Nigeria’s Growth Yet To Improve Living Standards, Says World Bank

Nigeria has recorded modest economic growth and improving macroeconomic stability, but these gains have yet to translate into meaningful improvements in the living conditions of millions of citizens, according to the World Bank’s April 2026 Nigeria Development Update.

The report released on Tuesday in Abuja, titled “Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development,” noted that while recent reforms have helped stabilise key economic indicators, the impact on household welfare remains limited, with poverty and inequality still widespread.

According to the World Bank, Nigeria’s economy grew by 4.0 per cent in 2025, maintaining the same pace as in 2024. The growth was largely driven by the services sector, particularly information and communications technology (ICT), financial services, and real estate, while other sectors recorded only marginal expansion.

Inflation, which had surged in previous years, showed signs of easing, dropping to 15.1 per cent year-on-year in February 2026 from 26.3 per cent a year earlier.

The decline was attributed to tight monetary policy, reduced volatility in the exchange rate, and improvements in food supply.

Despite these positive trends, the report stressed that household incomes have not fully recovered, leaving many Nigerians struggling with the high cost of living.

It noted that poverty levels remain elevated, underscoring the urgent need for policies that not only stabilise the economy but also expand economic opportunities and create jobs.

The country’s external position remained relatively strong in 2025, supported by increased non-oil exports, resilient remittance inflows, and renewed interest from foreign portfolio investors.

As a result, Nigeria recorded a current account surplus of 4.8 per cent of Gross Domestic Product (GDP), while gross external reserves rose to $45.5bn, equivalent to about 8.7 months of import cover.

On the fiscal side, stronger non-oil revenues boosted Federation Account receipts to 8.5 per cent of GDP.

However, rising expenditure pressures led to a slight increase in the consolidated fiscal deficit, which stood at 3.1 per cent of GDP.

The World Bank also highlighted the potential impact of ongoing geopolitical tensions in the Middle East, noting that while higher oil prices could boost Nigeria’s revenues, they could also lead to increased costs for energy, fertiliser, and transportation, thereby exerting upward pressure on inflation.

The report warned that global financial conditions may tighten further due to heightened risk aversion, potentially affecting capital flows and exchange rate stability.

It advised that Nigeria maintain a flexible exchange rate regime to absorb external shocks, while fiscal authorities should use any windfall revenues to rebuild buffers and provide targeted support to vulnerable populations rather than reintroducing broad subsidies.

Monetary authorities, it added, should sustain a tight policy stance to consolidate disinflation gains, while structural reforms aimed at improving productivity and competitiveness should be deepened.

However, the report emphasised that macroeconomic stability alone would not be sufficient to improve living standards without significant investment in human capital development.

It identified early childhood development as a critical area for intervention, noting that outcomes in Nigeria remain poor and uneven. According to the report, about 110 out of every 1,000 children die before the age of five, 40 per cent are stunted, and more than half are not developmentally on track before starting school.

The World Bank stressed that investments in nutrition, healthcare, early learning, and child protection from pregnancy through the first five years of life are essential to improving long-term productivity and reducing poverty.

It called for a more integrated approach to early childhood development, combining health, nutrition, education, and social protection services into a coordinated framework. This, it said, would require better targeting of resources, stronger delivery systems, and increased collaboration between government, private sector, and community-based organisations.

World Bank Country Director for Nigeria, Mathew Verghis, while speaking on the report said while efforts to stabilise the economy are commendable, more needs to be done to ensure that the benefits of these reforms reach ordinary Nigerians.

He noted that sustaining and deepening macroeconomic reforms, alongside addressing structural challenges, would be key to achieving faster, more inclusive growth, job creation, and improved living standards.

Similarly, the World Bank’s Lead Economist for Nigeria, Fiseha Haile, expressed cautious optimism about the country’s economic outlook, projecting growth of about 4.2 per cent between 2026 and 2028.

However, he warned that inflation, though declining, is expected to remain relatively high in the near term, partly due to external pressures such as global conflicts and supply chain disruptions.

Overall, the report concluded that while Nigeria has made progress in stabilising its economy, the real test lies in translating these gains into tangible improvements in the lives of its citizens through sustained reforms and strategic investments in people.