Nigeria's Economy Shows Signs of Improvement, but Challenges Persist

Strategic Insights -

The Nigerian economy has made significant strides in recent times, with the country's sustained commitment to economic reforms yielding impressive results. According to the World Bank's Acting Country Director for Nigeria, Taimur Samad, the economy grew by 4.6% year-on-year in the last quarter of 2024, resulting in a full-year growth rate of 3.4% for 2024. This marks the highest growth rate since 2014, excluding the COVID-19 rebound in 2021-2022. Despite these gains, high inflation remains a concern, and the Central Bank of Nigeria (CBN) has been called upon to maintain tight monetary policies to preserve economic stability.

Key Takeaways:

  • The Nigerian economy grew by 4.6% year-on-year in the last quarter of 2024, resulting in a full-year growth rate of 3.4% for 2024, the highest since 2014 (excluding the COVID-19 rebound in 2021-2022).
  • The fiscal deficit reduced from 5.4% of GDP in 2023 to 3.0% in 2024, driven by a sharp rise in federation revenues, which surged from N16.8 trillion in 2023 to an estimated N31.9 trillion in 2024.
  • The World Bank emphasizes the need for sustained momentum and additional reforms to drive growth and expand economic opportunities.
  • The private sector is seen as a key driver of growth, with the World Bank advocating for a private sector-led, public sector-facilitated growth strategy to address infrastructure gaps and improve access to finance for new and existing businesses.
  • The Central Bank of Nigeria (CBN) has been called upon to maintain tight monetary policies to preserve economic stability and bring inflation under control, which is projected to decrease to just above 22% annually by 2025.
  • World Bank's Lead Economist for Nigeria, Alex Sienaert, highlights the importance of scaling up targeted cash transfer programs to support vulnerable populations and ensuring that revenue gains are carefully monitored following the fuel subsidy removal.

Statistics:

  • The Nigerian economy grew by 4.6% year-on-year in the last quarter of 2024, resulting in a full-year growth rate of 3.4% for 2024.
  • The fiscal deficit reduced from 5.4% of GDP in 2023 to 3.0% in 2024.
  • Federation revenues surged from N16.8 trillion in 2023 to an estimated N31.9 trillion in 2024.
  • The World Bank projects inflation to decrease to just above 22% annually by 2025.

Sources:

  • World Bank's Nigeria Development Update (NDU) report titled 'Building Momentum for Inclusive Growth' (2025)
  • World Bank's Acting Country Director for Nigeria, Taimur Samad
  • World Bank's Lead Economist for Nigeria, Alex Sienaert