From Victor Osula, Abuja
The World Bank has projected a notable decline in Nigeria’s inflation rate, forecasting that inflation could average just over 22 per cent in 2025—provided the Central Bank of Nigeria (CBN) maintains its current policy of monetary tightening.
This projection was contained in the Bank’s latest Nigeria Development Update (NDU) report titled “Building Momentum for Inclusive Growth”, which was officially launched in Abuja on Monday.
The biannual report reviews recent economic developments, evaluates ongoing policy reforms, and outlines strategies for promoting inclusive growth across the country.
While acknowledging signs of gradual economic recovery—evident in GDP growth, improved government revenue, and efforts at fiscal consolidation—the Bank said Nigeria’s inflation remains “high and sticky.” However, it expressed optimism that the CBN’s tighter monetary stance will help bring inflation under control over time.
“Inflation has remained high and sticky but is expected to fall to an annual average of 22.1 per cent in 2025, as a sustained tight stance firmly establishes monetary policy credibility and dampens inflationary expectations,” the World Bank stated on its website.
It attributed Nigeria’s recent inflation surge to a combination of structural and policy-related factors, including the removal of fuel subsidies, exchange rate unification, high logistics and energy costs, and persistent food supply disruptions.
The report also noted a shift in Nigeria’s macroeconomic performance, highlighting that the economy grew by 4.6 per cent year-on-year in the fourth quarter of 2024, leading to a full-year growth rate of 3.4 per cent—the strongest performance since 2014, excluding the post-COVID rebound.
Acting World Bank Country Director for Nigeria, Taimur Samad, described the improved fiscal outlook as a “historic opportunity” for the country to redirect public spending.
“Nigeria has made impressive strides to restore macroeconomic stability. With the improvement in the fiscal situation, Nigeria now has a historic opportunity to improve the quantity and quality of development spending—investing more in human capital, social protection, and infrastructure,” Samad said.
He stressed the importance of moving public resources away from “unsustainable patterns” and focusing them on critical development needs.
The World Bank also emphasised the need for job creation to drive inclusive growth. It called for higher productivity in labour-intensive sectors capable of generating mass employment. While sectors such as finance and ICT have seen strong performance, the report noted that they are not accessible to the majority of Nigerians due to skill gaps and other barriers.
“International experience suggests that the public sector cannot sustainably generate growth and jobs by itself. Nigeria is no exception,” said Alex Sienaert, the Bank’s Lead Economist for Nigeria. “A useful strategy is to position the public sector as a provider of essential services and as an enabler for the private sector to invest, innovate, and grow the economy,” he added.
Meanwhile, the World Bank raised concerns over the Nigerian National Petroleum Company (NNPC) Limited’s handling of the financial gains from the removal of petrol subsidies. According to the report, the NNPC has only been remitting about half of the savings from subsidy removal to the Federation Account, citing outstanding debt arrears.
President Bola Tinubu had scrapped the petrol subsidy in May 2023 as part of broader economic reforms aimed at freeing up resources for infrastructure and social programmes. The move led to a sharp rise in fuel prices across the country.
However, the World Bank’s latest findings show that despite the full removal of the subsidy by October 2024, the NNPC only began transferring revenue gains in January 2025—and has since remitted just 50 per cent of those funds.
“Despite the subsidy being fully removed in October 2024, NNPC started transferring the revenue gains to the Federation only in January 2025. Since then, it has been remitting only 50 percent of these gains, using the rest to offset past arrears,” the Bank stated.
“As of March 2025, full remittance had not yet occurred, as NNPC claims it has large PMS-related subsidies that should be settled first,” the report added.
