Onome Amuge
Nigeria’s reform-driven economic stabilisation is gathering attention among investors and multilateral institutions. Yet, as the World Bank warns in its latest Nigeria Development Update (NDU), the government’s success in restoring fiscal and monetary order risks losing momentum if ordinary Nigerians continue to face deteriorating living standards.
The report, titled “From Policy to People: Bringing the Reform Gains Home,” highlights that while macroeconomic indicators point to resilience for Africa’s fourth largest economy,social pressures from rising food prices and entrenched poverty threaten to blunt reform dividends.
According to the NDU, Nigeria’s economy grew by 3.9 per cent in the first half of 2025, up from 3.5 per cent a year earlier, supported by strength in services and non-oil industries, as well as modest recovery in oil production and agriculture. The current account surplus has expanded to 6.1 per cent of GDP, foreign reserves have exceeded $42 billion, and public debt is forecast to fall from 42.9 per cent to 39.8 per cent of GDP,the first decline in more than a decade.
Yet, behind these improving metrics lies an economy still wrestling with deep structural fragility. The World Bank’s report is explicit on this point. While acknowledging the progress in stabilising the naira and narrowing fiscal imbalances, it warns that the persistence of food inflation (Nigeria’s most regressive tax), is eroding purchasing power and worsening poverty. Food prices have quintupled between 2019 and 2024, with poor households, who devote around 70 per cent of their income to food, bearing the brunt.
Mathew Verghis, the World Bank’s country director for Nigeria,stated: “The Nigerian government has taken bold steps to stabilize the economy, and these efforts are beginning to yield results. 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.”
The report identifies food inflation as the most immediate threat to Nigeria’s social fabric, urging authorities to confront both policy-induced distortions and structural weaknesses. The World Bank advocates lifting trade restrictions such as import bans and high tariffs, while investing in logistics, input supply chains, and rural infrastructure. It notes that Nigeria’s food systems are constrained by poor transport networks, inadequate cold-chain storage, and insecurity in key agricultural regions.
Fiscal efficiency is another focus. Despite fiscal consolidation, spending inefficiencies remain entrenched. The NDU proposes greater transparency in the Federation Account and stronger oversight of state-level deductions. It also calls for a national fiscal pact that links budget priorities with long-term development goals, particularly in education, healthcare, and social protection.
On social safety nets, the Bank presses for institutionalisation. It recommends scaling up domestically financed cash transfers and creating a shock-responsive protection mechanism that cushions households during crises, marking a shift from emergency-driven interventions to sustained welfare programming.
The macroeconomic outlook is cautiously optimistic. Nigeria’s GDP growth is projected to accelerate to 4.2 per cent in 2025 and 4.4 per cent by 2027, anchored by services and agriculture. Inflation is expected to ease gradually but remain above target, requiring what the World Bank calls sustained monetary discipline. As Samer Matta, the Bank’s Senior Economist for Nigeria, noted, “Taming food inflation remains the single most effective way to improve welfare—it is, quite literally, the biggest tax on the poor.”
