Nigeria’s economic overhaul is beginning to deliver measurable gains, the World Bank said, while cautioning policymakers against using higher oil revenues to finance subsidies or sustained spending increases.
In its Nigeria Development Update released on April 8, 2026, the Washington-based lender said Africa’s largest economy is showing signs of stabilisation following a series of fiscal and monetary reforms. Real gross domestic product expanded by 4.0% in 2025, broadly in line with the 4.1% growth recorded in 2024, supported by strong performance in services, including ICT, financial services and real estate.
Early indicators for 2026 point to continued expansion across sectors, although global tensions have introduced some headwinds, the bank said.
Inflation has eased sharply but remains elevated. Consumer prices rose 15.1% year-on-year in February 2026, down from 26.3% in the same period a year earlier, according to the report. Food inflation slowed to 12.1%, offering some relief to household incomes.
Despite the improvement, the bank warned that inflation risks are re-emerging. Escalating geopolitical tensions in the Middle East have pushed up energy and commodity prices, reversing some of the recent gains. Petrol prices rose 45% between February and March 2026, while diesel nearly doubled to about N1,800 per litre, increasing pressure on businesses and consumers.
Nigeria’s external position strengthened in 2025, underpinned by exchange-rate adjustments, steady remittance inflows and renewed foreign portfolio investment. The current account posted a surplus of 4.8% of GDP, while net external reserves climbed to $34.8 billion, with gross reserves at $45.5 billion, equivalent to 8.7 months of import cover.
On the fiscal side, pressures persist. The deficit widened slightly to 3.1% of GDP in 2025 from 2.8% in 2024, as higher non-oil revenues were offset by increased federal recurrent spending and stronger capital outlays by state governments.
Looking ahead, the World Bank projects growth to average about 4.2% between 2026 and 2028, supported by continued reform momentum, macroeconomic stability and investment flows. However, it said poverty reduction will lag, as job creation struggles to keep pace with population growth and inflation continues to erode purchasing power.
In a statement issued alongside the report on April 8, 2026, the bank stressed that maintaining policy discipline will be critical, particularly as rising crude prices boost government revenues.
“Fiscal policy should treat higher oil revenues as a temporary windfall,” the bank said, urging authorities to prioritise rebuilding buffers rather than expanding spending commitments, especially in the run-up to elections.
The lender also advised that any additional revenue should be deployed cautiously, favouring targeted and time-bound cash transfers for vulnerable households instead of broad-based subsidies or price controls.
Monetary policy, it added, should remain tight to anchor inflation expectations, while exchange-rate flexibility should be preserved to absorb external shocks.
The World Bank said Nigeria’s long-term growth trajectory will depend on deeper structural reforms, including stronger revenue mobilisation, improved fiscal governance and more efficient investment in infrastructure and human capital.
The current reform phase, it concluded, has created a foundation for stability, but sustaining those gains will require disciplined execution in an increasingly uncertain global environment.