The World Bank has cautioned that Nigeria’s ambition to bring inflation down to single digits in the short term is unlikely to materialize, warning that the country remains among a small group of African nations still struggling with persistently high consumer prices.
In its latest Africa’s Pulse report released on Tuesday, the Bretton Woods institution projected that Nigeria, alongside Angola, Ethiopia, Ghana, Malawi, Sudan, Zambia, São Tomé and Príncipe, and Zimbabwe, will continue to experience double-digit inflation through 2025, even as price pressures ease across most of Sub-Saharan Africa.
The World Bank noted that while 37 of Africa’s 47 economies are on track to maintain single-digit inflation by 2026, Nigeria remains an outlier due to structural imbalances such as currency depreciation, high food and energy prices, and persistent supply constraints.
This assessment contrasts sharply with the Federal Government’s optimism that recent fiscal and monetary reforms—particularly the unification of exchange rates, removal of fuel subsidies, and tighter monetary policy—would rapidly tame inflation.
Government’s Confidence Meets Global Skepticism
Top government officials, including Minister of Finance and Coordinating Minister for the Economy, Wale Edun, and Central Bank Governor Olayemi Cardoso, have repeatedly expressed confidence that ongoing reforms will bring inflation down to single digits within a few years.
Speaking at the CBN Governor’s Annual Lecture Series in Lagos last week, Cardoso reaffirmed that single-digit inflation remains a medium-term target, arguing that price moderation will strengthen economic stability and investor confidence.
However, the World Bank’s findings suggest that Nigeria’s inflation path is likely to remain stubbornly high in the near term, undermining the government’s projections.
Inflation Still an African Outlier
According to the report titled “Pathways to Job Creation in Africa,” the region’s median inflation rate has fallen sharply—from 9.3% in 2022 to 4.5% in 2024—and is projected to stabilize between 3.9% and 4.0% over 2025–2026.
It added that nearly 60% of Sub-Saharan African countries have experienced disinflation this year. Yet, Nigeria is among nine countries still projected to face double-digit inflation, reflecting deep-seated economic distortions.
While inflation is easing in countries like Ivory Coast, Kenya, Senegal, and Tanzania, which have benefited from disciplined fiscal policies and stable exchange rate regimes, Nigeria’s economy continues to face exchange rate pass-through effects and logistical bottlenecks that drive up prices.
“Nigeria’s situation remains challenging because of exchange rate pressures and structural supply constraints,” said Andrew Dabalen, the World Bank’s Chief Economist for Africa.
Growth Outlook Brightens but Inflation Clouds Gains
Despite these inflationary challenges, the World Bank upgraded Nigeria’s growth forecast by 0.6 percentage points, citing a rebound in oil production and renewed private investment. The Bank expects Sub-Saharan Africa’s economy to expand by 3.8% in 2025 and reach 4.4% between 2026 and 2027, underscoring the region’s resilience amid global economic headwinds.
Nonetheless, it warned that inflation remains a major drag on household welfare, consumer spending, and business confidence in Nigeria.
Economists have attributed the country’s high inflation to a mix of currency depreciation, rising energy costs, and food supply disruptions worsened by insecurity and poor transportation networks.
Call for Structural Reforms and Job Creation
Beyond inflation, the report also drew attention to Africa’s employment crisis, stressing that growth must translate into decent jobs for the region’s rapidly expanding labor force.
“External debt service has more than doubled in the past decade, and the number of Sub-Saharan African countries at high risk of debt distress has nearly tripled since 2014,” the report noted.
It urged African governments to pursue reforms that reduce the cost of doing business, strengthen institutions, and invest in human capital. Key sectors identified for potential job creation include agribusiness, housing, healthcare, tourism, and mining—with tourism alone capable of generating multiple indirect jobs per position created.
“Over the next 25 years, Sub-Saharan Africa’s working-age population will grow by more than 600 million,” Dabalen added. “The challenge is ensuring that these people find meaningful work in stable and growing economies.”
For Nigeria, the message is clear: while reforms have brightened growth prospects, taming inflation will require deeper structural adjustments, credible monetary discipline, and sustained efforts to stabilize the naira and reduce production costs.