Nigeria sees strong economic growth despite soaring inflation — World Bank

Nigeria's economy experienced its strongest growth in nearly a decade, achieving a 4.6% year-on-year increase in the fourth quarter of 2024.
The World Bank predicts overall growth for Nigeria at 3.6% for 2025 but emphasizes concerns over high inflation.
Nigeria's government revenue increased significantly due to foreign exchange subsidy removal and improved tax collection.

Nigeria's economy posted its strongest growth in nearly a decade in 2024, fueled by a robust fourth quarter and a healthier fiscal outlook, according to the World Bank.

The World Bank’s lead economist for Nigeria, Alex Sienaert, said on Monday that the country’s economy grew by 4.6% year-on-year in the fourth quarter of 2024, marking a strong finish that has carried into early 2025, according to high-frequency business indicators.

The World Bank projects Nigeria’s overall growth at 3.6% for 2025.

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Inflation remains a major challenge

However, the World Bank cautioned that persistently high inflation remains a major concern.

Since taking office, President Bola Tinubu has introduced chains of economic reforms aimed at stabilising Africa’s most populous nation, These include the removal of fuel subsidies, cuts to electricity subsidies, and a devaluation of the naira.

While these measures are designed to restore economic balance, they have also contributed to a steep rise in the cost of goods and services, placing a heavy burden on consumers.

Despite this, the World Bank projects that Nigeria’s inflation rate could ease to an annual average of just over 22% in 2025, provided that the Central Bank of Nigeria sustains its current tight monetary policy.

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However, Sienaert noted that Nigeria's government revenue rose by 4.5% of GDP in 2024, a "remarkable achievement" attributed to the removal of foreign exchange subsidies, improved tax collection, and increased remittance inflows.

The country’s foreign exchange reforms have created a market-reflective, unified and stable exchange rate, allowing the central bank to rebuild official reserves, now exceeding $37 billion, Sienaert said.

This boost in revenue helped reduce the fiscal deficit to an estimated 3% of GDP in 2024, down from 5.4% in 2023. However, he added that the full financial benefit of ending fuel subsidies has yet to be fully realised.