Nigeria is caught in a defining moment, balancing early signs of recovery with growing social and economic strain. On one side, recent economic reforms have introduced signs of revival. Growth has stabilised, external buffers are strengthening, and bold policy decisions have begun to reshape the macroeconomic narrative. On the other side, the daily experiences of millions of Nigerians tell a very different story, one shaped by high food prices, deepening poverty, and growing anxiety about the country’s rising dependence on external lenders, particularly the World Bank. The contrast between progress on paper and hardship on the ground forms the central tension that defines Nigeria’s economic reality in 2025.
The World Bank’s most recent assessment captures this duality. Its report acknowledges that Nigeria has made significant progress toward stabilising its economy since 2023. Reforms such as fuel subsidy removal, currency liberalisation, and shifts in tax policy have brought clarity to macroeconomic management and helped rebuild investor confidence. Economic growth reached 3.9 percent in the first half of 2025, up from 3.5 percent in 2024. Foreign reserves have climbed above $42 billion. The current account surplus has widened to 6.1 percent of GDP. And for the first time in more than a decade, public debt is projected to decline as a share of GDP.
Yet, beneath these promising indicators lies a harsh truth. Food inflation has become a crushing weight on households. Poverty remains widespread. Social protection is weak. And the fiscal discipline that reforms were expected to support is being tested by a new wave of concessional borrowing. Nigeria’s economic story is therefore one of two competing realities: an economy that looks healthier at the macro level but remains deeply fragile at the micro level.
A Reform Agenda With Mixed Results
Nigeria’s recent economic reforms were introduced under intense pressure. The former fuel subsidy had become fiscally unsustainable, draining public resources and crowding out investment in infrastructure and social programmes. Currency management had distorted markets and created arbitrage opportunities for elites. Tax revenues were among the lowest in the world as a share of GDP. By mid-2023, the country faced dwindling reserves, mounting debt service obligations, and deep investor uncertainty.
The government responded with a reform package that dismantled the subsidy regime, liberalised the exchange rate, and launched targeted tax reforms aimed at widening the revenue base. These steps were welcomed by the World Bank and other international partners. They were also seen as necessary to restore macroeconomic stability. As Mathew Verghis, the World Bank Country Director for Nigeria, observed, the reforms were bold and essential for recalibrating the economy.
Two years later, the results are visible in headline figures. Growth is rebounding. Oil production, long hampered by theft and pipeline disruptions, has started to recover. The services sector remains the backbone of output expansion. Agriculture has also regained momentum. Foreign reserves have improved. And Nigeria’s fiscal deficit is expected to stabilise at about 2.6 percent of GDP in 2025.
The government’s confidence has grown accordingly. Officials often cite the early successes as evidence that reforms are working. But the numbers tell only part of the story.
The Weight of Rising Food Prices
Nigeria’s strongest structural weakness is still food inflation. The World Bank report describes it plainly. The cost of a basic food basket has increased fivefold since 2019. For households that spend between 60 and 70 percent of their income on food, the burden has become overwhelming. Even middle-income families have been pushed to the brink. The spike in food prices has eroded the value of wages, increased social stress, and worsened malnutrition indicators.
The causes are complex. Exchange rate volatility has increased the cost of imported food inputs. Insecurity continues to disrupt farming communities and food transport corridors. Climate shocks have reduced crop yields in many regions. Structural bottlenecks in logistics and storage amplify seasonal shortages. Import restrictions and trade barriers have constrained supply when domestic production falls short.
The World Bank identifies food inflation as Nigeria’s most urgent socioeconomic challenge. Samer Matta, one of the Bank’s senior economists in Abuja, describes food inflation as the biggest tax on the poor. He argues that rising prices have wiped out the benefits of recent reforms for millions of households.
Debt, Dependence, and the Tension of New Borrowing
Nigeria’s fiscal strategy has come under renewed scrutiny as the government prepares to secure $750 million in new World Bank loans. One loan will support digital infrastructure through the BRIDGE project, while the other will strengthen the country’s health security architecture. Both are ambitious! Both promise long-term development benefits. And both highlight the country’s growing reliance on concessional financing.
Between June 2023 and August 2025, Nigeria secured $8.4 billion in fresh World Bank loans covering energy, education, governance, and infrastructure. The BRIDGE project alone is a colossal undertaking. Its goal is to expand Nigeria’s fibre-optic backbone from 35,000 kilometres to over 125,000 kilometres. The plan includes seven regional fibre rings, 37 city loops, 77 regional networks, and a network of edge data centres. Minister Bosun Tijani describes it as the most ambitious digital infrastructure project in Nigeria’s history.
The health security programme is equally critical. Nigeria has faced repeated outbreaks of diseases ranging from cholera to Lassa fever, with the COVID-19 pandemic exposing deep vulnerabilities in health surveillance and emergency response systems. Strengthening these systems is not just a national priority, it is also a regional necessity, given how easily diseases cross borders in West and Central Africa.
But the loans have raised difficult questions. Economists are divided. Supporters argue that concessional borrowing is appropriate for long-term investments that will yield economic dividends. Critics insist that Nigeria’s debt trajectory is becoming unsustainable. The World Bank now holds nearly 40 percent of Nigeria’s external debt stock. Debt service obligations are rising. And the social costs of borrowing are more visible when revenue generation struggles to keep pace.
Aliyu Ilias of CSA Advisory is sceptical of the government’s reliance on external financing. He points out that Nigeria’s debt has surged from about #87 trillion in 2023 to about #149 trillion in 2025. He also warns that debt is crowding out spending on education, infrastructure, and job creation. In his view, Nigeria risks sinking into a new era of fiscal vulnerability.
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However, the government counters that the loans are essential for growth; they are concessional, they are tied to productive investments and they provide opportunities for technology transfer, capacity building, and long-term competitiveness.
This debate reflects the structural dilemma facing Nigeria. The country needs massive investment to modernise its economy. Yet, it must avoid borrowing its way into another crisis.
Disconnection Between Growth and Living Standards
One of Nigeria’s most persistent challenges is disconnect between economic growth and living standards. It is a paradox that has haunted the country for decades. Growth may rise, but poverty remains stubbornly high. The reasons lie in the structure of the economy.
Growth is driven primarily by the services sector, which is dynamic but not labour-intensive enough to absorb the country’s fast-growing youth population. Oil revenues remain volatile and insufficient for development financing. Productivity in agriculture remains low. Manufacturing capacity is underdeveloped. And insecurity continues to limit investment and job creation.
In this context, even a growth rate of 4.2 percent in 2025, as projected by the World Bank, may not be enough to dramatically reduce poverty or unemployment. Nigeria needs growth that is both faster and more inclusive. It needs stronger industrial capacity, deeper value chains, and a more competitive export base. It must also address structural issues, including the high cost of logistics, unreliable energy supply, and the fragmentation of markets across states.
Until these issues are resolved, economic growth will continue to feel abstract for millions of Nigerians.
A Population Under Pressure
Nigeria’s population is now estimated at roughly 230 million people and continues to grow rapidly. The demographic pressure places enormous strain on public services, housing, education, and job markets. Every year, several million young Nigerians enter the labour force, yet job creation consistently lags behind. The result is a large population of underemployed youth, many of whom feel excluded from economic opportunity.
This demographic reality magnifies the consequences of food inflation and high living costs. It also increases the urgency of improving healthcare, electricity access, and digital connectivity. Nigeria’s economic challenges cannot be separated from its demographic trajectory. The country’s ability to harness its population as an economic asset depends on education, health, and job creation. Without these, population growth becomes a burden rather than a driver of prosperity.
Where Nigeria Goes From Here
Nigeria’s future depends on how effectively it can reconcile its two competing realities. The growth numbers are improving, but the quality of life for ordinary Nigerians is deteriorating. This contradiction lies at the heart of the country’s economic predicament.
To bridge the gap between macroeconomic stability and household welfare, Nigeria needs bold and targeted reforms. First, it must focus urgently on food supply and agricultural productivity. Without a decisive strategy that tackles insecurity, logistics, trade restrictions, and climate adaptation, food inflation will continue to undermine every other reform.
Second, social protection must become a national priority, not an afterthought. Cash transfers help cushion shocks, but Nigeria needs comprehensive programmes that reach the most vulnerable and align with long-term development goals.
Third, borrowing must be linked to projects that create measurable value. Digital infrastructure and health security are important investments, but accountability and transparency are essential to ensure that these loans deliver results.
Finally, the government must rebuild public trust. Citizens need to feel the benefits of reforms. Without visible improvements in living standards, the credibility of the reform agenda will weaken.
Nigeria’s growth may be improving, but it remains overshadowed by the difficult realities facing its people. The true test of Nigeria’s economic future is not in its GDP figures or reserve levels. It lies in whether the country can translate macroeconomic progress into meaningful prosperity for its citizens. Until then, the growth story will remain incomplete, and Nigeria’s potential will continue to collide with the harsh constraints of everyday life.
