What’s Stopping Nigeria from Becoming a Trillion-Dollar Economy?

Nigeria has the people. It has the money. It has the natural resources. So why is the economy still struggling to take off?

According to the African Development Bank (AfDB) in its latest Nigeria Country Focus Report, Nigeria can become a trillion-dollar economy but not without serious change in how it manages what it already has.

Not a lack of wealth but a lack of use

The problem isn’t that Nigeria lacks resources. It’s that those resources, financial, human, and natural are not being used well. AfDB’s report, titled “Making Nigeria’s Capital Work Better for Its Development,” urges Nigeria to rethink how it plans, invests, and governs.

According to the report, Nigeria is facing a $31.5 billion yearly gap in financing. That’s a huge hole to fill. But it’s not impossible. The solution? Smarter spending, stronger institutions, and bolder reforms.

The untapped power of human capital 

One of the biggest missed opportunities is Nigeria’s people. With a Human Capital Index score of just 36%, Nigeria is far behind many of its neighbours. The country is underinvesting in its youth especially in education and healthcare.

Right now, only 7.9% of public spending goes to education and 5.3% to health. In a country full of young people, that’s not enough. Without proper investment in its people, productivity suffers, and so does long-term growth.

Revenue troubles and the tax puzzle

Then there’s the money problem or more accurately, the money collection problem. Nigeria’s tax-to-GDP ratio is just 13%, one of the lowest in West Africa. A large informal sector, weak tax enforcement, and poor compliance make things worse.

The report suggests expanding the tax base, plugging fiscal leaks, and modernising revenue collection. These changes could create more room for public investment in roads, schools, hospitals, and power.

Governance Gaps: Too Many Voices, Not Enough Action

Even when money is available, it’s not always well-managed. Overlapping agencies, slow decision-making, and weak accountability systems keep the country from moving forward. Investors lose trust, and projects stall.

As AfDB’s Chief Economist, Kevin Urama, puts it: institutional reform and respect for the rule of law are non-negotiable if Nigeria wants to build real, lasting wealth.

Reforms Are happening but it’s not enough yet

Nigeria has made some bold moves in recent times removing fuel subsidies, adjusting its exchange rate, and tweaking tax policies. These are steps in the right direction. But they’re not enough.

The report predicts Nigeria’s economic growth could slow to 3.2% in 2025 and 3.1% in 2026 slightly down from 3.4% in 2024. That’s not the kind of growth needed to power a trillion-dollar economy.

Natural resources is still a big deal but shrinking

Nigeria still depends heavily on its natural resources, oil, gas, and land which make up over a third of its capital wealth. But this wealth is shrinking. Since 1999, the value of natural capital per person has been falling every year.

To stop this slide, AfDB recommends investing in green finance, climate-smart agriculture, and Nigeria’s slice of the global carbon market, a space that could earn the country up to $2 billion.

The traditional approach, relying on aid and loans won’t be enough. Nigeria needs to get creative. 

Blended finance, diaspora bonds, fintech solutions, and Naira-backed infrastructure guarantees can attract new capital and unlock stalled projects.

What’s really stopping Nigeria? – AfDB

In simple terms,  it’s not about what Nigeria lacks. It’s about how it uses what it has. The potential is massive. The people are ready. The resources exist.

But without strong governance, smarter spending, better policies, and serious investment in its youth, Nigeria’s trillion-dollar dream will remain just that a dream.