The World Bank says Nigeria’s macroeconomic outlook is beginning to look more promising following a raft of sweeping fiscal and monetary reforms rolled out over the past year. But while the country may be inching back from the brink, the bank warns that real inclusive development will require far more than positive GDP numbers or increased government revenue—it will demand bold and targeted efforts to rebalance the economy from the ground up.
The assessment was captured in the latest Nigeria Development Update (NDU) report titled “Building Momentum for Inclusive Growth”, released in Abuja on Monday. For the first time in years, Nigeria has posted figures that suggest a shift in direction: the economy grew by 4.6% year-on-year in the fourth quarter of 2024, pushing full-year GDP growth to 3.4%—the strongest non-COVID rebound since 2014.
That figure excludes the temporary rebounds recorded during the COVID-19 years, when a brief post-lockdown surge masked underlying weaknesses. This time, the World Bank attributes the gains to “sustained policy reforms and improved revenue mobilization,” pointing particularly to the Tinubu administration’s controversial but arguably necessary decisions to end petrol subsidies and unify the exchange rate.
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“Nigeria has made impressive strides to restore macroeconomic stability,” said Taimur Samad, the Acting Country Director for the World Bank in Nigeria. He noted that the narrowing of the country’s fiscal deficit from 5.4% of GDP in 2023 to 3.0% in 2024 marks a significant milestone in the country’s effort to escape its longstanding budget crisis.
But it was the revenue side of the ledger that drew particular attention. Government earnings more than doubled, from N16.8 trillion in 2023 (about 7.2% of GDP) to an estimated N31.9 trillion in 2024 (11.5% of GDP). According to the report, this dramatic increase in public revenue has opened the door for fiscal consolidation and strengthened external buffers, at a time when Nigeria’s foreign reserves and currency stability remain top investor concerns.
However, despite the optimistic tone of the growth figures, the report underscores a deeper reality – noting that growth remains uneven, exclusionary, and structurally fragile.
Most of the recent GDP growth is concentrated in sectors like finance and ICT industries, with limited capacity to absorb Nigeria’s massive and largely unskilled labor force. Millions of Nigerians still find themselves locked out of these sectors due to limited access, education, or digital literacy. And while the macro indicators may be trending upward, poverty and unemployment remain stubbornly high.
The World Bank noted that if Nigeria is to achieve its ambition of becoming a $1 trillion economy by 2030—a goal recently reiterated by policymakers—it must fundamentally change what is growing, how it is growing, and who benefits from that growth.
“International experience suggests that the public sector cannot sustainably generate growth and jobs by itself. Nigeria is no exception, particularly since public resources remain constrained,” said Alex Sienaert, Lead Economist for Nigeria at the World Bank.
Instead, Sienaert advocates for a dual role: a government that both delivers essential public services and creates the enabling environment for private sector-led investment and innovation. Without such an approach, the report warns, the country risks sliding back into the same cycle of booms and busts that have plagued its economy for decades.
Inflation is Still a Thorn
The macro reforms may have improved revenue and investor sentiment, but ordinary Nigerians are still reeling under the weight of elevated prices. The World Bank acknowledges that inflation, driven by the removal of fuel subsidies, exchange rate realignment, high energy and logistics costs, and persistent food supply disruptions, remains “high and sticky.”
The report projects that inflation will begin to ease, averaging 22.1% in 2025, as the Central Bank of Nigeria’s aggressive monetary tightening starts to bear fruit. The CBN’s recent shift toward a tighter stance, marked by successive interest rate hikes and efforts to mop up excess liquidity, is credited with gradually anchoring inflation expectations.
However, the report stops short of declaring victory, noting that structural problems—such as weak agricultural productivity, poor logistics infrastructure, and rampant insecurity in food-producing regions—continue to pose serious risks to price stability and food access.
Lessons from the Past
Nigeria’s latest gains mirror brief periods of fiscal discipline seen in previous administrations, often triggered by crises or multilateral pressure. The Buhari administration, for instance, undertook minor reforms under IMF watch during the 2016 recession, but later reversed course when oil prices rebounded. Many observers worry that a similar pattern may emerge again if the current revenue increase is not channeled into long-term investments.
This time, however, the World Bank sees an opening—if the government can hold its nerve.
“With the improvement in the fiscal situation, Nigeria now has a historic opportunity to improve the quantity and quality of development spending,” said Samad. “That includes investing more in human capital, social protection, and infrastructure.”
But he was quick to add a cautionary note: the allocation of public resources must shift from past “unsustainable patterns” toward development priorities that reduce inequality and empower the private sector.
Can the Reforms Deliver Jobs?
At the heart of the World Bank’s argument is the belief that Nigeria’s reforms, while painful, can be made to work, provided they are accompanied by deeper structural changes that address the root causes of economic exclusion.
The NDU recommends a four-pronged strategy: improve infrastructure, expand access to credit, stimulate competition across key sectors, and overhaul policies in agriculture, manufacturing, and informal trade that affect employment at scale.
The World Bank is particularly focused on sectors that can provide broad-based jobs, such as construction, agro-processing, and light manufacturing. The Bretton Wood Institute notes that without a deliberate pivot in this direction, Nigeria risks replicating the “jobless growth” phenomenon that has characterized much of its past economic performance.
With a population nearing 230 million and growing rapidly, Nigeria needs to create millions of jobs annually just to keep pace. Any growth model that fails to deliver employment at scale, the report suggests, is likely to collapse under the weight of rising inequality, unrest, and political instability.
This means that Nigeria’s path forward depends not just on sticking with reform, but on reforming with a human face, ensuring that macro stability translates into better lives for ordinary citizens.