Nigeria’s crude oil sector recorded a steep decline in profitability in 2024, as the country’s gross profit from crude oil and gas sales fell sharply by N824.66 billion, even though total oil receipts and production increased during the year.

According to the Budget Implementation Report for Q4 2024, published by the Budget Office of the Federation, gross profit from oil and gas operations dropped to N1.08 trillion in 2024, compared to N1.90 trillion in 2023 — representing a 43.32% year-on-year decline.

This performance not only highlights the erosion of profitability across Nigeria’s oil value chain but also underscores persistent inefficiencies despite key policy reforms, including the removal of the petrol subsidy and strengthened upstream monitoring systems. The gross profit also fell short of the government’s full-year target of N1.46 trillion by N385.39 billion (26.32%), signaling weaker-than-expected returns from the sector.

Profitability Shrinks Despite Higher Revenue Collection

While gross profit declined, Nigeria’s overall oil and gas receipts increased substantially. Total oil and gas revenue before deductions rose to N15.07 trillion in 2024, up from N8.36 trillion in 2023 — a sharp 80.33% increase.

However, the composition of this revenue reveals a worrying imbalance: gross profit accounted for only 7.2% of total oil and gas income in 2024, compared to 22.8% in the previous year. This means that while the federal government is mobilizing more naira-based revenues, a much smaller proportion of those earnings is translating into pure profit.

Quarterly data reinforce this margin pressure. Gross profit came in at N365.22 billion in Q1, plunged to N161.49 billion in Q2, and then rebounded modestly to N216.58 billion and N335.69 billion in Q3 and Q4, respectively. Still, none of these quarterly results met the budget benchmark of N366.09 billion, and the deep Q2 slump left a hole that subsequent quarters could not fully close.

Oil Taxes, Royalties, and FX Gains Rise Sharply

Underneath the declining profit figures, the broader oil and gas revenue landscape was notably strong. The fiscal system captured more naira revenues from the sector, largely due to currency effects and improved enforcement.

Petroleum Profit Tax (PPT) and gas income surged by 111.56%, rising from N2.84 trillion in 2023 to N6.00 trillion in 2024. Similarly, royalty collections jumped by 179.74%, reaching N6.99 trillion compared to N2.50 trillion the previous year. The increase reflects better metering, improved compliance, and stronger oversight from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Perhaps the most dramatic growth came from exchange gains, which climbed to N4.24 trillion from N791.88 billion, representing a massive 435.93% increase. The naira’s sharp depreciation following foreign exchange reforms significantly inflated the naira value of dollar-denominated oil exports.

Other ancillary revenues also rose strongly. Gas flaring penalties reached N391.26 billion, up from N140.54 billion, while incidental oil revenues — including royalty recovery and marginal field payments — more than doubled to N347.75 billion. These gains highlight the fiscal impact of regulatory tightening and improved revenue tracking.

Rising Costs and JV Structures Erode Profits

Despite higher tax and royalty inflows, the underlying profitability of Nigeria’s oil operations deteriorated. The data suggest that escalating operating costs, legacy joint-venture (JV) obligations, and the structure of production-sharing contracts (PSCs) continue to limit the federal government’s share of oil profits.

Even though deductions for JV cash calls and federally funded upstream projects fell significantly — from N2.45 trillion in 2023 to N156.70 billion in 2024 — the gross profit margin remained thin. The report shows that items such as “Other Federally Funded Upstream Projects,” which cost N1.92 trillion in 2023, dropped to zero in 2024, while JV cash call deductions also disappeared from the books.

Net Oil Revenue Jumps, but Gains May Be Superficial

Thanks to lower deductions and favorable FX conversions, net oil revenue to the federation surged to N12.95 trillion in 2024, up from N4.82 trillion in 2023 — a rise of 168.83%. Similarly, total oil and gas revenue after the 13% derivation to oil-producing states increased by 80.35%, reaching N13.11 trillion compared to N7.27 trillion in the prior year.

However, analysts warn that these headline gains are primarily accounting-based, driven by currency revaluation effects rather than improved efficiency or productivity in the upstream sector. The gap between soaring tax receipts and collapsing profit margins highlights a structural weakness in Nigeria’s petroleum economics — where rising costs, exchange rate distortions, and governance inefficiencies continue to erode real earnings.

As 2025 unfolds, the challenge for policymakers will be translating high nominal oil revenues into sustainable fiscal gains by improving cost efficiency, renegotiating JV frameworks, and accelerating reforms to reduce leakages across the petroleum value chain.

Prominent legal scholar and former President of the Nigerian Bar Association (NBA), Dr. Olisa Agbakoba, SAN, has called for urgent and comprehensive reforms in Nigeria’s land titling system, arguing that it represents the single most transformative policy that could unlock over N1.5 quadrillion in dormant capital and reposition the nation’s economy for sustainable growth.

Speaking in a policy paper titled “Devolution is the Solution: Foundational Reform Agenda for Nigeria’s Transformation,” Agbakoba said that Nigeria’s vast wealth lies not in oil or foreign reserves but in the untapped potential of land and real estate assets currently trapped under informal ownership.

He emphasized that the failure to properly document and legally recognize land ownership has left billions of dollars in “dead capital” — assets that cannot be leveraged, traded, or integrated into the financial system.

“Over 90 percent of land and real estate in Nigeria have tainted, defective, or no titles at all,” Agbakoba said, citing findings from studies conducted by the World Bank, PwC, and his firm, Olisa Agbakoba Legal (OAL). “This creates ‘dead capital’—assets that cannot be traded, serve as collateral, or be indexed to the financial system.”

According to him, this situation mirrors the thesis of Peruvian economist Hernando de Soto, who argued in The Mystery of Capital that converting dead capital into productive assets through formal property rights is one of the most powerful tools for economic transformation in developing countries.

Formal Land Titling as an Economic Game-Changer

Agbakoba stressed that land titling — the process of formally recognizing and recording private property rights — could radically expand access to credit and investment in Nigeria. With formal ownership documents, property holders can use their land or buildings as collateral for loans, unlocking liquidity and empowering individuals and businesses alike.

“Once property owners have legal titles, banks will be more willing to lend because the assets represent secure collateral backed by enforceable rights,” he explained. “This is how nations build credit-based economies that drive wealth creation and industrialization.”

Commendation for Ongoing Federal Reforms

The senior advocate praised the Federal Government’s National Land Registration, Documentation and Titling Programme, which aims to digitize land records and create a transparent national property registry. However, he urged the administration of President Bola Tinubu to accelerate and scale up the project, ensuring full collaboration between federal and state land agencies.

According to Agbakoba, integrating land values into the national financial system through digital mapping, legal harmonization, and unified documentation would lay the groundwork for massive capital mobilization. “This is not just an administrative reform,” he added. “It is a structural economic revolution.”

From a Cash Economy to a Credit Economy

Agbakoba argued that Nigeria must transition from its prevailing cash-based economy to a credit-driven system if it hopes to achieve inclusive and sustained growth. He maintained that a credit economy allows citizens to leverage assets and expand purchasing power beyond immediate cash availability.

“Nigeria operates a cash economy, which limits the economy’s productive potential because people can only buy what they can afford,” he said. “A functional credit system allows individuals to buy, build, and invest in ways that multiply economic activity.”

To illustrate the potential impact, Agbakoba projected that if 200 million Nigerians each accessed N300,000 in credit, the country would inject N60 trillion into circulation — stimulating domestic demand, supporting small businesses, and easing the country’s foreign exchange pressures.

“When citizens can access affordable credit in naira to own homes, start enterprises, or expand production, it strengthens the naira’s real value,” he explained. “It becomes a currency backed not just by policy, but by productivity and confidence.”

Government Commitment to Land Reform

In August, the Minister of Housing and Urban Development, Arc. Ahmed Dangiwa, reaffirmed the Federal Government’s commitment to improving land titling, documentation, and registration across the country. He announced a plan to raise formal land documentation coverage to 50 percent within the next decade, under a national initiative aimed at unlocking the full economic potential of land assets.

Agbakoba welcomed this commitment but emphasized that political will and institutional coordination would determine the reform’s success. “With the right legal framework, Nigeria can turn its vast land resources into bankable wealth,” he concluded. “This is the surest path to financial inclusion, poverty reduction, and genuine national prosperity.”

The Lagos State Government has made a notable comeback to Nigeria’s domestic debt market with plans to raise up to ₦200 billion through a book-building process under its ₦1 trillion Debt and Hybrid Instruments Issuance Programme. The fresh issuance, which spans a 10-year tenor, is intended to fund critical infrastructure projects and reinforce Lagos’s status as West Africa’s financial hub.

According to the offer documents distributed by the lead issuing house, Chapel Hill Denham Advisory Services Limited, the bonds are being offered at an indicative yield range of 16.15% to 16.25%. The subscription window opened on Thursday, November 6, 2025, and will close on Thursday, November 13, 2025, during which institutional and high-net-worth investors are expected to submit bids indicating the amounts they wish to purchase and their preferred yields.

The book-building process, a standard mechanism in capital market operations, allows the issuing house to determine the final price and yield of the bond based on real-time investor demand. Once the bidding period closes, the bookrunner—acting on behalf of the State—will finalize the offer price that reflects market sentiment and appetite.

Financing Lagos’s Development Agenda

Proceeds from this ₦200 billion bond are earmarked for priority physical and social infrastructure projects across Lagos State. These include major transportation upgrades, affordable housing schemes, healthcare modernization, education infrastructure, and environmental sustainability initiatives—all central pillars of Governor Babajide Sanwo-Olu’s THEMES+ development agenda.

As Nigeria’s economic powerhouse, Lagos contributes roughly 20% of the country’s GDP and remains one of Africa’s most dynamic subnational economies. Its diversified revenue base and solid fiscal discipline have consistently positioned it as a model for state-level financial management and economic innovation.

Investor Confidence Driven by Fiscal Strength

Analysts note that Lagos State’s ability to attract investor interest in challenging macroeconomic conditions is underpinned by its strong fiscal profile. The State’s internally generated revenue (IGR) surged by over 100% to nearly ₦2 trillion in 2024, signaling financial resilience and a robust capacity to service debt obligations.

Credit rating agencies have echoed this confidence: Lagos maintains a rating of Aa- from Agusto & Co. and AA- from GCR Ratings. Both agencies cite the State’s large and stable revenue base, diversified economy, prudent financial management, and sustained access to liquidity as key factors supporting the ratings.

“Lagos has maintained a consistent record of fiscal responsibility and remains one of the few subnationals with a reliable track record of bond repayments,” noted an investment advisory firm in Lagos. “This ₦200 billion issuance will likely attract strong institutional participation given the State’s credibility and its role as a benchmark issuer in Nigeria’s subnational bond market.”

Proven Track Record of Debt Market Engagement

Since its groundbreaking ₦15 billion floating-rate bond issuance in 2002, Lagos has set the pace for subnational borrowing in Nigeria. The State has returned to the market multiple times, issuing ₦80 billion in 2012, ₦87.5 billion in 2017, and ₦137.3 billion in 2020—each targeted at bridging the funding gaps in infrastructure and social services.

All previous issuances have either been fully repaid or remain performing, a record that underscores Lagos’s reputation as a dependable borrower. The latest bond is expected to follow the same path, reinforcing investor trust and demonstrating the government’s commitment to fiscal integrity.

Sustaining Growth and Urban Renewal

Lagos faces the dual challenge of managing rapid urbanization and financing large-scale infrastructure to meet the needs of its over 20 million residents. The new bond issuance is designed to address these challenges by mobilizing long-term capital for critical sectors—especially transport, power, and housing.

Financial analysts predict that the attractive yield range and the State’s proven repayment record will ensure oversubscription. Beyond funding development, the transaction is also expected to deepen Nigeria’s subnational debt market and promote investor confidence in infrastructure-backed state securities.

Recognition for Financial Leadership

In recognition of his administration’s commitment to fiscal innovation and transparent market engagement, Governor Babajide Sanwo-Olu will be honoured at the upcoming Nairametrics Capital Market Awards for his role in positioning Lagos as the financial hub of West Africa.

The State’s continued engagement with the capital market, experts say, highlights a forward-looking financing strategy that balances sustainability with growth—ensuring that Lagos not only meets its infrastructure needs but also sets a blueprint for other Nigerian states seeking to tap into domestic capital markets.

As Lagos reaffirms its leadership in subnational debt issuance, the ₦200 billion bond marks another decisive step toward building a smarter, more connected, and economically vibrant megacity.

The Federal Executive Council (FEC) has approved three landmark policies aimed at accelerating Nigeria’s transition into a digital and knowledge-driven economy, in what government officials describe as a major step toward unlocking innovation, trade, and global competitiveness.

According to a statement from the State House, the policies were presented by Minister of Industry, Trade and Investment, Jumoke Oduwole, and are aligned with President Bola Tinubu’s Renewed Hope Agenda. Together, they are designed to diversify Nigeria’s economic base by strengthening the intellectual property system, advancing digital trade under the African Continental Free Trade Area (AfCFTA), and promoting services exports through talent development.

“The policies are designed to strengthen Nigeria’s intellectual property ecosystem, unlock opportunities in digital trade, and expand the country’s footprint in the global services export market,” the State House said in a statement released Saturday.

1. Intellectual Property Reform: Turning Ideas into Capital

The first policy, the National Intellectual Property Policy and Strategy (NIPPS), is Nigeria’s first-ever unified framework for protecting and commercialising intellectual property rights.

Developed with technical assistance from the World Intellectual Property Organization (WIPO) and input from over 200 stakeholders, NIPPS aims to transform creative and innovative ideas into valuable economic assets.

“NIPPS positions Nigeria as a regional hub for intellectual property and innovation in West and Central Africa,” the presidency stated. “It connects innovators, creators, and investors to turn ideas into economic assets.”

The policy is expected to boost Nigeria’s creative industries, encourage innovation, and attract foreign investment by providing a structured system for protecting and monetising intellectual property.

2. AfCFTA Digital Trade Protocol: Nigeria Takes the Lead

The second reform involves the ratification of the AfCFTA Protocol on Digital Trade, a key milestone that cements Nigeria’s leadership role in shaping Africa’s $3.4 trillion single market.

The protocol establishes continent-wide standards for e-commerce, data governance, cybersecurity, and consumer protection, providing a more predictable and harmonised environment for digital transactions.

By endorsing the agreement, Nigeria is positioning itself as a continental leader in digital commerce, opening new opportunities in fintech, e-commerce, and creative technology sectors.

3. Services Export Mechanism: Talent as a Growth Engine

The third initiative, the National Coordination Mechanism for Services Exports, will be driven by the National Talent Export Programme (NATEP).

The policy aims to enhance Nigeria’s global competitiveness in digital outsourcing and professional services — sectors that are becoming vital to the global economy.

According to the presidency, the mechanism is expected to create one million new jobs and generate $10 billion annually in GDP contributions by 2030.

“This positions Nigeria as Africa’s hub for digital outsourcing and professional services,” the statement noted.

The policy will streamline processes to export Nigerian talent and expertise, capitalizing on the global demand for skilled professionals in technology, finance, healthcare, and engineering.

A New Chapter in Economic Transformation

The three reforms collectively mark a strategic pivot in Nigeria’s economic policy — one that places ideas, data, and talent at the heart of industrialisation and national development.

“The three reforms signal a bold new chapter in Nigeria’s economic transformation where ideas, data, and talent drive growth, industrialisation, and sustainable prosperity,” the State House said.

As Nigeria embraces this digital future, the country is not merely adapting to global trends but actively shaping them, strengthening its role as a continental leader in innovation, trade, and digital transformation.

Background: Building a Future-Ready IP Economy

Earlier this year, Nairametrics reported that the Federal Government planned to launch NIPPS by July 2025 to strengthen protections for innovators, creatives, and entrepreneurs.

The policy targets longstanding issues such as piracy and intellectual property theft that have hindered growth in Nigeria’s creative and tech sectors. By introducing clear legal frameworks and commercial pathways, it aims to encourage innovation, reduce financial risks, and unlock new revenue streams for creators and businesses.

Minister Oduwole emphasized the strategic importance of IP as an economic driver:

“IP is a strategic enabler for trade, and as we mobilise our IP ecosystem, we are strengthening the backbone of licensing, royalties, franchising, and digital content export.”