Nigeria’s economy recorded a 3.9 per cent growth in the first half of 2025, reflecting the positive impact of ongoing fiscal and monetary reforms, according to the Nigeria Development Update (NDU) released on Wednesday by the World Bank.
The multilateral institution, however, cautioned that the gains from the reforms of the Tinubu administration were yet to translate into significant improvements in living standards for millions of Nigerians still grappling with poverty, food insecurity, and high inflation.
The report that was released on Wednesday, titled “From Policy to People: Bringing the Reform Gains Home,” commended the Nigerian government for taking bold measures to stabilise the economy through exchange rate unification, fuel subsidy removal, and tighter monetary policies. It, however, emphasised the urgent need to shift focus from macroeconomic stabilisation to improving household welfare and social outcomes.
According to the NDU, the 3.9 per cent growth in the first half of 2025 represented a rise from 3.5 percent recorded in the same period of 2024. The World Bank attributed this expansion to strong performance in the services and non-oil sectors, as well as modest gains in oil production and agriculture.
It also noted that Nigeria’s external position had improved considerably, with foreign reserves surpassing $42 billion and the current account surplus rising to 6.1 per cent of GDP, buoyed by higher non-oil exports and reduced oil imports.
On the fiscal front, the World Bank reported that the federal deficit was projected to remain steady at 2.6 per cent of GDP in 2025, despite lower oil prices. More notably, public debt is forecast to decline for the first time in over a decade—from 42.9 per cent to 39.8 per cent of GDP—reflecting improved fiscal discipline and revenue mobilization efforts.
While acknowledging these achievements, the Bank expressed concern that macroeconomic improvements have not translated into better welfare outcomes for the average Nigerian. The report observed that many households continued to face severe hardship due to persistent food inflation and limited income growth.
“Food inflation remains the most pressing issue,” the report stated. “Poor households—who spend up to 70 per cent of their income on food—have seen the cost of a basic food basket rise fivefold between 2019 and 2024.”
World Bank Country Director for Nigeria, Mathew Verghis, said the government’s reforms were laying the groundwork for a stronger and more stable economy, but warned that macroeconomic stability alone was insufficient.
“The Nigerian government has taken bold steps to stabilize the economy, and these efforts are beginning to yield results,” Verghis said. “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 bridge the gap between policy success and tangible welfare gains, the World Bank highlighted three critical priorities that Nigeria must pursue with urgency.
The bank called for decisive action to tackle food inflation by removing trade barriers such as import bans and excessive duties, while addressing structural challenges in agricultural production—including insecurity, poor logistics, limited access to quality seeds and fertilizers, and inadequate storage and transport infrastructure.
The Breton Wood institution urged the authorities to enhance the efficiency of public spending through greater fiscal transparency and accountability, particularly in Federation Account (FAAC) deductions. It also recommended the establishment of a national fiscal pact to align public expenditure with developmental priorities, especially in education, healthcare, and human capital investments.
The report emphasised the need to expand and institutionalise social protection by introducing regular, domestically financed cash transfers for the ultra-poor and developing a shock-responsive safety net to help vulnerable households cope with economic shocks and crises.
The World Bank further observed that while inflationary pressures may begin to ease gradually, they are expected to remain elevated in the near term. Sustained monetary discipline and continued structural reforms will be required to bring down food and core inflation to levels consistent with stable growth and improved welfare.
According to Samer Matta, the World Bank’s Senior Economist for Nigeria, inflation remains the “biggest tax on the poor.” He said while the reforms are addressing long-standing policy distortions, the country must persist in implementing policies that directly tackle the root causes of high prices and weak productivity.
“Nigeria’s reform efforts are commendable and are beginning to show positive results,” Matta noted. “However, the cost of living remains high, and tackling food inflation must remain at the center of policy efforts to ensure that growth benefits the poor.”
Looking ahead, the bank’s outlook for Nigeria remains cautiously optimistic. It projects economic growth to rise modestly from 4.2 per cent in 2025 to 4.4 per cent by 2027, driven primarily by continued expansion in the services sector, alongside steady growth in agriculture and non-oil industries.
However, the report warned that achieving the projections will depend on the government’s ability to sustain reforms, improve policy consistency, and deepen investments in human capital and infrastructure. It also underscored the importance of rebuilding public trust through improved governance and transparency, ensuring that reform dividends reach citizens directly.
