World Bank Warns Multidimensional Poverty Threatening Nigeria’s Economic Potential

The World Bank has raised concerns that multidimensional poverty and weak early childhood development outcomes are threatening Nigeria’s long-term economic potential, despite signs of macroeconomic recovery.

This was disclosed in its April 2026 Nigeria Development Update titled: “Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development.”

According to the report, Nigeria is facing a deep early childhood development crisis, with poor outcomes in health, nutrition, and learning undermining productivity and future growth.

The Bank noted that while the Nigerian economy recorded moderate growth in 2026, following expansions of 4.1 per cent in 2024 and 4.0 per cent in 2025, the gains have not translated into improved living standards for most citizens.

It stated that growth was largely driven by the services sector, particularly ICT, financial services, and real estate, while agriculture and crude oil production made modest contributions.

On inflation, the report said price pressures have eased but remain in double digits, partly due to the impact of the Middle East conflict.

“Tight monetary policy, reduced exchange rate volatility, and improved food supply have helped ease price pressures,” the report stated.

The report further revealed that favourable external inflows boosted reserves, with net external reserves rising to $34.8 billion at the end of 2025, while gross reserves reached $45.5 billion, equivalent to 8.7 months of imports.

However, it noted that Nigeria’s fiscal deficit widened slightly in 2025, as increased non-oil revenues were offset by higher state-level capital spending and federal recurrent expenditure.

“Federation Account Allocation Committee (FAAC) gross revenues rose from 7.9 per cent of GDP in 2024 to 8.5 per cent in 2025, driven by strong non-oil tax collections reflecting improved tax administration.

“This includes expanded e-filing and e-payments, higher compliance ahead of the implementation of the new tax bills, and the rollout of VAT e-invoicing, alongside a 0.2 per cent of GDP rise in subnational internally generated revenues,” the report stated.

Despite these gains, the bank warned that economic recovery has yet to improve household welfare, as wage growth continues to lag behind inflation, leaving real incomes under pressure.

It emphasised that early childhood development, especially from pregnancy to age five, is critical to reversing the trend.

“Investments during this period generate lasting benefits, including better education outcomes, higher earnings, lower health costs, and stronger social cohesion. Investments during this period are highly cost-effective,” the report said.

The report highlighted alarming child welfare indicators, noting that 110 out of every 1,000 Nigerian children die before the age of five, 40 per cent are stunted, and 52 per cent are not developmentally on track before entering school.

It attributed these outcomes to persistent gaps in maternal healthcare, nutrition, early learning, and access to water and sanitation, particularly within the first 2,000 days of a child’s life.

The bank added that these outcomes remain “weak and highly unequal,” with significant disparities across income levels, regions, and states.

The chief economist for Africa at the World Bank, Andrew Dabalen, said African economies are facing tougher conditions than expected, citing rising energy and input costs since the outbreak of the Middle East conflict in late February.

In response, the federal government said it is taking steps to stabilise the economy and sustain recovery.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said recent indicators show inflation is easing, non-oil revenues are improving, and the debt-to-GDP ratio is declining.

Speaking in Abuja during the presentation of the report, Edun said the exchange rate is also showing signs of stability, attributing the progress to ongoing fiscal reforms.

“These reforms include real-time digital revenue tracking, forensic audits, reduced cost of governance, and a shift from debt financing to equity and PPP models,” he said.

He, however, acknowledged that Nigerians are yet to feel the full impact of the reforms, particularly amid rising global fuel and food prices.

Edun said the government remains committed to building a more transparent, resilient, and inclusive economy.