World Bank: Nigeria needs to consolidate economic stability, inclusive growth

The World Bank has called on Nigeria to consolidate macroeconomic stability and ignite inclusive growth through deeper, wider structural reforms.

The bank, in its Nigeria Development Update, NDU, report released on Monday, stated that there was a need for the economy to generate more and better jobs at scale and reduce poverty.

The report noted that Nigeria’s macroeconomic situation is improving due to sustained reforms, as the country’s revenue earnings rose from 16.8 trillion in 2023 to estimated N31.9 trillion in 2024.

According to the report, which is titled “Building Momentum for Inclusive Growth,” 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 per cent, the highest since 2014, excluding the 2021-2022 COVID-19 rebound.

The bank said recent reforms have also helped to strengthen the foreign exchange market and Nigeria’s external position, adding that 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% 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 bank said in a statement.

The report further further noted 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.

Acting World Bank Country Director for Nigeria, Taimur Samad, 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 stated that inorder to achieve Nigeria’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.

It further noted that the economy should generate positive spillovers, and create jobs and opportunities at scale, especially for the poor and economically insecure.

The bank 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.

“A private sector-led, public sector-facilitated growth strategy can boost inclusive growth. 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,” it stated.

World Bank Lead Economist for Nigeria, Alex Sienaert, “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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