World Bank: Nigeria’s Single-Digit Inflation Target Unrealistic Amid Persistent Economic Pressures

The World Bank has described the Federal Government’s target of achieving single-digit inflation in the short term as unrealistic, warning that Nigeria remains one of the few African countries still battling persistently high consumer price inflation.

In its latest Africa’s Pulse report released on Tuesday, the Bank projected that Nigeria, along with Angola, Ethiopia, Ghana, Malawi, Sudan, Zambia, São Tomé and Príncipe, and Zimbabwe, will continue to experience double-digit inflation through 2025.

According to the report, while 37 out of 47 African economies are expected to maintain single-digit inflation by 2026, Nigeria stands out as an outlier due to structural weaknesses, including continued currency depreciation, elevated food and energy prices, and supply constraints that drive price instability.

This assessment challenges the Federal Government’s optimism that its ongoing fiscal and monetary reforms — such as FX unification, fuel subsidy removal, and tighter monetary policies by the Central Bank — will rapidly bring inflation down to single digits.

Finance Minister and Coordinating Minister of the Economy, Wale Edun, and Central Bank Governor, Olayemi Cardoso, have repeatedly assured Nigerians that inflation would decline soon. Speaking at the CBN Governor’s Annual Lecture Series at the Lagos Business School last week, Cardoso reaffirmed that achieving single-digit inflation remains a medium-term goal, arguing that official data may overstate current price levels.

However, the World Bank’s findings suggest otherwise. Despite widespread disinflation across Sub-Saharan Africa, Nigeria remains among a small group of countries where inflation continues to run high, even as regional price growth slows to historic lows.

The biannual report, titled “Pathways to Job Creation in Africa,” notes that Sub-Saharan Africa’s median inflation rate fell from 9.3 per cent in 2022 to 4.5 per cent in 2024 and is projected to stabilize around 4 per cent by 2026. Still, nine countries, including Nigeria, are expected to record double-digit inflation next year.

While the report highlights Sub-Saharan Africa’s resilience amid global economic challenges — with regional growth forecast to rise from 3.5 per cent in 2024 to 3.8 per cent in 2025 — it warns that inflation remains a major constraint on Nigeria’s growth prospects, household welfare, and business confidence.

The Bank also upgraded Nigeria’s growth projection by 0.6 percentage points, citing improved oil production and modest investment inflows, but cautioned that persistent inflation undermines these gains.

“While countries like Côte d’Ivoire and Kenya benefit from price stability, Nigeria’s inflation trajectory continues to weigh on consumer demand and macroeconomic stability,” the report stated.

Economists attribute Nigeria’s price challenges to factors such as the weak naira, high energy costs, and food supply disruptions worsened by insecurity and poor logistics. With over half of African nations expected to maintain inflation below five per cent next year, Nigeria’s double-digit rate remains an anomaly.

Countries like South Africa, Senegal, and Tanzania have successfully anchored inflation through disciplined fiscal policies and stable exchange rates.

“Nigeria’s situation remains challenging due to exchange rate pass-through effects and structural supply bottlenecks,” said Andrew Dabalen, the World Bank’s Chief Economist for Africa.

The report also cautioned that, despite economic resilience, the region’s growth remains insufficient to generate enough decent jobs for its growing labour force. External debt servicing, it added, has doubled over the past decade, with many countries now at high risk of debt distress.

For Nigeria, rising inflation has deepened poverty, eroded purchasing power, and limited job opportunities. The World Bank urged African governments to pursue reforms that cut business costs, build human capital, and attract private investment, identifying agribusiness, healthcare, housing, tourism, and mining as key job-creation sectors.

“Over the next 25 years, Sub-Saharan Africa’s working-age population will grow by more than 600 million,” Dabalen said. “The real challenge lies in ensuring these people find productive jobs in an environment of stability and opportunity.”