Nigeria’s economy experienced its fastest growth in nearly 10 years in 2024, propelled by a robust fourth quarter and stronger government finances, according to the World Bank.
During a presentation on Monday, the Bank’s Lead Economist for Nigeria, Alex Sienaert, revealed that the country’s GDP expanded by 4.6% year-on-year in the fourth quarter of 2024. He noted that high-frequency business indicators show continued momentum into the early months of 2025.
“This is the strongest quarterly growth Nigeria has seen in about a decade,” Sienaert said, ahead of the launch of the Nigeria Development Update (NDU) in Abuja the Bank’s bi-annual flagship report that analyses key economic trends and policy challenges.
Inflation Remains a Persistent Challenge
Despite the positive growth trajectory, Sienaert cautioned that high inflation remains a major headwind.
Nigeria’s headline inflation rate eased to 23.18% in February 2025, the lowest since June 2023, down from 24.48% in January. Food inflation followed a similar trend, falling to 23.51%, its lowest level since September 2022. However, core inflation which strips out volatile food and energy prices quickened to 24.43% from 23.01%.
On a monthly basis, consumer prices surged by 3.90% in March, up sharply from 2.04% in February, highlighting ongoing cost pressures.
Economic Reforms Yield Results
The World Bank attributed the stronger growth and improved fiscal outlook to bold reforms implemented under President Bola Tinubu’s administration, including:
- Fuel subsidy removal
- Electricity subsidy reduction
- Foreign exchange liberalisation
These reforms contributed to a more market-reflective and unified exchange rate, allowing the Central Bank of Nigeria to rebuild its foreign reserves, which now exceed $37 billion.
“That’s significant because this is the cushion the economy has against external volatility,” Sienaert said.
Improved Revenues, Smaller Deficit
Sienaert also highlighted a 4.5% increase in government revenue as a share of GDP in 2024 a notable improvement attributed to better tax administration, higher remittances, and the removal of FX subsidies.
As a result, Nigeria’s fiscal deficit fell to 3% of GDP in 2024, down from 5.4% in 2023. However, he noted that the full fiscal benefits of subsidy reforms are yet to fully materialise.
Outlook and Caution
Looking ahead, the World Bank projects Nigeria’s economy will grow by 3.6% in 2025, barring any major disruptions. But Sienaert warned that sustaining the gains will depend on maintaining tight monetary policy and fiscal discipline.
“High inflation remains a pressing concern,” he emphasized. “To consolidate these gains, Nigeria must stay the course with strong macroeconomic management.”
