The World Bank has stated that Nigeria’s economy is set to grow in the first half of 2026 despite the Iran war, but rising fuel costs and persistently high inflation risk squeezing incomes and slowing poverty reduction. World Bank Nigeria lead economist Fiseha Haile made this known during the Nigeria Development Update (NDU) presentation in Abuja, noting that while overall business activity has been expanding, the shock from the Middle East conflict is still being felt through higher inflation.
Inflation eased sharply to 15.06 per cent in February from around 33 per cent in December 2024 following the rebasing of the Consumer Price Index, but remains high compared with regional peers. Haile noted that fuel prices have risen more than 50 per cent during the Iran war, feeding into transport, food, and production costs. He warned that inflation remains elevated and under increasing pressure, posing risks to incomes and poverty reduction efforts.
The World Bank forecasts economic growth of about 4.2 per cent for 2026 and urged authorities to save windfalls from higher oil prices, keep monetary policy tight, and avoid blanket subsidies to rein in inflation. The bank noted that Nigeria’s fiscal deficit widened slightly to 3.1 per cent of GDP in 2025, but remains lower than in pre-reform years. The debt-to-GDP ratio fell for the first time in a decade, helped by stronger fiscal performance and exchange rate valuation gains.
World Bank Country Director for Nigeria Mathew Verghis identified energy sector reform as the most urgent priority for unlocking growth, warning that gains in off-grid solar will fall short without fixing the country’s on-grid electricity system. “Without that, Nigeria’s ambition of building a $1 trillion economy could remain out of reach,” he stressed. He also pointed to the need for stronger fiscal governance and deeper coordination across Nigeria’s decentralised system, with state governments expected to play a larger role in delivering critical infrastructure.
The bank also highlighted a deepening child development crisis, with approximately 110 out of every 1,000 children dying before age five. Verghis cautioned that inflation remains the most immediate threat to household welfare, stressing that lowering prices is critical to restoring purchasing power. He noted that even at around 15 per cent, price pressures continue to erode incomes significantly. The World Bank’s latest gender data report also showed that only 10.5 per cent of employed women in Nigeria are in wage and salaried jobs, far below the Sub-Saharan Africa average of 16.9 per cent.
