Why it Matters
- Economic Stability with Caution: Nigeria’s GDP grew by 3.9% in H1 2025, and public debt declined for the first time in over a decade—but household hardship remains high.
- Inflation as the Main Risk: Food prices have increased fivefold since 2019, eroding purchasing power and worsening poverty despite macroeconomic gains.
- Policy Priorities Identified: The World Bank calls for urgent reforms in food supply chains, fiscal transparency, and social protection systems to translate growth into improved welfare.
- Medium-Term Outlook: Growth is projected to reach 4.4% by 2027, supported by services, agriculture, and non-oil industries, but sustained inflation control is essential to inclusive recovery.
Nigeria has taken important steps toward stabilising its economy through recent policy reforms, but more needs to be done to ensure these gains translate into better living standards for its citizens, according to the latest Nigeria Development Update (NDU) released by the World Bank.
Titled “From Policy to People: Bringing the Reform Gains Home,” the report notes progress in economic growth, domestic revenue mobilisation, monetary policy, and external balances—while underscoring persistent challenges such as high food inflation, widespread poverty, and structural barriers that constrain inclusive growth.
According to the NDU, Nigeria’s economy expanded by 3.9% year-on-year in the first half of 2025, up from 3.5% in the same period of 2024. Growth was driven by strong performance in services and non-oil industries, alongside improvements in oil production and agriculture. The country’s external position has strengthened, with foreign reserves exceeding $42 billion and the current account surplus rising to 6.1% of GDP, supported by higher non-oil exports and lower oil imports. On the fiscal side, despite lower oil prices, the federal deficit is projected at 2.6% of GDP in 2025, broadly unchanged from 2024, while public debt is expected to decline for the first time in over a decade, from 42.9 to 39.8% of GDP.
Get the report here: https://documents.worldbank.or...
However, the report cautions that these macroeconomic gains have yet to translate into tangible improvements in people’s lives. Many households continue to face hardship, with poverty and food insecurity remaining high. Food inflation remains a major concern: poor households—who spend up to 70% of their income on food—have seen the cost of a basic food basket rise fivefold between 2019 and 2024. The NDU notes that while current reforms are addressing long-standing policy distortions, sustained progress in livelihoods will depend on continued efforts to reduce inflation, foster inclusive growth, strengthen public services, and expand support for the most vulnerable.
“The Nigerian government has taken bold steps to stabilise the economy, and these efforts are beginning to yield results,” said Mathew Verghis, World Bank Country Director for Nigeria. “But macroeconomic stability alone is not enough. The true measure of success will be how these reforms improve the daily lives of Nigerians—especially the poor and vulnerable.”
To help bridge the gap between macroeconomic progress and improved welfare, the report identifies three urgent priorities:
- Tackling food inflation by removing trade barriers such as import bans and excessive duties, while addressing structural bottlenecks in seeds, input supply, security, logistics, and infrastructure (including transport, power, storage, and cold chains).
- Improving the efficiency of public spending through greater fiscal transparency, stronger discipline in Federation Account (FAAC) deductions, and a national pact to align fiscal policy with development objectives, especially human capital investments.
- Expanding and institutionalising social protection, including regular, domestically financed cash transfers for the ultra-poor and a shock-responsive safety net system to help households manage crises.
The outlook for Nigeria’s economy remains cautiously optimistic. Growth is projected to accelerate modestly from 4.2% in 2025 to 4.4% in 2027, driven by services and supported by agriculture and non-oil industry. Inflation is expected to gradually ease but remain elevated, requiring sustained monetary discipline and structural reforms to tackle food prices—the “biggest tax on the poor,” said Samer Matta, the World Bank’s Senior Economist for Nigeria.
