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The World Bank has warned that Nigeria’s ambition to achieve single-digit inflation in the near term is unrealistic, warning that persistent price pressures will continue to weigh on micro, small and medium enterprises (MSMEs) and households.
In his latest The pulse of Africa In its report, the Bank noted that while inflation has eased across much of sub-Saharan Africa, with average rates falling from 9.3% in 2022 to 4.5% in 2024, Nigeria is expected to remain in double digits until 2026.
The World Bank’s chief economist for Africa, Andrew Dabalen, said Nigeria’s inflation outlook is worsened by exchange rate volatility and structural supply constraints, which continue to push up the cost of goods and services.
The report notes that ongoing economic reforms, including the removal of fuel subsidies and the unification of the foreign exchange market, could produce positive long-term results, but are unlikely to bring immediate relief.
It warned that sustained inflation would further increase production costs for SMEs, erode households’ purchasing power and stifle growth and job creation.
The Bank also cited rising debt service obligations and weak output growth as further risks to Africa’s largest economy.
While the Minister of Finance and Coordinating Minister of Economy, Wale Edun, and the Governor of the Central Bank, Olayemi Cardoso, expressed confidence that current policy interventions will soon tame inflation, Dabalen stressed that Nigeria’s situation remains complex.
He said: “The case of Nigeria is particularly challenging due to exchange rate pass-through and structural supply bottlenecks.
“While most currencies that were depreciating against the US dollar have stabilized, Nigeria still faces unique pressures.”
The World Bank urged the federal government to step up efforts to reduce business costs, support MSMEs and channel investments into sectors such as agriculture, housing, healthcare, tourism and mining to promote sustainable growth and resilience.
