Abuja: Nigerias macroeconomic situation is improving as a result of sustained reforms according to the latest edition of the Nigeria Development Update (NDU) report released today. The report highlights significant economic growth and fiscal improvements, indicating a positive trend for the country’s economy.
According to World Bank, the report titled “Building Momentum for Inclusive Growth” shows that economic growth in the last quarter of 2024 increased to 4.6% year-on-year, pushing growth for the full year 2024 to 3.4%. This marks the highest growth rate since 2014, excluding the COVID-19 rebound period of 2021-2022. The report attributes this growth to recent reforms that have strengthened the foreign exchange market and Nigeria’s external financial position. Moreover, the consolidated fiscal position saw considerable improvement in 2024, driven by surging revenues. The fiscal deficit decreased from 5.4% of GDP in 2023 to 3.0% in 2024, propelled by a significant rise in federation revenues from N16.8 trillion in 2023 to an estimated N31.9 trillion in 2024.
The NDU report also notes that while inflation has remained high and sticky, it is anticipated to decline to an annual average of 22.1% in 2025. This reduction is expected as a sustained tight monetary policy stance establishes credibility and dampens inflationary expectations. The current challenge is to maintain macroeconomic stability and promote inclusive growth through deeper structural reforms. This includes generating more and better jobs and reducing poverty.
Key strategies suggested include fostering healthy competition, enhancing market openness, and improving the business environment to spur business dynamism. Additionally, improving access to finance for new and existing firms is crucial for growth and productivity. The report also emphasizes the need for improved policies in key sectors to unlock their potential.
International experience reinforces that the public sector alone cannot sustainably generate growth and jobs. This is particularly relevant for Nigeria, where public resources remain limited. A strategic approach involves positioning the public sector as a provider of essential public services and as an enabler for private sector investment and innovation. Alex Sienaert, World Bank Lead Economist for Nigeria, highlights the importance of this dual role in driving economic growth.