Economic reforms implemented in recent years have prevented Nigeria from plunging into a fiscal crisis and helped stabilise macroeconomic conditions, but they have also placed severe strain on ordinary citizens, with the number of poor Nigerians rising by an additional 58 million over six years, the World Bank has said.
In its latest Nigeria Development Update (NDU), published in May 2025, the Bank cautioned that the gains from subsidy removal, foreign-exchange liberalisation and tax reform remain fragile and unevenly distributed.
The report states that the number of Nigerians in poverty climbed from 81 million (40 per cent) in 2019 to 139 million (61 per cent) in 2025. It further warns that the absolute poverty rate could reach 141 million (an implied 62 per cent) by 2026.
Between 2019 and 2023, average consumption per person fell by 6.7 per cent, a sign of worsening living standards for many Nigerians.
The Bank also points to the rise of “extreme poverty”, the share of Nigerians unable to afford basic calories even if they spent all their income on food. That share nearly doubled from 14 per cent to 27 per cent over the same period.
While headline inflation has begun to moderate, it remains high. The World Bank projects an average rate of about 22.1 per cent for 2025.
A new metric in the report, the CPI-FP index, covering the eight food items most consumed by the poor (rice, palm oil, groundnut oil, white beans, bread, beef, maize flour and yams), shows cumulative inflation of 406 per cent between 2019 and 2024.
This far outpaces general food inflation (201 per cent) and headline inflation (161 per cent) over the same period. For the poorest 10 per cent of households, who spend up to 70 per cent of their income on food, this represents an acute threat to basic survival.
The report recommends removing trade barriers on essential foods and intermediate products, citing duties of between five and 35 per cent as a major driver of food inflation.
Despite the hardships, the NDU acknowledges certain macro gains: growth has revived, foreign reserves are rising, and the fiscal position has shown signs of resilience.
Yet the Bank warns that these improvements have not translated into “broad-based improvements in living standards.”
“Growth is not strong enough to create sufficient quality jobs and still-high inflation continues to erode real incomes,” it notes.
The report also flags a structural shift in Nigeria’s federation: for the first time, state governments collectively received more from the Federation Account than the federal government, undermining the centre’s capacity to fund national projects.
As states expand capital spending and the federal government remains constrained by rising wage and interest obligations, the Bank warns of growing “asymmetry” in capacity and project delivery.
Speaking at the Nigerian Economic Summit (NES31), the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, reiterated the government’s resolve:
“I will just emphasise that at the end of the day, the reforms must translate to better living standards. They must translate to lifting Nigerians out of poverty in their millions.”
Edun has also argued that fiscal reforms, subsidy removals, and foreign exchange liberalisation have released funds equivalent to about 5 per cent of GDP.
The federal government has defended the reforms as necessary corrections of past distortions, and as steps to rescue public finances, stabilise the economy, and attract investment.
President Tinubu said recently, “Along with subsidy removal, these decisions have rescued our public finances, stabilised the economy, and reassured investors at home and abroad. We owe this progress to the sacrifices of Nigerians … the better days we promised are already within sight.”
The NDU projects gradual improvements: headline inflation may decline from 23.8 per cent in 2025 to 19.5 per cent in 2026 and 15.8 per cent in 2027.
Yet the Bank warns that “still timid growth and remaining inflationary pressure, particularly from food prices, are expected to further push poverty up.”
To convert macro stability into widespread welfare gains, the Bank argues for stronger coordination of fiscal, monetary, and structural reforms, including greater transparency in public spending, better targeting of social programmes, and increased investment in people and infrastructure.
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