World Bank Sounds Alarm on Nigeria's Economic Prospects Amid Poverty Crisis
The World Bank has issued a stark warning in its April 2026 Nigeria Development Update, titled "Nigeria's Tomorrow Must Start Today: The Case for Early Childhood Development," stating that multidimensional poverty is severely threatening the nation's economic potential. The report underscores a deep early childhood development crisis, with weak outcomes in health, nutrition, and learning undermining long-term productivity and growth.
Economic Growth and Inflation Trends
According to the Washington-based institution, 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 percent expansion in 2024, while real GDP grew by 4.0 percent in 2025. The growth was primarily driven by the services sector, particularly ICT, financial services, and real estate, with modest contributions from agriculture and crude oil production.
The World Bank noted that inflation declined substantially but remained in double digits as the Middle East conflict added renewed pressure. Tight monetary policy, reduced exchange rate volatility, and improved food supply have helped ease price pressures, the report stated. Additionally, 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, equivalent to 8.7 months of imports.
Fiscal Deficit and Revenue Improvements
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 percent of GDP in 2024 to 8.5 percent 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 new tax bills, and the rollout of VAT e-invoicing, alongside a 0.2 percent of GDP rise in subnational internally generated revenues, the report detailed.
Early Childhood Development Crisis
The World Bank emphasized that for most Nigerians, the economic recovery has yet to translate into better living conditions, with wage growth lagging behind inflation, leaving real incomes under pressure and poverty levels largely unchanged. The bank highlighted that early childhood, 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.
However, 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 percent are stunted, and 52 percent are not developmentally on track before entering school, the report said. These 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. 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.
Regional Economic Forecast and Government Response
Similarly, the World Bank lowered its economic growth forecast for Sub-Saharan Africa in 2026 by 0.3 percent, citing rising global costs and heightened uncertainty from the Middle East conflict, which are expected to slow the region's fragile recovery. The region's economy is now expected to expand by 4.1 percent this year, unchanged from 2025 but lower than the 4.4 percent forecast in October.
Reacting to the report, the Ministry of Finance outlined steps being taken to steady Nigeria's economy. Minister of Finance and Coordinating Minister of the Economy, Wale Edun, pointed to early signs of recovery backed by improved revenue, with inflation easing, non-oil revenues improving, debt-to-GDP ratio declining, and the exchange rate showing stability. 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 stated.
Director General of the Budget Office of the Federation, Dr Tanimu Yakubu, insisted that Nigeria is not in economic collapse but undergoing a difficult adjustment process aimed at correcting long-standing structural problems. He explained that the removal of policies like fuel subsidies and multiple exchange rate windows has exposed true costs, improving transparency and restoring confidence.
Echoing this, the President of the Nigerian Association of Chambers of Commerce, Mines and Agriculture (NACCIMA), Jani Ibrahim, emphasized the need for strategic economic reforms, noting opportunities in areas like the African Continental Free Trade Area and digital economy.
