Nigeria’s Economic Reforms Drive Strongest Growth in a Decade, Says World Bank

Nigeria’s macroeconomic outlook is on a markedly upward trajectory following an ambitious reform agenda undertaken over the past year. According to the latest edition of the World Bank’s Nigeria Development Update (NDU), released under the theme “Building Momentum for Inclusive Growth,” the country has made substantial progress toward restoring fiscal discipline, strengthening its foreign exchange market, and initiating steps toward broader structural transformation.

The report outlines that Nigeria’s economic growth in the final quarter of 2024 rose to 4.6% (year-on-year), driving the annual GDP growth for 2024 to 3.4%. This marks the highest growth rate since 2014, excluding the COVID-19 rebound years of 2021–2022. The recovery is being attributed to a series of sustained economic reforms by the federal government aimed at stabilizing macroeconomic indicators and unlocking long-term potential.

Fiscal and Revenue Gains Underpin Stability

A key highlight from the report is the significant improvement in Nigeria’s fiscal position. The consolidated fiscal deficit dropped sharply from 5.4% of GDP in 2023 to 3.0% in 2024. This was largely driven by a dramatic increase in the Federation’s revenues, which jumped from N16.8 trillion (7.2% of GDP) in 2023 to an estimated N31.9 trillion (11.5% of GDP) in 2024. Such growth signals a rebalancing of public finances and a move away from reliance on unsustainable fiscal patterns.

This fiscal windfall, the report argues, presents a “historic opportunity” for Nigeria to reorient its public spending toward high-impact development priorities such as infrastructure, healthcare, education, and social protection.

Inflation Easing but Remains a Concern

While inflation remains elevated, the World Bank projects a decline to an annual average of 22.1% in 2025. The persistent tight monetary policy stance is credited with anchoring inflationary expectations and re-establishing monetary policy credibility. However, the report stresses that Nigeria must maintain these macroeconomic gains through consistent policy enforcement and institutional strengthening.

A Turning Point for Inclusive and Job-Rich Growth

Despite the encouraging progress, the report underscores that Nigeria’s economy must generate inclusive, broad-based growth to significantly lower poverty rates. The World Bank warns that without a deliberate rebalancing of growth towards labor-intensive sectors, Nigeria risks exacerbating inequality and economic insecurity.

To meet the government’s ambitious goal of achieving a $1 trillion economy by 2030, the pace of growth must accelerate further and focus on sectors that offer high employment multipliers. Currently, high-performing sectors such as finance and information and communications technology (ICT) contribute significantly to GDP but are not inclusive, as many Nigerians lack the skills or access needed to participate in these sectors.

Reform Blueprint for Sustained Development

The NDU lays out a four-pillar strategy to drive inclusive and sustained growth in Nigeria:

1. Infrastructure Investment: Addressing significant gaps in electricity supply, transportation networks, and digital connectivity is crucial to enabling private sector growth.

2. Market Reforms and Business Climate Enhancement: Fostering competitive markets and reducing regulatory bottlenecks will increase investment, productivity, and entrepreneurship.

3. Financial Access for SMEs: Enhancing credit availability to both new and existing firms, particularly in underserved regions, can help spur innovation and job creation.

4. Sectoral Policy Reforms: Tailored reforms in agriculture, manufacturing, digital services, and renewable energy are essential to unleashing sectoral potential and absorbing a growing workforce.

A Strategic Role for Government

The report reaffirms that the public sector alone cannot be the engine of job creation. Instead, Nigeria must adopt a model where the government acts as both a provider of essential services—particularly in health, education, and infrastructure—and a facilitator of private investment.

“Nigeria has made impressive strides to restore macroeconomic stability... Now is the time to reallocate public resources to meet development needs and empower the private sector to lead the way,” stated Taimur Samad, Acting World Bank Country Director for Nigeria.

Alex Sienaert, the World Bank’s Lead Economist for Nigeria, added, “International experience suggests that governments do best when they focus on building human capital and laying the groundwork for businesses to thrive. Nigeria is no exception.”

Outlook

The report concludes that Nigeria’s current window of opportunity should not be squandered. Reforms must be institutionalized, social investments increased, and policies made more inclusive to sustain the momentum. By implementing deeper and broader reforms now, Nigeria can secure its path toward not just higher GDP growth, but a more equitable, resilient, and prosperous future.