IMF Excludes Nigeria from Africa’s Fastest-Growing Economies, Cites Stronger Reforms in Benin, Côte d’Ivoire, and Others
Despite recent improvements in Nigeria’s growth outlook, the International Monetary Fund (IMF) has omitted Africa’s largest economy from its latest list of the continent’s fastest-growing nations. Instead, smaller economies such as Benin Republic, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda have emerged as standout performers, outpacing regional peers through sustained reforms and fiscal discipline.
According to the IMF, these five countries are now ranked among the world’s fastest-expanding economies, driven by consistent policy adjustments, enhanced fiscal management, and increased investments in infrastructure and manufacturing.
Abebe Selassie, Director of the IMF’s African Department, made the disclosure during the launch of the Fund’s latest Regional Economic Outlook for Sub-Saharan Africa at a press briefing on Thursday. Selassie explained that the strong performances of these economies are underpinned by macroeconomic stability and decisive reform measures that have positioned them for continued growth.
He noted that overall regional growth in Sub-Saharan Africa is projected to remain steady at 4.1 percent in 2025, with a slight uptick expected in 2026. This momentum, he said, will be supported by ongoing efforts at macroeconomic stabilisation and reforms in key economies across the continent.
“Sub-Saharan Africa’s economic growth, we now estimate, is expected to hold steady at 4.1 percent this year, with a modest pick-up expected in 2026,” Selassie stated. “This reflects ongoing progress in macroeconomic stabilisation and reform efforts across major economies in the region. Countries like Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda are among the fastest-growing in the world.”
The IMF’s exclusion of Nigeria from the list comes even as the Fund recently revised the country’s 2025 growth forecast upward to 3.9 percent, citing improvements in oil production, investor confidence, and fiscal policy management. The updated projection represents a 0.5 percentage point increase from its previous forecast, signaling cautious optimism about Nigeria’s medium-term prospects.
Similarly, the National Bureau of Statistics (NBS) reported that Nigeria’s Gross Domestic Product (GDP) grew by 4.23 percent year-on-year in real terms during the second quarter of 2025 — an improvement from the 3.48 percent recorded in the same period of 2024. Analysts attribute this uptick to a recovery in oil output, gains in non-oil sectors, and easing inflationary pressures.
However, despite these positive indicators, the IMF warned that Nigeria’s growth remains below its potential, urging authorities to intensify structural reforms, strengthen the power sector, tackle inflation, and broaden the non-oil revenue base through industrial diversification and improved tax administration.
Selassie further highlighted growing financial vulnerabilities across the region, noting that many African governments, including Nigeria, are increasingly dependent on domestic bank borrowing as access to external financing tightens. This trend, described as the “sovereign-bank nexus,” raises concerns about the stability of national banking systems.
“In about half of the cases, we estimate that public debt is now held by domestic financial institutions,” Selassie said. “This has gone up over the years. While it has helped sustain public spending, it also poses risks to financial stability, particularly in countries where public debt and interest rates are high.”
He added that rising debt service costs are crowding out development spending, while inflation — though easing regionally — remains in double digits in several economies. External buffers such as foreign reserves, he cautioned, are under strain and must be rebuilt to strengthen resilience against global shocks.
The IMF also underscored the need for stronger domestic revenue mobilisation through tax reforms and digitalisation, alongside measures to build public trust in tax institutions and ensure equity in revenue collection.
Since 2020, the IMF has disbursed nearly $69 billion to African countries, including about $4 billion in 2025 alone, to support recovery efforts and provide technical assistance.
Selassie concluded by urging African governments to reinforce regulatory oversight and capital buffers in their financial sectors while ensuring that fiscal policies are sustainable enough to prevent economic shocks.
“Public finances must be placed on a healthy trajectory to limit spillovers,” he said. “The region’s resilience has been remarkable, but continued turbulence in global markets, slowing growth, and diverging commodity prices will test that strength in the months ahead.”
IMF Commends Nigeria’s Reform Progress but Warns of Persistent Inflation, Debt, and Global Trade Headwinds
As Sub-Saharan Africa continues to navigate an increasingly complex global economic landscape, the International Monetary Fund (IMF) has delivered a mixed assessment—praising Nigeria’s fiscal and monetary reforms while cautioning that broader regional challenges could constrain growth and stability.
The Fund noted that while a few African countries such as Kenya and Angola have regained access to international capital markets, rising U.S. tariffs and the expiration of preferential trade benefits under the African Growth and Opportunity Act (AGOA) could weaken Africa’s trade and growth outlook. At the same time, the expected sharp decline in foreign aid threatens to tighten fiscal space for low-income and fragile states, compounding existing vulnerabilities.
To bolster resilience, the IMF identified two key policy imperatives for African economies: domestic revenue mobilisation and stronger debt management.
The first, according to IMF’s African Department Director, Abebe Selassie, involves modernising tax systems through digitalisation, reducing wasteful tax exemptions, and enforcing compliance. However, he stressed that these reforms must also build public trust, institutional capacity, and undergo careful impact assessments to ensure fairness.
The second priority, debt management, he said, should focus on transparency—publishing comprehensive debt data, improving public financial oversight, and adopting credible fiscal frameworks to lower borrowing costs and attract innovative financing.
Nigeria’s Progress and Remaining Risks
Turning to Nigeria, the IMF acknowledged visible progress in stabilising prices and improving monetary credibility. The decline in inflation, the Fund observed, aligns with tighter monetary policies and a more flexible exchange rate regime. Yet, Selassie warned that inflation remains “sticky” due to what he called a “level shift,” meaning prices have adjusted to higher baselines rather than returning to pre-crisis levels.
“So starting with inflation in Nigeria,” he said, “we find the decline consistent with the tightening of policies undertaken in recent years. We are encouraged by this progress, but there’s still some distance to go toward meeting government targets.”
The IMF’s latest assessment also showed that about 20 countries in Sub-Saharan Africa are now either in or at high risk of debt distress, with 14 classified as high-risk and six already in distress. Selassie stressed that boosting sustainable growth remains essential to easing debt burdens, noting that “one-size-fits-all” policy prescriptions would not work across the region’s diverse economies.
Illicit Flows and Structural Leakages
Selassie further highlighted the issue of illicit financial flows—ranging from trade mis-invoicing and tax evasion to corruption-related outflows—as a persistent drag on fiscal capacity.
He urged African nations to address these leakages by identifying their sources and enacting reforms that target the underlying causes. “Some are simple trade leakages,” he said, “others involve tax evasion or outright illegal activities. Tackling them requires systemic reforms and better enforcement.”
Expensive Borrowing and Market Realities
While acknowledging that market access for some African economies is improving, the IMF warned that borrowing costs remain prohibitively high. Governments, it said, must approach external borrowing with caution and ensure all decisions are anchored in sound medium-term fiscal strategies.
Despite these warning signs, the IMF commended Nigeria and several other reform-oriented economies for progress in fiscal consolidation, exchange rate flexibility, and monetary tightening, which have collectively helped stabilise growth and moderate inflationary pressures.
Policy Direction “Broadly Positive”
On the sidelines of the 2025 IMF/World Bank Annual Meetings in Washington, D.C., officials from the Fund’s Fiscal Affairs and Monetary and Capital Markets departments described Nigeria’s policy direction as “broadly positive.”
According to Davide Furceri, Division Chief in the Fiscal Affairs Department, Nigeria currently maintains a neutral fiscal stance—a balance between government spending and taxation that supports anti-inflation efforts without undermining economic growth.
“We think that this neutral fiscal stance is consistent with helping monetary policy reduce inflation,” Furceri said. He praised Nigeria’s recent reforms in tax administration and expenditure management, noting that “many of the laws passed have simplified the tax code, reduced burdens on businesses, and cut wasteful spending.”
He added that Nigeria’s growth prospects could be strengthened further by improving the efficiency and composition of public spending, especially in social protection and infrastructure investment to cushion vulnerable households.
Exchange Rate Flexibility and External Buffers
The IMF’s Director of Monetary and Capital Markets, Tobias Adrian, also lauded Nigeria’s recent exchange rate adjustments and tighter monetary policy, noting that these measures have enhanced credibility and strengthened external buffers.
“Exchange rates are important buffers that help economies adjust to shocks,” Adrian explained. “A depreciating exchange rate isn’t necessarily a bad thing—it can restore equilibrium. Nigeria has taken many steps to strengthen policy frameworks, particularly in monetary policy.”
Supporting this view, Jason Wu, Assistant Director at the IMF, said Nigeria’s economic fundamentals have improved significantly, pointing to stronger revenues, improved transparency in foreign reserve management, and lower inflation—down from over 30 percent last year to around 23 percent in 2025.
“Revenue collection has strengthened and FX transparency has improved,” Wu noted. “The direction of travel appears positive.”
Global Uncertainty Still a Threat
Nonetheless, the IMF warned that Sub-Saharan Africa remains vulnerable to global shocks, including another possible wave of capital flow volatility that could expose fragile economies. Wu cautioned that although capital inflows are resuming, “surge-and-retrenchment cycles” could return, especially if global investors reassess risks.
To shield their economies, the IMF urged African governments to stay the course on fiscal discipline, deepen debt management, and implement long-term structural reforms.
“Improving fundamentals—fiscal, monetary, and structural—will be key to sustaining resilience,” Wu concluded. “The region has made remarkable progress, but continued vigilance is essential to secure durable growth amid global uncertainty.”