Market News

by Nduka Chiejina, Abuja

Nigeria’s economy needs to grow at a rate five times faster than its current pace to achieve the $1 trillion target by 2030, as well as address the country’s rising poverty levels, according to the World Bank.

This was stated during the unveiling of the Nigeria Development Update (NDU) report on Monday, which assesses the nation’s economic development.

The report, titled “Building Momentum for Inclusive Growth,” was presented by Alex Sienaert, the World Bank’s Lead Economist for Nigeria. In his remarks, Sienaert commended the Nigerian government for implementing macroeconomic reforms that have stabilized the economy.

However, he pointed out that more efforts are needed to ensure that this growth is inclusive, particularly through expanding cash transfer programmes for the vulnerable populations in the country.

Sienaert added that international experience shows that the public sector alone cannot generate sustainable economic growth and jobs. He stressed that public resources remain limited and that a successful strategy for Nigeria would involve positioning the public sector to both provide essential services—such as human capital development and infrastructure—and create an enabling environment for the private sector to thrive.

“Nigeria is no exception, particularly since public resources remain constrained. A useful strategy is to position the public sector to play a dual role as a provider of essential public services, especially to build human capital and infrastructure, and as an enabler for the private sector to invest, innovate, and grow the economy,” Sienaert stated.

The unveiling event was attended by key government officials, including Minister of Finance and Coordinating Minister of the Economy Wale Edun, Central Bank of Nigeria (CBN) Governor Olayemi Cardoso, Minister of Communications and Digital Economy Bosun Tijani, Minister of Budget and Economic Planning Abubakar Bagudu, Plateau State Governor Caleb Mutfwang, UAC Foods MD/CEO Oluyemi Oloyede, and Acting World Bank Country Director for Nigeria Taimur Samad.

The World Bank’s NDU report then noted the urgent need for Nigeria to accelerate its economic growth to meet its aspirations of a $1 trillion economy by 2030. The report stated that this can only be achieved by rebalancing the growth composition toward more productive sectors that create jobs and opportunities for the poor and economically insecure.

While sectors like finance and information and communication technology (ICT) have been key drivers of economic growth, they do not provide mass employment opportunities, as many Nigerians lack the skills to participate in these industries.

The World Bank then proposed a growth strategy led by the private sector but facilitated by the public sector. Critical to this strategy is addressing infrastructure gaps, particularly in electricity and transportation, and fostering a competitive business environment that encourages market openness. Improving access to finance for new and existing businesses and refining policies in key sectors will also help unlock economic potential.

The report also noted that economic growth in the final quarter of 2024 increased by 4.6 percent year-on-year, pushing the forecasted growth rate for the full year to 3.4 percent. This marks the highest growth rate since 2014, excluding the COVID-19 rebound in 2021-2022.

Recent reforms have been credited with improving Nigeria’s foreign exchange market and bolstering the country’s external position. The report recognized significant improvements in the fiscal deficit, which shrank from 5.4 percent of GDP in 2023 to 3.0 percent in 2024, largely driven by a sharp rise in national revenues.

“The fiscal deficit shrank from 5.4 percent of GDP in 2023 to 3.0 percent of GDP in 2024, a major improvement that was driven by a sharp increase in revenues of the entire Federation, which rose from N16.8 trillion in 2023 (7.2 percent of GDP) to an estimated N31.9 trillion in 2024 (11.5 percent of GDP),” the report noted.

Despite these positive developments, inflation remains high but is projected to decrease to an annual average of 22.1 percent in 2025, aided by a continued tight monetary policy stance.

The World Bank report stressed the need for deeper, wider structural reforms to consolidate macroeconomic stability and ignite inclusive growth. It further noted the importance of generating better jobs at scale to reduce poverty.

In his remarks, Taimur Samad, Acting World Bank Country Director for Nigeria, praised Nigeria for making notable strides in restoring macroeconomic stability. He stated that with improvements in fiscal management, the country now has a unique opportunity to direct more resources towards human capital, social protection, and infrastructure development.

Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, during the panel discussion, expressed his appreciation for the World Bank’s support and recognition of Nigeria’s progress. He noted that macroeconomic stability is crucial and pointed out the importance of transparency in the oil sector.

“We need to push for transparency in the oil sector, which is key to achieving our economic goals. Investment plays a critical role in creating jobs, and we must maintain the momentum to attract more investments into the country,” Edun said.

The finance minister also spoke about the ongoing efforts to digitalize social safety nets and ensure that cash transfer programmes reach those who need them the most.

CBN Governor Olayemi Cardoso addressed the role of the Central Bank in safeguarding economic stability, particularly in the foreign exchange market. “We will continue to protect the economy. With that comes a need to be proactive,” he remarked.

Cardoso expressed confidence that the ongoing policies will lead to a moderation of inflation and interest rates over time.

He also stressed the importance of financial inclusion, noting that the CBN is committed to supporting the fintech sector and improving access to finance for all Nigerians.