Nigeria’s Economy Booms in 2024 Despite Inflation – World Bank

According to the World Bank, Nigeria’s economy recorded its fastest growth in about a decade in 2024. A strong Q4-2024 and an improved fiscal position drove Nigeria’s economic growth.

However, the World Bank warned that high inflation remains a challenge.

President Tinubu’s reforms, which include ending fuel subsidies, slashing electricity allowances, and devaluing the naira, have added upward pressure on prices.

Economic Growth

According to the World Bank, in Q4-2024, Nigeria’s economy expanded by 4.6% year-on-year, topping an annual growth rate of 3.4%

It is the highest growth rate since 2014, excluding the post-pandemic rebound in 2021–2022. The bank expects this growth trajectory to continue, with GDP expected to hit 3.6% in 2025.

The World Bank reported that growth in 2024 was driven by the financial and telecommunication services sector, a rebound in oil production, and a recovery in transportation.

Inflation: A Persistent Challenge

Despite acknowledging positive growth figures in Nigeria, the World Bank warns that inflation remains persistent.

According to the bank, headline inflation peaked at 32.7% year-on-year in September 2024 due to the removal of fuel subsidies and naira devaluation.

However, the bank expects inflation to average 22.1% in 2025, which will remain a significant headache for policymakers.

Read: How Nigeria Can Survive US-China Trade Tensions – IMF DG

Fiscal Reforms

The World Bank noted that President Tinubu’s reforms have led to substantial fiscal improvements. As a result, in 2024, government revenues surged by 4.5% of GDP due to fuel subsidy removal and increased remittances.

In addition, the federal government’s fiscal deficit fell from 5.4% in 2023 to 3% in 2024.

Furthermore, the country’s exchange rate reforms stabilized the naira, enabling the Central Bank of Nigeria to boost the country’s official reserves to over $37 billion.

World Bank Warns Nigeria’s Growth Rate Too Sluggish for a $1 Trillion Economy

The World Bank also warned that Nigeria’s current economic growth rate is too sluggish to meet the federal government’s ambitious target of transforming the country into a $1 trillion economy by 2030.

During the Nigeria Economic Summit in 2023, President Tinubu vowed to transform Nigeria into a $1 trillion economy by the end of the decade in 2030.

While Nigeria’s GDP grew by 3.84% in Q4 2024, according to the National Bureau of Statistics (NBS), the World Bank states that it is far below the level required to create jobs and reduce poverty.

The bank noted that while ICT and finance are among Nigeria’s economy’s best-performing sectors, they are inadequate to drive mass employment.

Thus, the World Bank highlighted the agricultural, manufacturing, and service sectors as critical to this transformation.

These sectors can absorb a large share of Nigeria’s labour force and deliver a fairer income distribution nationwide.