The Nigerian Economic Summit Group (NESG) has sounded an alarm over the country’s declining industrial output and the overwhelming dominance of informal economic activity, warning that these deep-rooted structural weaknesses are undermining Nigeria’s long-term growth prospects.
In a new research report presented on Wednesday, the NESG revealed that despite repeated policy commitments to industrialisation by successive governments, Nigeria’s economy remains heavily informal—posing serious challenges to revenue mobilisation, data collection, and effective policy implementation.
The report shows that the informal sector now accounts for 54.4 percent of economic activity, with the formal sector trailing at 45.6 percent. NESG analysts said this imbalance limits the government’s ability to raise taxes, accurately track economic activity, and drive sustainable development.
Even more troubling is the sharp decline in the country’s real Gross Domestic Product (RGDP), which fell from N43.1 billion in 2019 to N35.5 billion by 2024. NESG described this as a significant erosion of Nigeria’s productive capacity, particularly in the industrial sector, which is vital for diversification and long-term resilience.
According to the presentation titled “X-raying the Data Insights from the Rebased GDP,” the services sector has overtaken both agriculture and industry as the main contributor to GDP. However, this shift has not translated into widespread economic benefits, as the services sector remains dominated by low-productivity and informal enterprises.
NESG’s senior economist and research lead, Dr. Faith Iyoha, explained that while recent currency devaluation efforts have stabilised the foreign exchange market, they have also reduced consumer purchasing power, placing added pressure on already struggling households. The report notes that Nigeria’s per capita GDP plunged from $2,777 in 2019 to just $1,036 in 2024, underscoring the growing hardship faced by citizens.
The think-tank stressed that although the rebased GDP may offer a broader picture of Nigeria’s economic activities and open new opportunities for investment, the underlying challenges remain unaddressed. “Nigeria’s economy is structurally concentrated in low-productivity and highly informal sectors,” the NESG stated, warning that continued neglect of industrial development and formalisation efforts could stall progress.
The NESG recommended that policymakers shift focus toward productivity-driven sectors that can deliver inclusive growth and create decent jobs. It urged government action on sector-specific challenges such as lack of skills, poor energy access, limited mechanisation, and weak innovation ecosystems.
It also pointed out that agriculture’s low growth rate of 1.7 percent is unlikely to ease food inflation, especially as demand continues to rise. On social protection, the report exposed gaps in health insurance coverage, access to education, and unemployment benefits, leaving millions of Nigerians vulnerable.
The Group called for a national emergency response to revive the industrial sector and proposed the adoption of a coordinated National Industrial Policy to drive strategic, long-term interventions. It further urged that policies in trade, industry, and investment be tailored to engage the informal sector, particularly MSMEs, which form the bulk of Nigeria’s business landscape.
Finally, NESG cautioned against relying solely on GDP figures to assess national well-being. It recommended the use of updated household survey data and complementary welfare indicators to better capture the economic realities of Nigerians.
