Nigeria’s growth under threat as poverty deepens — World Bank warns

The World Bank has said Nigeria is facing a deep early childhood development crisis, warning that weak outcomes in health, nutrition, and learning are undermining long-term productivity and economic growth.

This was contained in the Washington-based institution’s April 2026 Nigeria Development Update titled, “Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development,” reports The Guardian.

According to the bank, the Nigerian economy grew at a moderate pace in 2026, despite a slight cool-down following the start of the Middle East conflict. This followed a 4.1 per cent expansion in 2024, while real GDP grew by 4.0 per cent in 2025. It noted that the growth was driven primarily by the services sector, particularly ICT, financial services, and real estate, while agriculture and crude oil production have also contributed modestly.

The World Bank noted that the country’s inflation declined substantially, though it remained in double digits as the Middle East conflict added renewed pressure on the economy. “Tight monetary policy, reduced exchange rate volatility, and improved food supply have helped ease price pressures,” the report stated.

The report also acknowledged that favourable external inflows contributed to a buildup in reserves, with net external reserves rising to $34.8 billion at end-2025 and gross reserves reaching $45.5 billion, which is equivalent to 8.7 months of imports.

According to the report, Nigeria’s fiscal deficit widened slightly in 2025, as the continued surge in non-oil revenues was largely absorbed by increased state-level capital spending and higher federal recurrent spending.

“Federation Account Allocation Committee (FAAC) gross revenues rose from 7.9 per cent of GDP in 2024 to 8.5 per cent in 2025, driven by strong non-oil tax collections reflecting improved tax administration.

“This includes expanded e-filing and e-payments, higher compliance ahead of the implementation of the new tax bills, and the rollout of VAT e-invoicing, alongside a 0.2 per cent of GDP rise in subnational internally generated revenues,” the report stated.

The World Bank further warned that for most Nigerians, the economic recovery has yet to translate into better living conditions. According to the report, wage growth has lagged behind inflation, leaving real incomes under pressure and poverty levels largely unchanged.

The bank also said early childhood, particularly from pregnancy to age five, is critical, noting that investments during this period generate “lasting benefits, including better education outcomes, higher earnings, lower health costs, and stronger social cohesion. Investments during this period are highly cost-effective,” the report said.

It noted that outcomes in Nigeria remain poor compared to peers, with high child mortality, malnutrition, and low developmental readiness. “On average, 110 out of 1,000 Nigerian children die before age five, 40 per cent are stunted, and 52 per cent are not developmentally on track before entering school,” the report said.

The bank added that the outcomes are driven by persistent gaps in maternal health, nutrition, early learning, and access to water and sanitation, particularly during the first 2,000 days of a child’s life. Despite recent reforms, the bank said outcomes remain “weak and highly unequal,” with sharp disparities across income groups, regions, and states.

According to the report, stunting rates are “more than three times higher among children from poor households than among those from wealthier ones,” while development gaps between rich and poor households exceed 40 percentage points.

Similarly, the World Bank lowered its economic growth forecast for Sub-Saharan Africa in 2026 by 0.3 per cent, saying rising global costs and heightened uncertainty from the Middle East conflict are expected to slow the region’s fragile recovery. In the report released yesterday, the bank said the region’s economy is now expected to expand by 4.1 per cent this year, unchanged from 2025 but lower than the 4.4 per cent it had forecast in October.

The revision reflects the fallout from the conflict involving the United States and Iran, which has driven up fuel and fertiliser prices, disrupted global energy markets and threatened investment flows, the World Bank said.

The Chief Economist for Africa at the World Bank, Andrew Dabalen, described the environment facing African governments as tougher than anticipated. He noted that energy and input costs have climbed sharply since the Middle East war began in late February, leaving many economies under strain.

Reacting, the Ministry of Finance has spoken on steps being taken to steady Nigeria’s economy, with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, pointing to early signs of recovery backed by improved revenue. The update was shared in a statement posted on the ministry’s official page.

Edun made this known in Abuja during the April 2026 Nigeria Development Update organised by the World Bank. The ministry said recent indicators show inflation is beginning to ease, while non-oil revenues are also improving; It added that the debt-to-GDP ratio has declined, with the exchange rate showing signs of stability.

It linked these developments to reforms introduced to strengthen fiscal management.

“These reforms include real-time digital revenue tracking, forensic audits, reduced cost of governance, and a shift from debt financing to equity and PPP models,” Edun said.

He, however, noted that Nigerians still need to feel the impact of the reforms, especially with global pressures pushing up fuel and food prices. He added that the government will keep working towards a more transparent, resilient and inclusive economy over time.

Edun “presented a picture of an economy in transition with inflation falling, non-oil revenues rising, debt-to-GDP declining, and the exchange rate stabilising.”

Also, Director General of the Budget Office of the Federation, Dr Tanimu Yakubu, has insisted that Nigeria is not in economic collapse but going through a difficult adjustment process aimed at correcting long-standing structural problems in the economy. While acknowledging the hardship currently being experienced by Nigerians, he insisted that it reflects a deliberate reform process.

“The current hardship, though undeniable, reflects a deliberate process of correcting structural imbalances that have persisted for years,” he said, adding that “distress is evident, but it must not be mistaken for systemic failure.”

Yakubu explained that countries facing true economic collapse do not carry out key reforms such as unifying exchange rates, rebuilding foreign reserves, regaining access to international capital markets, or improving government finances. He noted that Nigeria is making progress in these areas despite ongoing challenges.

He said for years the country operated an economic system that appeared stable on the surface but was weakened by deep inefficiencies, including fuel subsidies, multiple exchange rate windows, and heavy government spending that encouraged profit-making through arbitrage rather than real production.

According to him, these policies largely benefited a small segment of the population while placing hidden costs on the wider economy. Their removal, he said, has exposed the true cost of running the system, leading to higher prices but also improving transparency and restoring confidence in economic management.

On government finances, Yakubu said recent data shows improvement following the removal of fuel subsidy, with revenues shared under the Federation Account rising by more than 40 per cent. He attributed this to better remittance practices and reduced leakages.

He added that Nigeria’s public debt remains below 30 per cent of Gross Domestic Product, describing it as moderate compared to other emerging economies, while external reserves have risen above $40 billion, based on figures from the Central Bank of Nigeria.

Echoing the Minister, the President of the Nigerian Association of Chambers of Commerce, Mines and Agriculture (NACCIMA), Jani Ibrahim, said that the Nigerian economy is undergoing a period of structural recalibration that requires serious adoption of new strategies and a workable economic framework.

“The implementation of new tax frameworks, evolving financial regulations, persistent inflationary trends, local security realities and global economic uncertainties, particularly triggered by the recent developments in the Middle East, require that businesses adopt more disciplined, data-driven, and forward-looking strategies,” he said during the chambers’ NEC meeting on Wednesday.

“At the same time, opportunities abound. The African Continental Free Trade Area, the digital economy, the global Halal market, green investments, etc., all present viable pathways for growth. The imperative before us is clear: to translate these opportunities into tangible outcomes through coordinated action, policy advocacy, and enterprise resilience,” he said.