Nigeria has made progress in stabilizing its economy through policy reforms, but significant challenges remain in improving the lives of its citizens, according to the latest Nigeria Development Update (NDU) released by the World Bank.
The report, titled “From Policy to People: Bringing the Reform Gains Home,” highlights growth in economic activity and improvements in domestic revenue mobilization, monetary policy, and external balances. Despite these advances, persistent issues such as high food inflation and widespread poverty continue to hinder inclusive growth.
The NDU states that Nigeria’s economy grew by 3.9% year-on-year in the first half of 2025, compared to 3.5% during the same period in 2024. This increase was driven by strong results in services and non-oil industries, as well as improvements in oil production and agriculture. The country’s foreign reserves now exceed $42 billion, and its current account surplus has risen to 6.1% of GDP due to higher non-oil exports and reduced oil imports. Although oil prices have fallen, the federal deficit is expected to remain at 2.6% of GDP for 2025—similar to last year—and public debt is projected to decline from 42.9% to 39.8% of GDP.
However, these macroeconomic gains have not yet led to better living standards for many Nigerians. The report notes that poverty and food insecurity are still prevalent. Food inflation remains a serious concern; poor households spend up to 70% of their income on food, with the cost of a basic food basket increasing fivefold between 2019 and 2024.
“The Nigerian government has taken bold steps to stabilize 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 address these issues, the report outlines three main priorities:
- Reducing food inflation by eliminating trade barriers such as import bans and high duties while addressing supply chain problems related to seeds, inputs, security, logistics, transport infrastructure, power supply, storage facilities, and cold chains.
- Increasing public spending efficiency through improved fiscal transparency and discipline in Federation Account deductions along with aligning fiscal policy more closely with development goals like investing in human capital.
- Expanding social protection programs by institutionalizing regular cash transfers funded domestically for those most in need and developing a safety net system responsive to shocks that can help households manage crises.
Looking ahead, Nigeria’s economic outlook is described as cautiously optimistic. Growth is forecasted to rise modestly from 4.2% in 2025 to 4.4% by 2027 due mainly to continued strength in services alongside support from agriculture and non-oil industry sectors. Inflation is predicted to decline gradually but stay elevated for some time; ongoing monetary discipline and structural reforms are seen as necessary steps for tackling high food prices.
“Food prices remain the biggest tax on the poor,” said Samer Matta, Senior Economist for Nigeria at the World Bank.