LAGOS – After years of economic stagnation, Nigeria is setting the stage for a new phase of growth with a wave of bold, yet challenging, reforms.....KINDLY READ THE FULL STORY HERE▶

Nigeria is laying the groundwork for a new economic trajectory following years of stagnation, according to the International Monetary Fund (IMF), which noted cautious signs of progress amid wide-ranging and difficult reforms.

This assessment was detailed in a note authored by Axel Schimmelpfennig, the IMF’s Mission Chief to Nigeria, and Christian Ebeke, the IMF’s Resident Representative in Nigeria, as part of the Staff Report for the 2025 Article IV Consultation with the country.

The IMF officials acknowledged recent reform efforts but warned that the challenge ahead remains steep: translating early policy gains into long-term, inclusive prosperity for over 200 million Nigerians—many of whom still face deep poverty, rising inflation, and worsening food insecurity.

Since 2023, Nigeria has taken critical steps to address longstanding structural challenges. When President Bola Tinubu assumed office that year, he inherited a troubled economy marked by declining real incomes, high poverty levels, and unsustainable fiscal policies.

From 2014 to 2023, Nigeria’s real GDP per capita declined by an average of 0.7% annually, while nearly 42% of the population lived below the poverty line.

Fuel subsidies—though politically popular—strained public finances and contributed to recurring fuel shortages. Additionally, the scarcity of foreign exchange drove businesses and individuals toward an expensive parallel market, undermining confidence in monetary policy. Inflation surged further as the Central Bank of Nigeria (CBN) continued to finance large budget deficits.

In response, the Tinubu administration and the CBN launched a bold reform agenda in 2023. The foreign exchange market was liberalised, scrapping multiple exchange rates that had long distorted trade and investment flows. The long-standing fuel subsidy regime was dismantled, freeing up resources for other national priorities. At the same time, efforts began to improve one of the weakest revenue collection systems in the world.

According to the IMF, these efforts have started to yield results. International reserves are growing, access to foreign currency through official channels has improved, and the exchange rate gap has narrowed significantly.

In December 2024, Nigeria successfully returned to the international capital markets, earning credit rating upgrades from major agencies. The launch of a new private refinery in a fully deregulated downstream sector is also expected to reduce dependence on imported petroleum products and retain more value-added processing within the country.

Despite this progress, the IMF warns that critical challenges remain. Inflation continues to exceed 20%, eroding the purchasing power of most Nigerians. Infrastructural gaps, particularly in electricity, still constrain private-sector growth and job creation. Most urgently, Nigeria lacks a robust social safety net to shield its most vulnerable citizens from the impact of ongoing reforms and global shocks.

Food insecurity remains a serious concern, while the broader global economic environment—including high interest rates and fluctuating oil prices—further complicates Nigeria’s fiscal and economic outlook. Oil revenues, which accounted for about 30% of government income in 2024, leave the country vulnerable to price volatility.

To fully unlock its economic potential, the IMF recommends that Nigeria pursue three key policy priorities:

1. Promote stronger and more inclusive growth:
Reforms have laid the groundwork for private-sector expansion, but to lift millions out of poverty, growth must become more inclusive. Scaling up cash transfer programs is essential to protect the most vulnerable and share the gains of reform more equitably.

2. Build a credible and effective budget framework:
Delivering improved infrastructure and investing in human capital require realistic budgeting, prudent spending, and transparent implementation. Stronger public financial management will also enhance accountability and rebuild public trust.

3. Boost domestic revenue mobilisation:
With urgent funding needs in agriculture, energy, infrastructure, and climate resilience, raising revenue is non-negotiable. Ongoing tax reforms aim to expand the tax base, simplify payment processes, and improve compliance. Once inflation and cost-of-living pressures ease, Nigeria can consider aligning its tax rates with regional benchmarks while ensuring fairness.

The IMF also stressed that savings from the removal of fuel subsidies must be directed toward high-impact investments—such as schools, hospitals, roads, and social protection—so that the benefits of reform reach all Nigerians.

“The government, along with its international partners, remains confident that Nigeria holds vast potential. But realising that potential will require not only sustained policy discipline, but also an unwavering commitment to building an economy that works for everyone,” the IMF said.

“As reforms take root and institutions are strengthened, Nigeria stands at a critical crossroads: to stay the course of transformation or risk sliding back into cycles of underperformance and vulnerability. The stakes have never been higher for a nation that aspires to lead Africa—and the global South—into a new era of shared prosperity.”

”NIVONEWS”