By Daniel Otera
Tight monetary policy by Nigeria’s apex bank may finally be yielding results, with the World Bank projecting a significant moderation in inflation by 2025.
The institution expects the country’s inflation rate to average 22.1 per cent, down from current highs, citing a continued focus on restoring price stability and reinforcing monetary policy credibility.
This forecast was made public in the World Bank’s latest Nigeria Development Update (NDU) report, titled “Building Momentum for Inclusive Growth”, officially launched in Abuja.
The biannual report assesses recent economic developments, reviews policy measures, and proposes strategic pathways to sustain ongoing reforms and promote equitable growth across Nigeria.
While Nigeria’s economy has shown signs of steady improvement most notably in GDP growth, government revenue, and fiscal consolidation the World Bank said inflation remains “high and sticky.” The report noted that the Central Bank of Nigeria’s tighter monetary stance is expected to gradually bring inflation under control.
“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 Bank said in the statement published on its website on Monday.
The World Bank attributed the inflationary surge in recent years to several structural and policy-driven factors. These include the removal of fuel subsidies, exchange rate unification, escalating logistics and energy costs, and recurring food supply disruptions.
Nonetheless, it acknowledged that efforts by the Central Bank are starting to take effect, with inflationary pressures expected to ease throughout 2025.
The report also highlighted a shift in Nigeria’s macroeconomic narrative. The economy grew by 4.6 per cent year-on-year in Q4 of 2024, leading to a 3.4 per cent full-year growth, the most robust performance since 2014, excluding the rebound after the COVID-19 pandemic.
Meanwhile, according to the World Bank’s Nigeria Development Update report, total government revenues rose substantially, from ₦16.8 trillion in 2023 to an estimated ₦31.9 trillion in 2024, accounting for 11.5 per cent of GDP. Simultaneously, the consolidated fiscal deficit narrowed from 5.4 per cent of GDP in 2023 to 3.0 per cent in 2024.
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Acting World Bank Country Director for Nigeria, Taimur Samad, described the improved fiscal outlook as a “historic opportunity” for Nigeria to recalibrate 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 stated.
He further emphasised the importance of redirecting public resources away from “unsustainable patterns” towards addressing critical development gaps.
The report underscored the importance of job creation in achieving long-term inclusive growth. It called for increased productivity in sectors with the potential to generate employment at scale. While sectors such as finance and ICT have outperformed others, the World Bank observed that they are not labour-intensive and largely inaccessible to a majority of Nigerians due to skill and access limitations.
“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 to play a dual role as a provider of essential public services… and as an enabler for the private sector to invest, innovate, and grow the economy,” he added.
The Nigeria Development Update report remains one of the World Bank’s core publications on Africa’s largest economy, providing empirical insights and recommendations to inform national and sub-national reforms.
Meanwhile, data from the National Bureau of Statistics (NBS) shows that headline inflation in Nigeria stood at 24.23 per cent in March 2025, up from 23.18 per cent in February, indicating that despite tightening measures, price pressures remain elevated in the short term.
Economic analysts believe the World Bank’s outlook provides a cautiously optimistic direction for policymakers to deepen structural reforms and prioritise long-term stability over populist fiscal policies.
