Services to drive Nigeria’s growth as reforms spur investment – World Bank

The World Bank has projected that services will continue to be the primary engine of Nigeria’s economic growth, supported by ongoing domestic reforms that are spurring investment.

In its latest ‘Global Economic Prospects’ report released Tuesday, the Bank noted that while the industrial sector remains constrained by weak crude oil output, activity in financial services and information and communication technology is driving robust growth.

According to the report, Nigeria’s economic growth rose to 3.4 percent in 2024, propelled by financial and telecom services, a rebound in the transportation sector, and a modest recovery in oil production. Growth is projected to strengthen further to 3.6 percent in 2025 and average 3.8 percent in 2026–2027.

The World Bank attributed the improved outlook to reforms that have encouraged private sector investment, especially in services. It also highlighted the Central Bank of Nigeria’s monetary tightening efforts to tackle inflation triggered by currency depreciation. Despite some cooling in recent months, inflation remains high relative to pre-pandemic levels and the Central Bank’s target. The policy rate was raised six times in 2024 to combat rising prices.

Nigeria’s fiscal position has also improved, helped by the removal of the implicit foreign exchange subsidy, stronger revenue administration, increased subnational revenues, and higher remittances from government-owned enterprises.

Across Sub-Saharan Africa (SSA), economic activity picked up to an estimated 3.5 percent in 2024, driven by public investment and rising commodity exports. Over 60 percent of the region’s economies experienced growth acceleration. However, the region’s two largest economies—Nigeria and South Africa saw divergent growth trends.

Elsewhere in SSA, countries such as Angola and Ethiopia recorded stronger growth supported by commerce, mining, energy, and agriculture. Survey data suggest that economic activity remained resilient in early 2025 in many of the region’s major economies. With progress in reducing inflation, several large economies, including Nigeria, paused further interest rate hikes.

The World Bank forecasts growth in SSA to rise to 3.7 percent in 2025 and average 4.2 percent in 2026–2027, assuming stable external conditions, easing inflation, and reduced conflict. However, per capita income growth in the region is expected to remain modest, averaging 1.6 percent annually between 2025 and 2027, and insufficient to lift a significant share of the population out of extreme poverty. In over a quarter of SSA countries, per capita income will remain below pre-pandemic levels by 2027, especially in those affected by persistent conflict.

Risks to the SSA growth outlook are tilted to the downside. Global growth could be weaker than projected if global trade tensions were to escalate further. The direct effects of the increased U.S. trade barriers on SSA economies are expected to be contained, as the region exports relatively few manufacturing goods to the United States. However, should trade fragmentation increase further or lead to a sharper slowdown in global growth, the adverse effects on SSA economies could be considerable due to their dependence on commodity trade

The World Bank said heightened trade tensions and policy uncertainty are expected to drive global growth down this year to its slowest pace since 2008 outside of outright global recessions.

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