The World Bank has cast doubt on the Federal Government’s goal of achieving single-digit inflation in the short term, describing it as unrealistic and inconsistent with Nigeria’s structural and macroeconomic realities.
In its latest Africa’s Pulse report released on Tuesday, the multilateral lender warned that Nigeria remains one of the few African countries likely to continue grappling with double-digit inflation through 2025, despite ongoing reforms by the Tinubu administration.
The report, titled “Pathways to Job Creation in Africa,” listed Nigeria among nine African nations — including Angola, Ethiopia, Ghana, Malawi, Sudan, Zambia, São Tomé and Príncipe, and Zimbabwe — that are projected to maintain elevated inflation levels over the next year.
According to the Bank, while 37 of the continent’s 47 economies are expected to achieve and sustain single-digit inflation by 2026, Nigeria remains an outlier, constrained by persistent currency depreciation, high food and energy costs, and supply chain disruptions that continue to exert upward pressure on prices.
“Consumer price inflation has continued to recede across most Sub-Saharan African countries, albeit at varying speeds,” the report said. “After peaking at 9.3 per cent in 2022, the region’s median inflation rate declined to 4.5 per cent in 2024 and is projected to stabilize between 3.9 and 4.0 per cent annually over 2025–26.”
However, within that group, the Bank said nine countries, led by Nigeria, still face double-digit inflation, driven by exchange rate pass-through, energy shocks, and structural bottlenecks that limit the transmission of monetary policy actions.
The World Bank’s assessment comes at a time when Nigerian authorities have continued to express optimism that recent fiscal and monetary reforms would swiftly curb inflation and stabilize the naira.
Key government figures — including the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, and the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso — have maintained that the ongoing reforms will soon yield results.
At the CBN Governor’s Annual Lecture Series held last week at the Lagos Business School, Cardoso reiterated the Bank’s commitment to bringing inflation down to single digits, describing it as a “medium-term target.”
“The idea is to ensure that in the medium term we achieve single-digit inflation,” Cardoso said, emphasizing that policy tightening and exchange rate unification would restore price stability.
But the World Bank’s analysis offers a sobering counterpoint to that optimism, warning that Nigeria’s economic conditions — particularly its dependence on imports, weak domestic production base, and volatile exchange rate regime — make a rapid disinflation unlikely in the near term.
The report observed that a broad wave of disinflation is sweeping across Sub-Saharan Africa, supported by improved fiscal discipline, easing global commodity prices, and stronger monetary coordination in several economies.
Countries like South Africa, Kenya, Senegal, and Tanzania have managed to anchor inflation within single digits, aided by consistent policy frameworks and relatively stable exchange rates.
In contrast, Nigeria’s inflation trajectory, which the National Bureau of Statistics recently placed at 20.12 per cent, continues to undermine purchasing power and consumer confidence. Economists note that the combination of fuel subsidy removal, foreign exchange market volatility, and rising energy costs has kept inflationary pressures elevated, eroding real incomes and widening inequality.
Andrew Dabalen, the World Bank’s Chief Economist for Africa, noted that Nigeria’s case remains particularly challenging because of “exchange rate pass-through and structural supply bottlenecks.”
“The median inflation rate in the region is less than four per cent, and most currencies that were cratering relative to the U.S. dollar have now recovered and stabilized,” Dabalen said. “Nigeria’s situation remains difficult because the impact of its exchange rate reforms continues to filter through to consumer prices.”
Despite inflation concerns, the Bank acknowledged Nigeria’s improving growth outlook. It upgraded the country’s growth forecast by 0.6 percentage points — one of the strongest revisions among large African economies — citing a rebound in oil production, improved investment sentiment, and gradual stabilization in the non-oil sector.
It projected that Sub-Saharan Africa’s economic growth will accelerate from 3.5 per cent in 2024 to 3.8 per cent in 2025, before averaging 4.4 per cent between 2026 and 2027. Nigeria’s contribution to this growth, however, remains constrained by inflationary pressures that have weakened consumer demand and discouraged long-term private investment.
“While countries such as Côte d’Ivoire and Kenya are benefiting from price stability and easing monetary conditions, Nigeria’s inflation trajectory continues to undermine consumer demand and macroeconomic stability,” the report noted.
Economists and analysts have attributed Nigeria’s stubborn inflation to a combination of monetary, structural, and security-related factors, including currency depreciation, rising energy costs, food supply disruptions, and poor logistics infrastructure.
For households and businesses, these pressures have deepened financial strain and eroded purchasing power, particularly among low-income earners.
The World Bank urged African governments — including Nigeria — to prioritize policies that address supply-side constraints, reduce the cost of doing business, and attract private investment. It identified agribusiness, healthcare, housing, tourism, and mining as sectors with the highest job-creation potential across the continent.
“Over the next quarter century, Sub-Saharan Africa’s working-age population will expand by more than 600 million,” Dabalen said. “The challenge is ensuring that these people find better jobs in an environment of stability and opportunity.”
The Bank also warned that despite the region’s economic resilience, external debt service obligations have more than doubled in the past decade, now accounting for two per cent of GDP, while the number of African countries at high risk of debt distress has nearly tripled since 2014.
For Nigeria, where unemployment and underemployment remain high, the combination of elevated inflation and rising debt costs continues to weigh on living standards and fiscal flexibility.
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World Bank Projects Prolonged Inflation Pressures in Nigeria despite Reforms
The World Bank has cast doubt on the Federal Government’s goal of achieving single-digit inflation in the short term, describing it as unrealistic and
