By Olamide Eyinla
Nigeria’s 2025 sectoral performance data tell an uncomfortable story.
A handful of sectors are racing ahead.
Transportation and Storage grew 16.9%, Finance and Insurance 14.5%, Water 10%, Other Mining 9.7%, Arts and Entertainment 9%, Oil and Gas and Electricity both 8.5%, ICT 6.9%.
Sustained, those rates would transform the country within a decade. But the heaviest sectors by share of GDP Agriculture (27.6% of GDP, growing 2.9%), Trade (17.4%, growing 1.8%), Real Estate (13.6%, growing 3.8%) and Manufacturing (8.1%, growing only 1.4%) are barely keeping pace with population growth. Public Administration (2%), Education (2.4%) and Human Health (2.5%) are similarly sluggish.
Add it up: the six laggard sectors carry 63% of GDP between them but contribute just 33% of growth. The driver sectors hold 34% of GDP yet deliver 58% of growth. Nigerian growth is concentrated in sectors that employ relatively few people, while the labour-intensive sectors that feed and employ most Nigerians stagnate. We are growing at the top while the base goes flat.
This is not a problem federal policy alone can solve. Most commentary on Nigeria’s economy stops at Abuja. That is half the diagnosis. Schools, primary healthcare, feeder roads, market sanitation, agricultural extension and embedded electricity generation are constitutionally or operationally the business of state and local governments. The 1999 Constitution distributes powers across three tiers; reform must be built across all three.
Here is what each tier must do, sector by sector.
Agriculture: Security First, Then Everything Else
Agriculture employs more Nigerians than any other sector and contributes more to GDP than any other. That it grew at only 2.9%, barely above population growth, is the single largest drag on prosperity.
The binding constraint is insecurity. Banditry across the Middle Belt and North-West has collapsed production cycles in states that feed the nation. You cannot raise productivity on farmland you cannot reach.
The Federal Government must pass enabling legislation for state police and properly regulated forest guards. It must concentrate joint security forces in 8–10 priority production corridors the Niger–Kebbi rice belt, the Benue–Taraba grain and yam belt, the Oyo–Ogun cassava belt, and others under unified operational command.
It must honour the Maputo commitment to allocate at least 10% of the budget to agriculture; current allocation hovers below 2%.
State Governments control land under the Land Use Act and must build digital land registries that allow smallholders to title and pledge their land as collateral. They must deliver the supporting infrastructure for the Special Agro-Industrial Processing Zones now being rolled out across 28 states with African Development Bank financing.
They must exit free-tractor politics that crowds out private mechanisation services like Hello Tractor and Babban Gona, replacing populist procurement with matching grants to scaled private operators.
Local Governments are responsible for intra-LGA roads. A reliable feeder road from a farm cluster to the trunk road is the single highest-return investment in post-harvest loss reduction, as losses currently run 30–50% on perishables. LGs must also rebuild market sanitation, cold storage and weighing infrastructure, and restore ward-level extension services. The FAO recommends one extension officer per 500 farm households; Nigeria currently averages one per 5,000–10,000.
Manufacturing: Power, Ports and Policy Stability
Foreign exchange access has materially improved since the 2023 naira float. The binding constraints now are energy cost, port inefficiency, policy reversals, and finished-goods smuggling that undermines domestic producers. Each is fixable.
The Federal Government must enforce its own 2026 reforms. The 127-item National List restructured tariffs to 0–10% on industrial inputs and 20–70% on finished imports, but it only works if Customs interdicts smuggling through Seme, Idiroko, Jibiya and the northern corridors.
The new Economic Development Incentive, offering a 5% capex tax credit for five years will only attract investment if the Nigeria Revenue Service publishes clear, non-discretionary qualification criteria, avoiding the opacity that discredited the old Pioneer Status. Manufacturers ask for one thing above all: a binding commitment to 36-month policy stability on tariffs, taxes and FX rules.
State Governments hold the most underused power of all under the Electricity Act 2023: the authority to license generation and distribution. Lagos, Ogun, Rivers, Kano, and Kaduna, hosts of Nigeria’s industrial clusters, should prioritise cluster-level 5–20MW gas-fired plants serving multiple factories at industrial estates. Per-unit power costs fall 40–60% versus diesel self-generation; manufacturing margins move from negative to positive. States must also rehabilitate the industrial estates themselves, Agbara, Ikeja, Ota, Nnewi, Kano-Bompai. Their current state actively repels investment.
Local Governments must end the multiple informal levies that plague trucks moving goods across LG boundaries. Published rate schedules, prosecuted extortion, and reliable municipal services within industrial estates, drainage, lighting, and waste are LG deliverables.
Trade: Add Value, Reduce the Nano-Trader Pile
Trade’s weakness has two structural roots. First, Nigeria connects to the world through low-value raw exports while importing processed and finished goods. Cocoa beans earned $1.3 billion in 2020; the same volume processed into chocolate would have earned roughly $6.5 billion.
Cashew, sesame, leather and crude petroleum tell similar stories. Second, Nigeria’s retail trade is dominated by over 40 million nano and micro-traders whose fragmentation prevents the scale, digitisation, automation and formal financing that productive trade requires.
The Federal Government must pass and implement the Raw Materials Research and Development Council’s 30% Value Addition Bill, with a five-year phased implementation for cocoa, cashew, sesame, solid minerals and leather. Ghana banned raw cocoa exports to Switzerland for similar reasons; Côte d’Ivoire mandates 50% local grinding.
Federal Government must also enforce AfCFTA Rules of Origin so Nigerian preferences accrue to genuinely Nigerian goods, not re-labelled imports. The 2026 presumptive tax regime should be deliberately designed to incentivise consolidation: traders above a turnover threshold should enjoy lower effective rates as registered companies than as individuals, pulling them into cooperatives, partnerships and registered SMEs.
State Governments should redevelop sprawling open markets, Mile 12 in Lagos, Dawanau in Kano, Onitsha Main, and Aba’s Ariaria as planned retail zones under PPP concessions with protected trader relocation rights. They should host export facilitation desks helping SMEs meet SON and NAFDAC standards and join container-sharing schemes so small exporters can fill part of a container instead of needing a full one. They should actively promote trading cooperatives of 20–100 members that pool capital and access formal credit collectively.
Local Governments govern markets directly. A single, transparent fee schedule replacing informal extraction would raise LG revenue while reducing trader cost. Issuing simple Business Identification Numbers linked to NIN and tax ID would create the dataset needed for credit scoring and graduation to formal status.
Education: Trust-Based Community Ownership
Education will not recover under direct ministerial management. The incentive structure rewards neither teachers nor administrators for outcomes. The reform that matters most is structural: community co-ownership institutionalised through legally constituted trusts.
The framework already exists. The National School-Based Management Policy establishes School-Based Management Committees comprising parents, alumni, community leaders, teachers and youth representatives, with authority over school development, resource use and fund mobilisation.
Surveys show SBMCs have been formally established in 91% of public primary schools but fewer than 25% are active. Where they function, the results are striking: girls’ enrolment rose 41% in Sokoto between 2008 and 2009, teacher absenteeism fell, and communities mobilised their own funds for classroom blocks and toilets.
The Federal Government must amend the Universal Basic Education Act and the National Universities Commission Act to convert SBMCs from advisory bodies into legally incorporated trust boards with fiduciary authority to appoint head teachers subject to professional qualifications, deploy capitation grants, and accept third-party funding from diaspora, alumni, corporate and faith-based sources. Federal universities must be restructured as autonomous trusts with governing councils, free to set salaries and raise endowments.
State Governments must register SBMCs as trusts, issue governance manuals, assess them quarterly, and grant operational autonomy to those that meet activity thresholds. State ministries of education should retain quality assurance, examinations, curriculum and inspection, but no longer run schools operationally. This separation, standard in well-performing systems from Singapore to England, is what gives trust-ownership its credibility.
Local Governments are the level at which parents, traditional leaders and faith institutions actually live. LG education authorities should be the registrar and convenor of SBMCs, ensuring legitimate elections and proper representation of women, youth and persons with disabilities. Co-financing classroom repairs and boreholes with community contributions through SBMCs creates ownership and reduces unit costs.
Health: Hospital Trusts, Real Insurance
Public hospitals cannot compete for doctors and nurses under the current civil service pay scales. They lose staff first to private hospitals, then to Saudi Arabia, the UK and North America.
The reform architecture mirrors education: trust-based hospital governance, paired with operational health insurance.
The Federal Government must restructure all federal teaching hospitals and federal medical centres under autonomous hospital trusts with governing boards drawn from medical faculty, patient representatives and professional bodies. Boards appoint Chief Medical Directors on fixed performance terms; civil-service tenure rules no longer apply.
Trusts may set remuneration, retain internally generated revenue, and accept corporate and philanthropic funding. The Basic Health Care Provision Fund only partially disburse funds; however, funds must be released in full, monthly. NHIA enrolment must include state-level equity funds to cover the informal sector.
State Governments should restructure their teaching hospitals, general hospitals and specialist hospitals as trusts mirroring the federal model. They should contract, and not directly operate primary healthcare, with PHCs running under local trust boards while state ministries handle regulation, licensing, drug supply and outcome audits. Every state needs a functional State Health Insurance Scheme covering indigent, informal-sector and state employees.
Local Governments are constitutionally responsible for primary healthcare. Mirroring the SBMC model for education, PHCs should be governed by Primary Healthcare Management Committees with authority over local hiring, community financing and operational hours. LGs must also rebuild environmental health services doing sanitation, vector control, food vendor inspection that prevent the disease burden PHCs then treat.
Public Administration: Get Government Out of Its Own Way
Public Administration grew at 2% in 2025, meaning government productivity is essentially static. The 2011 Oronsaye Report identified over 200 federal MDAs with duplicated mandates for merger or abolition. Most states carry 40–60 MDAs with overlapping mandates of their own and need state-level Oronsaye reviews.
Every government service that goes digital like tax filing, business registration, land titling, vehicle licensing, procurement eliminates rent-seeking and accelerates turnaround. Open contracting, properly implemented in Edo, Kaduna and Lagos, should be standard nationwide.
The Supreme Court’s 2024 ruling on direct federal allocation to local governments must be fully implemented by all states; State Joint Local Government Accounts have for too long been mechanisms for state capture of LG funds. The Organization designs of MDAs must be efficient and not the maintain the current practice of mass promotions per tenure rather than vacancies.
Four Cross-Cutting Imperatives
Reading the sectoral data together, the fastest-growing sectors share three characteristics: they have been liberalised; they have credible private-sector workarounds to public failure; or they operate under regulators with genuine independence.
The laggards are the sectors where state execution capacity, security and policy stability matter most. Four conditions determine whether everything above becomes real.
First, security reform, through state police and regulated forest guards. Without them, agriculture, rural manufacturing and rural health all fail.
Second, electricity reform under the Electricity Act 2023, the most important economic reform of the decade. State licensing, embedded generation, cluster-level industrial power and a functioning service-level regime determine whether manufacturing, health and education can operate.
Third, policy stability offering a binding commitment to 36-month policy horizons on industrial, trade and FX policy. Fourth, institutional separation: schools run by community trusts, hospitals run by hospital trusts, universities run by governing trusts, regulators independent of operators.
Nigeria’s laggard sectors will not recover through federal policy alone. They will recover when the Federal Government creates enabling legal and fiscal architecture, when State Governments deliver power, land administration, industrial estates and regulatory quality at their tier, when Local Governments rebuild markets, feeder roads, primary healthcare and SBMC-registered schools at theirs, and when institutional separation breaks the doom loop of direct government management.
The 2026 tax reforms, the new National Industrial Policy, the AGROW project, the Electricity Act and the Value Addition Bill provide the scaffolding. Execution across all three tiers is now the only remaining question. The next decade is decided by whether we answer it.
This blueprint was prepared by Olamide Eyinla, a People Development expert with a strong background in Economics. Driven by a passion for system thinking and public policy, Olamide is obsessed with exploring innovative approaches to fixing Nigeria’s socio-economic challenges. Author Name] is [your title and brief affiliation.
To read the article in full, visit: https://medium.com/@olamideyinla/fixing-nigerias-laggard-sectors-39ab8375f989 or https://open.substack.com/pub/olamideyinla/p/fixing-nigerias-laggard-sectors?r=4puqce&utm_campaign=post&utm_medium=web
