Nigeria’s economy expanded by 3.98% year-on-year in the third quarter of 2025, according to the National Bureau of Statistics (NBS). That pace represents a small slowing from the 4.23% expansion recorded in the previous quarter but continues a sequence of positive growth that has been building since 2021. The most recent data show a broad-based economy in which the non-oil sectors dominate output and the oil sector, while recovering in output, now contributes only a small share of aggregate GDP.
The non-oil sector accounted for roughly 96.56% of real GDP in Q3 2025, underscoring how the nation’s growth engine has shifted decisively away from crude in terms of share of output. Within that non-oil universe, services and agriculture were the main contributors to the quarter’s expansion. Services grew by 4.15% year-on-year and agriculture by 3.79%, the latter notably stronger than the same quarter a year earlier and signalling resilience in food and rural incomes. Financial services posted striking gains, with financial and insurance activities registering double-digit growth on an annual basis. Manufacturing, by contrast, remained subdued, expanding only modestly and reflecting ongoing input-cost and foreign-exchange pressures for firms that rely on imported equipment and raw materials.
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On the surface, the oil sector’s headline performance appears robust. The oil sector grew by 5.84% year-on-year in Q3 2025, and average daily crude production rose to about 1.64 million barrels per day. Yet this expansion translated into only a 3.44% contribution to overall real GDP for the quarter, emphasising the declining proportional importance of oil to aggregate output compared with the non-oil economy. The recent licensing round announced to attract upstream investment points to long-term plans to raise output further, but security and underinvestment mean supply gains will be gradual rather than instant.
While output is improving, inflationary pressures remain elevated by international and domestic measures. Headline inflation had been easing through 2025 but remained in double digits, and the Central Bank of Nigeria held the Monetary Policy Rate at 27% in late-November 2025 as it sought to bring inflation back toward single digits in a measured fashion. This tight-money stance is intended to anchor expectations but also constrains credit for businesses that need working capital to scale. The interplay between slower price growth and high policy rates will shape how robustly private investment and household demand recover into 2026.
Taken together, the figures point to a structural economy that is slowly diversifying. The services sector, centred on telecommunications, finance, trade and professional services, now dominates, with agriculture showing renewed strength that matters for employment and food security. Manufacturing’s modest growth highlights the persistent cost and exchange-rate challenges facing industrial producers, which can impede the transformation of the economy into higher value-added activity.
Policymakers therefore face trade-offs: pursuing tighter monetary policy to arrest inflation and preserve reserves, while designing targeted fiscal measures and supply-side reforms to reduce producers’ costs and attract long-term private investment. The success of reforms in transport, power, trade logistics and exchange-rate stability will determine whether the modest gains seen in Q3 are sustained and broadened.
Growth that is numerically positive but narrow in its domestic multiplier effects risks leaving households and small firms exposed. The labour-intensive sectors like agriculture, construction and trade are crucial to absorb new entrants into the labour force. If these sectors are able to expand in a way that translates into income gains for lower-income households, the current growth trajectory will deliver inclusive benefits. Conversely, if financial and ICT-led expansion continues to outpace manufacturing and tradable goods production, Nigeria will remain vulnerable to external shocks, commodity cycles and supply-side bottlenecks. International investors will watch three signals closely: a sustained decline in inflation, improvement in foreign reserves and clearer evidence of domestic cost reductions for manufacturers.
Investors will be looking for confirmation that non-oil growth can be sustained without rekindling inflation. They will want evidence that manufacturing can break free of FX-driven input constraints and that fiscal consolidation efforts do not crowd out productive spending. Policymakers, for their part, must show how planned reforms translate into lower cost structures for firms: clearer power sector plans, faster licensing and permitting where appropriate, improved logistics and targeted credit programmes that reach SMEs.
The NUPRC’s licensing round and upstream investment plans are important for future export earnings and long-term fiscal stability, but the economics of the next few quarters will be decided largely by the non-oil sectors and how policy manages the inflation-growth trade-off.
Cautious Optimism, and the Need For Steady Delivery
Q3 2025’s 3.98% growth is not a headline miracle, but it is meaningful: it confirms that Nigeria’s growth model has tilted toward services and agriculture and that modest recovery in oil output can coexist with broad-based, non-oil expansion. For Nigeria to convert that momentum into higher living standards and stronger resilience to shocks, the priority agenda is clear. Policymakers must marry macroeconomic stability with targeted supply-side interventions that lower the cost of doing business, while investors and development partners should focus on projects that raise productivity in manufacturing, logistics and power. If those elements align, the modest but positive readings of Q3 can become the foundation for more robust and inclusive growth in 2026 and beyond.
