World Bank Warns Rising Poverty Could Undermine Nigeria’s Economic Future

The World Bank has raised concerns that widespread multidimensional poverty in Nigeria is threatening the country’s long-term economic potential, particularly due to poor outcomes in early childhood development.

In its April 2026 Nigeria Development Update titled “Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development,” the global financial institution highlighted serious gaps in child health, nutrition, and learning, warning that these challenges could weaken future productivity and growth.

Growth amid persistent challenges

The report noted that Nigeria’s economy has continued to grow at a moderate pace, recording a 4.1 per cent expansion in 2024 and 4.0 per cent in 2025. Growth has been largely driven by the services sector, especially ICT, financial services, and real estate, with agriculture and oil contributing modestly.

Inflation has eased somewhat due to tighter monetary policies, improved food supply, and reduced exchange rate volatility, although it remains in double digits. External reserves also improved, with net reserves rising to $34.8 billion and gross reserves reaching $45.5 billion by the end of 2025.

Despite these gains, the World Bank noted that many Nigerians are yet to feel the benefits, as wage growth continues to lag behind inflation, leaving living standards largely unchanged.

Early childhood crisis

A major concern raised in the report is the state of early childhood development in Nigeria. The bank stressed that the period from pregnancy to age five is critical for building human capital, with long-term benefits for education, income, and health.

However, Nigeria’s outcomes remain poor compared to similar countries. According to the report, about 110 out of every 1,000 children die before the age of five, 40 per cent are stunted, and more than half are not developmentally ready for school.

These challenges are linked to gaps in maternal care, nutrition, early learning, and access to clean water and sanitation. The situation is further worsened by inequality, with children from poorer households significantly more affected than those from wealthier backgrounds.

Fiscal outlook and reforms

The report observed a slight increase in Nigeria’s fiscal deficit in 2025, despite improved revenue generation. Non-oil revenues rose due to better tax administration, including expanded digital systems and higher compliance.

Government officials, however, maintain that ongoing reforms are stabilising the economy. Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said recent measures—such as digital revenue tracking, reduced governance costs, and a shift toward public-private partnerships—are beginning to yield results.

He pointed to easing inflation, rising non-oil revenues, a declining debt-to-GDP ratio, and a more stable exchange rate as signs of progress, while acknowledging that many citizens have yet to experience meaningful relief.

Economy in transition, not collapse

Director-General of the Budget Office, Dr Tanimu Yakubu, also defended the current economic direction, describing Nigeria’s situation as a period of adjustment rather than collapse.

He explained that reforms such as the removal of fuel subsidies and exchange rate unification are correcting long-standing structural distortions, even though they have led to short-term hardship.

According to him, improved government revenues and stronger external reserves indicate progress, adding that Nigeria’s public debt remains relatively moderate compared to other emerging economies.

Global pressures and regional outlook

The World Bank also revised its 2026 growth forecast for Sub-Saharan Africa downward by 0.3 percentage points to 4.1 per cent, citing global uncertainties and rising costs linked to the Middle East conflict.

Higher fuel and fertiliser prices, along with disruptions in global markets, are expected to put additional strain on African economies.

Call for strategic action

The Nigerian Association of Chambers of Commerce, Mines and Agriculture (NACCIMA) has called for more strategic and coordinated reforms to navigate current economic challenges.

Its President, Jani Ibrahim, urged businesses to adopt data-driven and forward-looking strategies in response to evolving tax policies, inflation, and global uncertainties. He also pointed to opportunities in areas such as the African Continental Free Trade Area, digital economy, and green investments.

The way forward

The World Bank emphasised that addressing Nigeria’s development challenges requires urgent investment in early childhood development, alongside sustained economic reforms.

While macroeconomic indicators show signs of improvement, the report stressed that inclusive policies are needed to ensure that growth translates into better living conditions for the broader population.