The World Bank has projected that Nigeria’s per capita income will return to its pre-pandemic level by 2025.
This outlook comes as the country’s economy is expected to witness a gradual improvement in the coming years, according to the bank’s Global Economic Prospects report for January 2024.
The Sub-Saharan African (SSA) region, including Nigeria, experienced a slowdown in economic growth to an estimated 2.9% in 2023, primarily due to country-specific challenges such as higher input prices for businesses in Nigeria.
The region’s three largest economies – Nigeria, South Africa, and Angola – saw their growth rate slow to an average of 1.8% in 2023.
The Sub-Saharan Africa (SSA) region, where Nigeria is the largest economy, experienced a deceleration in growth to an estimated 2.9% in 2023, lower than the earlier projection.
Nigeria’s growth in 2023 softened to an estimated 2.9%, influenced by various factors including services growth weakening due to a disruptive currency demonetization policy.
However, there was an increase in annual oil production after previous years’ decline.
Looking forward, Nigeria’s economic growth is projected at 3.3% for 2024 and 3.7% for 2025. These projections are 0.3 and 0.6-% points higher than previous estimates made in June last year.
This improvement is expected due to the gradual impact of macro-fiscal reforms initiated by the government.
Key reforms have included removing the gasoline subsidy and unifying the exchange rate, which, despite causing short-term challenges, are deemed necessary for long-term economic stability and growth.
Growth in the coming years is expected to be driven by sectors like agriculture, construction, services, and trade.
Moreover, inflation is projected to ease gradually as the effects of last year’s exchange rate reforms and the removal of fuel subsidies fade away.
The report read:
The World Bank’s projection on per capita income is similar to a projection by an analyst at the global investment bank Morgan Stanley, who said the reforms made by the current president of Nigeria, Bola Tinubu, may lead to a strong increase in annual income despite the challenge they pose for economic growth.
To support those affected by these adjustments, the government launched a cash transfer intervention to provide relief to the poor and vulnerable, to cover 15 million households.
In the medium term, the economic outlook for Nigeria hinges on the continuation and effectiveness of its macroeconomic stabilization agenda.
With the implementation of these reforms, Nigeria’s economy is expected to grow at an average annual rate of 3.5% during 2023–2026.
However, this growth depends on the sustained and full implementation of these reforms and complementary actions.
