The World Bank has projected that Nigeria’s inflation rate will average 22.1% in 2025, as the Central Bank of Nigeria (CBN) continues to pursue a tight monetary policy aimed at stabilizing the economy and curbing inflation.
The forecast was disclosed on Monday during the launch of the latest Nigeria Development Update (NDU) report in Abuja, titled “Building Momentum for Inclusive Growth.” The biannual publication evaluates Nigeria’s economic performance, policy shifts, and prospects for inclusive development.
Inflation Remains Elevated but Shows Signs of Slowing
Despite some macroeconomic gains, the World Bank noted that inflationary pressures in Nigeria remain stubbornly high, fueled by structural challenges and policy reforms including the removal of fuel subsidies and the unification of exchange rates. High transportation and energy costs, along with persistent food supply issues, have also contributed to elevated consumer prices.
However, the Bank emphasized that the CBN’s recent tightening measures are beginning to take effect, anchoring inflation expectations and restoring confidence in monetary management.
“Inflation has remained high and sticky but is expected to fall to an annual average of 22.1% in 2025, as a sustained tight stance firmly establishes monetary policy credibility,” the report stated.
Macroeconomic Indicators Show Improvement
According to the report, Nigeria’s economy expanded by 4.6% year-on-year in the fourth quarter of 2024, bringing the total annual growth to 3.4%—the strongest since 2014, excluding the post-COVID rebound. Fiscal discipline also improved, with the national budget deficit narrowing from 5.4% of GDP in 2023 to 3.0% in 2024.
This was largely due to a significant increase in government revenue, which rose from N16.8 trillion in 2023 to N31.9 trillion in 2024, now accounting for 11.5% of GDP.
Taimur Samad, the World Bank’s Acting Country Director for Nigeria, described the improving economic fundamentals as a “historic opportunity” for the government to enhance public service delivery.
“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,” Samad said.
Structural Challenges Still Hinder Inclusive Growth
While sectors like finance and ICT continue to grow, the World Bank cautioned that these areas are not creating jobs at a scale large enough to address widespread poverty. Many Nigerians, the report noted, are excluded from participating in these sectors due to lack of access and insufficient skills.
The report advocates for a growth model led by the private sector, supported by better infrastructure, improved access to finance, competitive markets, and reforms in key productive sectors.
Alex Sienaert, the World Bank’s Lead Economist for Nigeria, emphasized that the public sector alone cannot drive sustainable growth and job creation.
“A useful strategy is to position the public sector to play a dual role—as a provider of essential public services and as an enabler for the private sector to invest, innovate, and grow the economy,” he said.
Outlook
The World Bank’s outlook suggests that while Nigeria is making progress toward macroeconomic stability, significant work remains in ensuring that growth is inclusive and sustainable. With inflation still high, and structural issues unresolved, policy consistency and private sector engagement will be essential for achieving long-term economic transformation.
