The World Bank’s new Nigeria Development Update (NDU), released on October 8, 2025, paints a cautiously optimistic picture of Africa’s largest economy.
Titled “From Policy to People: Bringing the Reform Gains Home,” the biannual report acknowledges major progress in stabilising Nigeria’s macroeconomy but warns that most citizens are yet to feel the benefits.
Here are 10 key disclosures from the report that every policymaker, investor, and citizen should know:
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Nigeria Has Avoided a Fiscal Crisis — Thanks to Bold Reforms
Since mid-2023, Nigeria has implemented several structural reforms — including fuel subsidy removal, exchange rate unification, and ending deficit monetisation.
These steps, the World Bank said, “prevented an outright fiscal crisis” and laid the foundation for recovery. The government’s improved tax collection and higher oil output have boosted public revenues and stabilised the economy.
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Economic Growth Has Strengthened but Remains Uneven
The report emphasized Nigeria’s GDP growth to 3.9% year-on-year in the first half of 2025, up from 3.5% in the same period of 2024.
The services sector, led by ICT, finance, and real estate, was the primary driver, while agriculture, employing one-third of Nigerians, contributed marginally due to structural bottlenecks.
The Bank projects GDP growth to rise slightly to 4.2% in 2025 and 4.4% by 2027, if reforms hold.
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Inflation Is Falling, But Food Prices Remain Painfully High
Headline inflation has started to ease, falling from 27.6% (month-on-month, annualised) in April 2025 to 12.9% in August.
However, food inflation which stands at 25.3% remains stubbornly high and continues to hurt the poor.
The World Bank identified “restrictive import policies, high tariffs, and domestic supply constraints” as the major causes of rising food costs.
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Nigeria’s Foreign Exchange Market Is More Stable
The World Bank boldly stated that the unification of the exchange rate and reforms at the Central Bank of Nigeria have restored market confidence.
A functioning “willing-buyer, willing-seller” FX market has emerged, while foreign reserves climbed above $42 billion as of September 2025.
The Bank described the naira as “market-reflective,” noting that the exchange rate premium between official and parallel markets has effectively disappeared.
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States Are Now Richer Than the Federal Government
For the first time, states received more FAAC allocations than the federal government in 2024.
The Bank ascribed this to the removal of FX subsidies and higher oil revenues, subnational governments recorded a combined surplus of 0.3% of GDP in the first half of 2025.
However, the Federal Government’s deficit widened to 3.8% of GDP due to falling independent revenues and rising wage and interest costs.
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Poverty Has Deepened, Despite Stabilization
The NDU report emphasized that between 2019 and 2023, average household consumption fell by 6.7%, while the poverty rate surged from 40% to 61% — or about 139 million Nigerians.
The World Bank attributes three-quarters of this increase to policy distortions and external shocks before 2023 but warns that “living standards have yet to improve meaningfully.”
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Food Inflation Is Largely Self-Inflicted
The report calls Nigeria’s food price crisis “policy-induced.”
Import bans and high tariffs on key staples like rice, wheat, tomato, and sugar, as well as inputs like fertilizer and cement, have inflated costs and limited supply.
“Such restrictions have created market concentration, low yields, and ultimately higher prices,” the Bank cautioned, urging Nigeria to align trade policy with ECOWAS norms.
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Fiscal Transparency Is Weak and Needs Urgent Fixing
The World Bank flagged serious gaps in Nigeria’s fiscal reporting, noting that debt principal repayments are wrongly treated as expenditure, overstating the government’s spending burden.
It also lamented delayed, fragmented data across federal and state levels, which “undermines confidence in reforms.”
The Bank urged the government to adopt a National Fiscal Pact to improve transparency, discipline, and coordination of public spending.
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Social Protection Coverage Has Collapsed
According to the latest report, only 6% of Nigerians currently benefit from any form of social protection, down from 19% in 2018/19.
Spending on social programs stands at just 0.14% of GDP, compared to the global average of 1.5%.
The report emphasised that rebuilding safety nets is essential for “bringing reform gains home” to the poor and economically insecure.
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Nigeria Can Afford to Protect Its Poor
The Bank calculated that providing monthly cash transfers to the ultra-poor — using the National Social Registry of 86 million individuals — would cost only 19% of total FAAC deductions in 2024.
So, it recommended that Nigeria domestically fund these programs to ensure stability, independence from donors, and long-term impact.
The Bottom Line
The World Bank’s message is that Nigeria’s macroeconomic recovery is real, but fragile.
The reforms of 2023–2025 have restored stability, yet their benefits must now reach ordinary citizens through lower food prices, efficient public spending, and stronger social safety nets.
As the report concludes, “Macroeconomic stabilisation is necessary but not sufficient – the ultimate test of reform success is whether Nigerians feel better off.”
