Nigeria’s economy has demonstrated significant positive momentum in the first half of 2025, marked by a 3.9% year-on-year expansion driven by strong performances across its service, non-oil industries, oil production, and agricultural sectors. This period has also seen a strengthening of the country’s external position, with foreign reserves surpassing $42 billion and a current account surplus reaching 6.1% of GDP. These developments, detailed in the World Bank’s latest Nigeria Development Update (NDU), signal a period of notable macroeconomic achievement.
Economic Expansion and External Strength
The World Bank’s report, titled “From Policy to People: Bringing the Reform Gains Home,” highlights that Nigeria’s economic growth in the first half of 2025 accelerated from 3.5% in the same period of 2024. Projections from various international bodies, including the World Bank itself, anticipate this growth trajectory to continue, with forecasts for 2025 ranging from 3.6% to 4.2%. Key sectors such as Information and Communication Technology (ICT), finance, and real estate are expected to contribute significantly to this expansion. Improved security in the Niger Delta region has also bolstered oil production, a vital component of the Nigerian economy.
On the external front, Nigeria’s foreign reserves have seen a substantial increase, exceeding $42 billion, a level not seen in years. This robust reserve position, coupled with a healthy current account surplus and improved foreign exchange inflows, suggests greater resilience in the face of global economic uncertainties. Reforms aimed at stabilizing the foreign exchange market have contributed to reduced naira volatility and a more favorable balance of payments outlook.
Fiscal Landscape: A Tale of Two Perspectives
While the overall economic picture shows promise, the fiscal situation presents a more complex narrative. According to the World Bank’s NDU, the federal deficit is projected to remain at 2.6% of GDP for 2025, and public debt is expected to decline from 42.9% to 39.8% of GDP, marking its first decrease in over a decade.
However, other analyses paint a different picture of Nigeria’s debt profile. Total public debt had already risen to approximately N149.39 trillion (over $97 billion) by March 31, 2025. Forecasts suggest this figure could reach as high as N187.79 trillion by the end of 2025. Debt servicing costs are a growing concern, consuming over 27% of the 2025 budget and exceeding allocations for education, health, and defense combined. The government is also seeking significant external borrowing, including approximately $2.3 billion to cover the 2025 budget deficit and refinance maturing Eurobonds.
Lingering Challenges: Inflation, Poverty, and Structural Hurdles
Despite the macroeconomic gains, the benefits have yet to fully translate into improved living standards for many Nigerians. High food inflation remains a critical issue, with poor households spending a substantial portion of their income on food. Between 2019 and 2024, the cost of a basic food basket rose fivefold for these households. Headline inflation, while moderating from its peak, remains stubbornly in double digits, making Nigeria an outlier among many African economies.
Poverty and food insecurity persist, with nearly 56% of Nigerians living below the national poverty line. Structural barriers, including logistical bottlenecks, inadequate infrastructure, and challenges in the agricultural value chain, continue to constrain inclusive growth. Small and medium-sized enterprises (MSMEs) are particularly vulnerable, with many shutting down due to rising production costs, inflation, and unreliable electricity supply.
World Bank’s Call to Action: Bridging the Gap
The World Bank emphasizes that macroeconomic stability alone is insufficient. The true measure of success, according to the report, lies in how these reforms tangibly improve the daily lives of Nigerians, particularly the poor and vulnerable. To bridge this gap, the World Bank identifies three urgent priorities:
* Tackling Food Inflation: This requires removing trade barriers, addressing bottlenecks in seeds, input supply, security, logistics, and infrastructure (transport, power, storage, cold chains).
* Improving Public Spending Efficiency: Greater fiscal transparency, stronger discipline in fund management, and a national pact to align fiscal policy with development objectives, especially human capital investment, are crucial.
* Fostering Inclusive Growth: Strengthening public services and expanding support for the most vulnerable populations are essential components.
Charting the Path Forward
While the economic news from the first half of 2025 reflects positive strides, the path ahead requires sustained effort to ensure these gains are broadly shared. The World Bank’s analysis, alongside insights from other global financial news, underscores the dual narrative of Nigeria’s current economic landscape: substantial growth and resilience on one hand, and persistent challenges that affect the welfare of its citizens on the other. Addressing food inflation, poverty, and structural impediments will be key to transforming Nigeria’s economic momentum into tangible improvements in the lives of all its people.