Nigeria: World Bank Labels Nigeria’s Single-Digit Inflation Goal Unrealistic

The World Bank has described Nigeria’s short-term ambition to achieve single-digit inflation as unrealistic, warning that the country remains among a small group of African nations still struggling with persistently high consumer prices.

In its latest Africa’s Pulse report released on Tuesday, the Bretton Woods institution projected that Nigeria — alongside 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, 37 of Africa’s 47 economies are expected to maintain single-digit inflation by 2026. However, Nigeria remains an outlier due to deep-rooted structural challenges such as currency depreciation, elevated food and energy costs, and persistent supply constraints that continue to fuel price instability.

This assessment contradicts the optimism expressed by Nigerian fiscal and monetary authorities, who have repeatedly assured citizens that ongoing reforms — including foreign exchange unification, fuel subsidy removal, and monetary tightening — would quickly reduce inflation to single digits.

At a recent Central Bank of Nigeria (CBN) lecture at Lagos Business School, CBN Governor Olayemi Cardoso reaffirmed that achieving single-digit inflation remains a medium-term target, while Finance Minister Wale Edun has made similar commitments.

“The idea is to ensure that, in the medium term, we achieve single-digit inflation,” Cardoso stated.

However, the World Bank report indicates that despite a broad disinflation trend across Sub-Saharan Africa, Nigeria remains one of the few economies still trapped in high inflation. The report, titled “Pathways to Job Creation in Africa,”noted that median inflation in the region fell from 9.3% in 2022 to 4.5% in 2024 and is expected to stabilize between 3.9% and 4.0% in 2025–2026.

“In 2025, nearly 60% of Sub-Saharan African countries will experience slower consumer price inflation. However, nine countries, including Nigeria, are still projected to record double-digit rates,” the report said.

While the World Bank acknowledged Nigeria’s improved growth outlook — upgrading its forecast by 0.6 percentage points due to a rebound in oil production and modest investment inflows — it warned that inflation continues to undermine household welfare and business confidence.

“While economies like Côte d’Ivoire and Kenya are benefiting from price stability and easing monetary conditions, Nigeria’s inflation trajectory continues to erode consumer demand and macroeconomic stability,” the Bank stated.

Economists attribute Nigeria’s inflationary pressures to a combination of exchange rate volatility, rising energy costs, and food supply disruptions driven by insecurity and poor logistics.

In contrast, countries such as South Africa, Senegal, and Tanzania have anchored inflation within single digits, supported by disciplined fiscal policies and effective exchange rate management.

“The median inflation in the region is less than four percent,” said Andrew Dabalen, the World Bank’s Chief Economist for Africa. “Nigeria’s situation remains challenging because of exchange rate pass-through effects and structural supply bottlenecks.”

Despite projecting moderate regional growth — from 3.5% in 2024 to 3.8% in 2025 and 4.4% in 2026–2027 — the World Bank cautioned that Africa’s expansion remains insufficient to absorb its rapidly growing labor force.

“External debt service has more than doubled over the past decade, reaching two percent of GDP in 2024,” the report noted, adding that the number of African nations at high risk of debt distress has nearly tripled since 2014.

For Nigeria, where unemployment and underemployment remain high, surging inflation has further eroded living standards and weakened real income growth.

The Bank urged African governments to focus on reducing the cost of doing business, investing in human capital, and strengthening institutions to attract private investment. It also identified agribusiness, healthcare, housing, tourism, and mining as sectors with the greatest job-creation potential.

“Over the next quarter century, Sub-Saharan Africa’s working-age population will grow by more than 600 million,” Dabalen said. “The challenge lies in ensuring that this expanding workforce can find better jobs in an environment of stability and opportunity.”