation.
On the domestic front, structural challenges such as persistent insecurity in key agricultural regions and the risk of severe.
It noted also that looking ahead, sustaining this downward trend will depend on continued exchange rate stability, effective monetary policy coordination, and improvements in local food production and distribution to reduce supply-side bottlenecks.
Nigeria’s Islamic finance industry estimated at $4 billion
The report also highlighted that Nigeria’s Islamic finance industry estimated at $4 billion as of May 2025, according to Fitch Ratings, with sukuk representing 53.9% and Islamic banking accounting for 45.2% 45.2 the market
The remaining share is made up of takaful (Islamic insurance) and Sharia-compliant investment funds.
“The industry’s expansion prospects remain positive over the short to medium term, supported by several structural and regulatory tailwinds. Notably, the federal government’s ongoing commitment to sovereign sukuk issuances—primarily for infrastructure financing, continues to bolster market depth and investor participation.
“Additionally, regulatory reforms aimed at strengthening the sector, such as increased paid-in capital requirements for non-interest banks, are expected to drive further growth in Islamic banking assets,” it further explained.
Non-interest banking, halal offerings to expand
The Norrenberger report added that in 2024, non-interest banking assets surged by an impressive 110% year-on-year, driven by robust growth in both customer deposits and Sharia-compliant financing activities, which more than doubled in value.
This remarkable expansion reflects rising confidence in the sector and increasing demand for ethical, interest-free financial services among both retail and corporate clients.
Further, during the first half of 2025, the Nigerian government re-entered the Sukuk market after a two-year hiatus, marking a renewed commitment to leveraging Islamic finance for infrastructure funding.
Additionally, the industry witnessed notable structural advancements following the CBN’s introduction of new Islamic liquidity management tools.
These include instruments such as the Non-Interest Financial Institutions’ Master Repurchase Agreement (MRA), Non-Interest Asset-Backed Securities, and Non-Interest Notes, all aimed at deepening market liquidity and strengthening the operational framework for non-interest financial institutions.
Also, it added that the halal segment of Nigeria’s asset management industry continued to gain traction in the first half of 2025, reflecting growing investor appetite for ethical and Sharia-compliant products.
According to data from the Securities and Exchange Commission (SEC), the number of registered Sharia-compliant funds increased from 15 to 18 during the period, signaling heightened interest from fund managers and investors alike.
In addition to the rise in the number of funds, the Net Asset Value (NAV) of these funds grew by 16%, reaching N60.5 billion as at mid-year 2025.
The mutual funds offerings have been expanded to include equities, fixed income, as well as balanced funds. This growth underscores the expanding role of halal offerings within Nigeria’s broader investment landscape, driven by a combination of stronger awareness, regulatory support, and the increasing financial sophistication of investors seeking ethical, non-interest based opportunities.
Subsequently, since the formal establishment of Sharia-compliant funds in 2020, the segment has achieved impressive growth of over 500% within less than five years, reflecting its rising importance as a viable alternative for both retail and institutional investors.
This surge has been supported by Nigeria’s efforts to deepen its non-interest finance ecosystem through regulatory reforms, investor education, and the development of Islamic financial instruments.
Projections for equity market
The Norrenberger report added that the Nigerian equity market is poised to sustain its positive momentum in the second half of 2025, supported by a combination of moderating inflation, expectations of monetary policy easing, and resilient corporate earnings.
These domestic tailwinds are likely to continue driving investor interest, though periodic profit-taking and market corrections should be expected.
It however noted that “The outlook remains tempered by several external and structural risks. Persistently tight global financial conditions, escalating geopolitical tensions, and uncertainties from international trade disputes may exert pressure on investor sentiment and limit the Central Bank’s room for aggressive rate cuts.
It added that on the fiscal front, risks surrounding the expanding national budget deficit, driven by weak oil prices and underwhelming crude production levels, pose challenges to macroeconomic stability.
In addition, the sustainability of the Central Bank’s ongoing currency defense strategy could be challenged in the absence of a meaningful improvement in foreign exchange inflows.
Overall, while the medium-term outlook for the equity market remains broadly positive, investor confidence will hinge on the government’s ability to manage fiscal and external vulnerabilities while sustaining macroeconomic reforms
Continued decline in domestic fixed income yields
The report noted that Policy reversal would anchor the yield outlook which is predicated on expectations of further moderation in inflation and a potential shift towards monetary policy easing by the CBN, following an extended period of aggressive tightening.
“This anticipated dive from the MPC is expected to drive demand for fixed income assets, particularly at longer maturities, as investors aim to lock in higher yields.
“This should, in turn, lead to a normalization of the yield curve towards a more conventional, upward-sloping shape. In the Eurobond space, volatility is expected to persist in the near term, influenced by ongoing global trade tensions.
However, a countervailing force is the widespread consensus that the U.S. Federal
Reserve will commence its rate-cutting cycle in H2 2025.
“While the exact timing is debated, the market largely anticipates two 25 bps cuts before the end of the year. Such a move would likely render U.S. Treasury securities less attractive, increasing the appeal of higher- yielding Eurobonds from emerging markets like Nigeria,” the report highlighted.
It said the most favorable scenario for Nigeria’s fixed income and Eurobond markets in H2 2025 would be a combination of U.S. Federal Reserve rate cuts and a benign outcome from trade negotiations.
Conversely, should trade tariffs prove more disruptive than anticipated, the resulting cost-push inflation could neutralize the positive effects.
Islamic Index beats broad market, delivers 32% return
In the equities space, the NGX Lotus Islamic Index delivered an impressive performance in the first half of 2025, posting a remarkable 32% return.
This significantly outpaced the broader market, as measured by the NGX All- Share Index (ASI), which gained approximately 17% over the same period.
The strong showing of the Islamic Index was primarily driven by substantial price rallies in key constituent stocks, the report further revealed.