Nigeria’s economy recorded its fastest growth in nearly a decade, expanding by 4.6% year-on-year in the fourth quarter of 2024. This surge is attributed to robust fiscal reforms and a strong performance in the non-oil sectors, according to the World Bank.
Under President Bola Tinubu’s administration, Nigeria has implemented bold economic reforms aimed at stabilizing the nation’s finances. Key measures include the removal of fuel subsidies, cuts in electricity tariffs, and significant devaluations of the Nigerian naira.
These steps have contributed to a more unified and market-reflective exchange rate, enabling the Central Bank of Nigeria to rebuild official reserves, which now exceed $37 billion.
Alex Sienaert, the World Bank’s lead economist for Nigeria, highlighted that these reforms have led to a notable increase in government revenues, rising by 4.5% of GDP in 2024. This fiscal improvement has allowed for a reduction in the fiscal deficit from 5.4% in 2023 to an estimated 3% in 2024, according to Reuters.
Despite the positive growth trajectory, Nigeria continues to grapple with high inflation, a challenge exacerbated by the very reforms driving economic expansion. The removal of subsidies and currency devaluations have led to increased costs for goods and services, placing a strain on consumers. The World Bank projects that inflation could average just over 22% in 2025, assuming the Central Bank maintains its current tight monetary policy.
According to Nairametrics, Looking ahead, the World Bank forecasts Nigeria’s economy to grow by 3.6% in 2025, building on the momentum from the previous year. This growth is expected to be driven by continued improvements in the non-oil sectors, particularly services such as financial services, telecommunications, and information technology. Additionally, easing inflationary pressures and improved business sentiment are anticipated to support this positive trend.
However, the full benefits of the implemented reforms, particularly the removal of fuel subsidies, have yet to be fully realized. The World Bank emphasizes the need for sustained tight monetary and disciplined fiscal policies to address ongoing inflation challenges and ensure long-term economic stability.
