On Thursday, the World Bank emphasized the need for Nigeria to cut government waste and redirect spending toward targeted poverty alleviation programs. This recommendation was outlined in the latest Nigeria Development Update (NDU) Report, titled “Staying the Course: Progress Amid Pressing Challenges,” which was launched in Abuja.
The report urges Nigeria to maintain a strict monetary policy and enhance the effectiveness of its policies until a consistent path of disinflation is achieved. Alex Sienaert, the World Bank’s Lead Economist for Nigeria, noted that the report underscores the importance of sustaining these policies while tackling structural issues to address inflation and foster long-term investment, growth, and job creation.
Sienaert highlighted the necessity of unifying the exchange rate to reflect market conditions and expanding the foreign exchange market. He also recommended focusing on four key areas to mitigate debt risks and allow for development spending aimed at poverty reduction: removing fuel subsidies, increasing transparency in the oil sector, and improving tax policies to enhance non-oil revenues. Additionally, he stressed the importance of protecting vulnerable populations by expanding cash transfer programs and strengthening social safety nets.
He remarked that these policy priorities are essential for building upon Nigeria’s macro-critical reforms and stimulating growth and job creation. Recent reforms have begun to restore macroeconomic stability, with GDP projected to grow by 3.3 percent in 2024, reaching an average of 3.7 percent annually between 2025 and 2027. However, headline inflation is expected to peak at an average rate of 31.7 percent in 2024, largely due to the depreciation of the naira and rising gasoline prices. In the medium term, adherence to the current policy mix could bring inflation down to 14.3 percent by 2027.
Ndiame Diop, the World Bank Country Director for Nigeria, noted that ongoing macro-fiscal reforms are already yielding positive results. He indicated that revenue is increasing, the foreign exchange market is improving, and these changes must translate into tangible benefits for Nigerians in their daily lives.
Diop stressed the importance of leveraging Nigeria’s competitive exchange rate—an opportunity that has arisen for the first time in 40 years. He urged the government to consolidate its improving fiscal outlook while expanding support for the poorest households to help them cope with rising costs. This, he asserted, should go hand in hand with creating growth opportunities and productive jobs, particularly for the youth.
The Nigeria Development Update is a biannual report that evaluates recent economic and social developments in Nigeria, placing them in a global context and examining the country’s medium-term development challenges.
Written By; Christopher Emuakpeje