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| President Bola Tinubu |
President Bola Ahmed Tinubu has welcomed the World Bank’s October 2026 Nigeria Development Update as confirmation that the bold, often painful economic reforms launched since mid-2023 are beginning to deliver measurable results. In a statement issued through his Special Adviser on Information and Strategy, Bayo Onanuga, the President described the findings as placing the economy “on a firmer footing for sustained growth” while candidly acknowledging that the gains have yet to fully ease the daily burdens faced by ordinary households.
The report, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities and launched in Abuja on 8 October 2026, paints a picture of an economy that has weathered external shocks better than many expected. Real GDP grew 4.2 percent in the first half of 2026, up from 3.9 percent in the corresponding period of 2025 and 3.5 percent in 2024. Growth was driven primarily by services, with a stronger contribution from agriculture. The World Bank projects average annual growth of at least 4.4 percent between 2026 and 2028—provided reform momentum is sustained.
Perhaps the most politically significant finding for the administration is that the poverty rate stabilised for the first time since 2019. The Bank expects poverty to begin a gradual decline as GDP growth outpaces population growth. This comes after years of rising poverty driven by policy distortions, the COVID-19 pandemic, insecurity, and the sharp cost-of-living pressures that followed the 2023 reforms.
Separate World Bank poverty data indicate the share of Nigerians living below the national poverty line rose from around 40 percent in 2019 to an estimated 63 percent more recently, underscoring how high the baseline remains even as the trajectory flattens. worldbank.org
The Numbers Behind the Stabilisation
Inflation offers a clearer illustration of both progress and fragility. Headline inflation fell sharply from 27.6 percent in January 2025 to 15.2 percent by December 2025, aided by tight monetary policy and reduced exchange-rate volatility. Higher global fuel prices linked to the Middle East conflict, combined with seasonal food price pressures, have since slowed the disinflation path. The World Bank still expects inflation to ease toward about 12 percent by 2028. worldbank.org
Nigeria’s external position strengthened markedly. The current account surplus rose to $12 billion (roughly 7.1 percent of GDP) in the first half of 2026, up from $8.6 billion a year earlier, helped by higher oil prices. Gross external reserves climbed from $45.5 billion at the end of 2025 to $53.8 billion by the end of August 2026 (and above $54 billion in September), supported in part by foreign portfolio inflows and improved foreign-exchange market functioning. worldbank.org
On the fiscal side, the reforms have transformed revenue mobilisation. Gross federation revenues increased by 69 percent in real terms between 2023 and 2025, largely reflecting the removal of the petrol subsidy, exchange-rate unification, and stronger revenue administration. States emerged as the biggest beneficiaries. Aggregate state revenues rose by about 93 percent in real terms over the same period, while expenditure increased by roughly 92 percent. Capital spending’s share of state budgets rose from 46 percent to 61 percent, with transport (especially roads) recording the largest increases, followed by housing, agriculture, and energy.
Internally generated revenue grew in real terms in 31 of 35 states for which data were available. Twenty-one states reduced their debt-to-GDP ratios between 2021 and 2025. Overall public debt is projected to fall from 40.0 percent of GDP in 2025 to 38.1 percent in 2026. These improvements have given subnational governments fiscal space they have not enjoyed in years.
The Spending Shift—and Its Limits
The World Bank’s special focus on state finances reveals both opportunity and caution. While absolute spending on education, health, and social protection rose substantially, these categories grew more slowly than economic infrastructure.
Education’s share of total state expenditure declined from 14.9 percent in 2021 to 12.1 percent in 2025; health remained broadly stable around 7 percent. Social protection’s share increased from 1.4 percent to 4.4 percent. In 29 of 33 states reviewed, spending priorities shifted toward economic infrastructure.
World Bank Country Director for Nigeria Mathew Verghis framed the moment clearly: “The bold macroeconomic reforms have substantially increased fiscal revenues at the state level, providing a unique opportunity to improve infrastructure, education, healthcare, and water services, which are critical to creating more and better jobs. Strengthening spending efficiency, accountability, and service delivery will be essential to ensuring that public resources improve the lives of Nigerians.”
President Tinubu echoed this dual message. “These findings confirm that the difficult but necessary decisions to remove the petrol subsidy, unify the foreign exchange market and strengthen fiscal discipline have raised revenues, stabilised the economy and created fiscal space for every tier of government to invest in its people,” the statement said. “The dividends of reform are becoming visible. But more work remains to ensure they fully translate into better living standards for every household, starting with lower food prices and decent jobs for our young people.”
Context: From Crisis Response to Inclusive Growth
The 2023 reforms—ending the longstanding petrol subsidy and unifying the multiple exchange rates—were among the most significant macroeconomic shifts in decades. They corrected deep distortions that had drained fiscal resources, fuelled parallel markets, and constrained investment. The immediate costs were severe: a sharp rise in transport and food prices, eroded household purchasing power, and a spike in poverty. Critics argued the social safety net was inadequate; supporters insisted the alternative was fiscal collapse.
Three years on, the World Bank data suggest the stabilisation phase is largely succeeding. Growth has accelerated, the naira’s volatility has eased, reserves have rebuilt, and revenues have surged. The Middle East conflict provided a mixed external shock: higher oil prices boosted export earnings and fiscal receipts (tempered by existing oil pre-commitments), but also interrupted the disinflation process.
The next phase is harder. Nigeria needs to absorb roughly 3.5 million new labour-force entrants each year. Most employment remains informal and low-productivity. Food inflation continues to dominate household budgets. Translating higher revenues and modest growth into lower food prices, productive jobs, and improved human capital outcomes will determine whether the stabilisation becomes a foundation for shared prosperity or remains a technical success with limited political payoff.
Tinubu’s response outlined the administration’s intended path under the Renewed Hope Agenda.
The government will expand targeted cash transfers (already reaching more than 10 million households), accelerate compressed natural gas (CNG) deployment to ease transport costs, raise agricultural productivity, and improve access to affordable healthcare and quality education. He urged state governors to prioritise projects that raise living standards, particularly in health and education, and commended the Economic Management Team led by the Minister of Finance and Coordinating Minister of the Economy, as well as state governments, for their cooperation.
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Independent Assessment and Risks Ahead
The World Bank’s tone is measured rather than celebratory. It credits the reforms for the revenue surge and macroeconomic resilience while repeatedly stressing that efficiency, accountability, and a stronger focus on human capital will decide whether the extra fiscal space improves lives. Private-sector-led growth and job creation remain essential; public spending alone cannot deliver the scale of employment needed.
Risks persist. Elevated fuel prices linked to global tensions could continue weighing on low-income households. Pre-election spending pressures in the run-up to 2027 could test fiscal discipline. Climate and agricultural shocks remain ever-present. And the political sustainability of reforms depends heavily on visible improvements in the cost of living—particularly food prices—before the next electoral cycle intensifies.
For now, the data show an economy that has moved from acute crisis management toward a more stable, if still fragile, equilibrium. President Tinubu’s claim that the reforms are “on track” is supported by the World Bank’s latest assessment. Whether that track leads to broad-based prosperity will depend on the quality of spending at both federal and state levels, the pace of structural reforms that unlock private investment, and the government’s ability to protect the most vulnerable while growth gathers pace.
The stabilisation is real. The harder work of making it inclusive has only just begun.
Samuel O. Sulaimon is the founder and Editor-in-Chief of Naijapiz. He covers News, Sports, Finance, Faiths, Education, Technology.
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