The World Bank has projected that Nigeria’s economy will expand by an average of 4.4 percent annually between 2026 and 2028 but warned that stronger economic performance must translate into better jobs, higher household incomes and improved public services before millions of Nigerians can experience meaningful improvements in their living standards.
The projection, contained in the October 2026 Nigeria Development Update, reflects improving economic conditions following fiscal, monetary and exchange-rate reforms that have strengthened government revenues and Nigeria’s external financial position.
However, the outlook also highlights a persistent challenge confronting Africa’s most populous country: economic growth has not yet produced a broad recovery in household purchasing power.
According to the World Bank, Nigeria’s real Gross Domestic Product expanded by 4.2 percent in the first half of 2026, compared with 3.9 percent during the corresponding period of 2025 and 3.5 percent in the first half of 2024.
The improvement was driven largely by the services sector, supported by a stronger contribution from agriculture.
The multilateral lender expects economic activity to remain resilient over the next two years, provided the government sustains reforms, improves public-service delivery and creates conditions for greater private-sector investment.
Inflation is also projected to decline gradually to approximately 12 percent by 2028, creating the possibility of improved purchasing power if household incomes rise faster than consumer prices.
Nevertheless, a decline in inflation does not automatically mean that food, transportation, housing and other essential goods will become cheaper.
It means the general pace of price increases is expected to slow.
For Nigerian households that have experienced substantial increases in living costs over recent years, restoring purchasing power will therefore require sustained improvements in earnings alongside slower inflation.
The distinction is important because economic expansion and household prosperity are not necessarily achieved at the same pace.
An economy can produce more goods and services while many workers continue to face stagnant real wages, limited employment opportunities and rising living expenses.
Nigeria’s experience illustrates that challenge.
The World Bank estimates that approximately 69.6 percent of Nigerians lived below the lower-middle-income poverty threshold of $4.20 per day in 2025.
It also estimates that 50.8 percent of the population, representing about 123 million people, lived in extreme poverty under the international poverty measure used in its assessment.
These estimates underscore the scale of the challenge facing policymakers, even as the broader economy records stronger growth.
The World Bank’s latest assessment indicates that the country’s poverty rate has stabilised for the first time since 2019, with gradual reductions expected over the medium term.
However, stabilisation means that the proportion of people living in poverty has stopped increasing, not that living conditions have already improved substantially.
The lender expects poverty reduction to gather momentum as inflation eases and economic opportunities expand, although progress will depend on the quality of growth and the effectiveness of government spending.
A major development in the latest report is the increase in financial resources available to state governments.
The World Bank estimates that state revenues increased by approximately 93 percent in real terms between 2023 and 2025, reflecting changes in fiscal arrangements and stronger revenue mobilisation.
The increase creates an opportunity for states to expand investments in infrastructure, education, healthcare, agriculture and other services that can improve productivity and living conditions.
However, additional revenue alone does not guarantee better economic outcomes.
The World Bank found that although states increased spending on development-related activities, the distribution of expenditure raises questions about the priority given to human capital.
Education accounted for 12.1 percent of total state expenditure in 2025, down from 14.9 percent in 2021.
Health spending remained broadly stable at approximately 7 percent, while social protection increased from 1.4 percent to 4.4 percent over the same period.
The figures suggest that states have additional fiscal capacity to support economic development, but the impact on household welfare will depend on how effectively those resources are allocated and managed.
For businesses, the projected expansion presents opportunities in sectors capable of responding to stronger domestic demand and improved infrastructure.
However, sustained private-sector growth will require reliable electricity, affordable financing, efficient transportation networks and a more predictable operating environment.
These conditions are particularly important for small and medium-sized enterprises, which face pressure from energy costs, limited access to credit and weak consumer purchasing power.
The employment implications are equally significant.
Nigeria requires economic growth that generates productive and better-paying jobs rather than relying solely on increases in output from sectors that may employ relatively few workers.
Without stronger job creation and wage growth, improvements in national economic indicators may take longer to translate into higher household consumption.
The country’s external position has also strengthened.
According to the World Bank, Nigeria recorded a current account surplus of approximately $12 billion in the first half of 2026, equivalent to 7.1 percent of GDP.
That compares with a surplus of $8.6 billion, or 6.7 percent of GDP, during the corresponding period of 2025.
Higher international oil prices supported export earnings, although the ongoing Middle East conflict has also increased energy-related costs and created additional uncertainty for businesses and consumers.
The combination highlights Nigeria’s continued exposure to global commodity-price movements.
Higher crude oil prices can improve export earnings and government revenue, but they can also increase domestic fuel costs and put pressure on transportation and consumer prices.
The World Bank believes that maintaining macroeconomic stability while improving public-service delivery will be essential to ensuring that the gains from stronger economic performance are more widely shared.
For policymakers, the challenge is increasingly moving beyond restoring economic stability to demonstrating how higher revenues and stronger output can improve the financial position of ordinary Nigerians.
The projected 4.4 percent annual growth rate offers a foundation for economic progress, but its significance will ultimately depend on whether businesses expand employment, wages recover in real terms and households regain the purchasing power lost during years of elevated inflation.
Nigeria’s economic outlook may be improving, but the more consequential measure of recovery will be how much of that progress reaches the people whose incomes and living standards remain under pressure.
