Says pace of growth needs to accelerate further
Says inflation to fall to an annual average of 22.1% in 2025
The World Bank said on Monday that Nigeria’s economy needs to generate “more and better” jobs and reduce poverty. The bank, in a report contained in the latest edition of the Nigerian Development Update (NDU), said that though Nigeria has made impressive strides to restore microeconomic stability with improvement in the fiscal situation, the country has a unique opportunity to improve the quantity and quality of development spending by investing more in human capital, social protection and infrastructure.
The bank has also commended the performance of Nigeria’s economy, noting that the macroeconomic situation is improving as a result of sustained reforms.
The report, titled Building Momentum for Inclusive Growth, states that economic growth in the last quarter of 2024 increased to 4.6 per cent (year-on-year), pushing growth for the full year 2024 to 3.4 percent, the highest since 2014 (excluding the 2021–2022 COVID-19 rebound).
According to the latest edition of the Nigeria Development Update (NDU) Report,
“Recent reforms have also helped to strengthen the foreign exchange (FX) market and Nigeria’s external position. The consolidated fiscal position improved in 2024, driven by surging revenues. The fiscal deficit shrank from 5.4% of GDP in 2023 to 3.0 per cent of GDP in 2024, a major improvement which was driven by a sharp increase in revenues of the entire federation, which rose from N16.8 trillion in 2023 (7.2% of GDP) to an estimated N31.9 trillion in 2024 (11.5% of GDP).”
The report further adds that inflation has remained high and sticky but is expected to fall to an annual average of 22.1 per cent in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations.
However, it highlighted that the challenge is to consolidate macroeconomic stability and ignite inclusive growth through deeper, wider structural reforms, and stressed,
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“There is a need for the economy to generate more and better jobs at scale and reduce poverty.”
Taimur Samad, Acting World Bank Country Director for Nigeria, said,
“Nigeria has made impressive strides to restore macroeconomic stability. With the improvement in the fiscal situation, Nigeria now has a historic opportunity to improve the quantity and quality of development spending; investing more in human capital, social protection, and infrastructure. The allocation of public resources can begin to shift away from the past unsustainable pattern, and rather towards meeting Nigeria’s large development needs, including the government playing its essential role of providing basic public services and serving as an enabler of private sector-led growth.”
The NDU further highlights that in order for the economy to meet the government’s aspiration of achieving a US$1 trillion economy by 2030 and deliver poverty reduction and shared prosperity, the pace of growth needs to accelerate further and its composition rebalanced towards those economic sectors and firms that are most productive, generate positive spillovers, and create jobs and opportunities at scale, especially for the poor and economically insecure.
It said at present, the best-performing sectors of the economy, like finance and ICT, are important drivers of growth but are not sources of mass employment as many Nigerians do not yet have the skills and opportunities to participate in them, stressing that a private sector-led, public sector-facilitated growth strategy can boost inclusive growth.
The Bank listed key elements of this strategy to include: addressing major infrastructure gaps, such as in electricity and transportation; fostering healthy competition, market openness, and improving the business environment to spur business dynamism; improving access to finance for new and existing firms to grow and improve productivity; improving policies in key sectors to help unleash the potential of these sectors.
Alex Sienaert, World Bank Lead Economist for Nigeria, said,
“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. A useful strategy is to position the public sector to play a dual role as a provider of essential public services, especially to build human capital and infrastructure, and as an enabler for the private sector to invest, innovate, and grow the economy.”
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