Nigeria's Economic Changes Showing Progress, But Poverty Still High, IMF

Nigeria's economic changes are starting to show results. These changes are helping to stabilize the economy and build trust with investors. But poverty is still a big problem, said the International Monetary Fund (IMF) on Tuesday.

The economy has gotten better in the last few years. This has made Nigeria, the most populated country in Africa, more able to handle outside shocks. But early gains could be lost due to global issues, especially the impacts of the US-Israel war against Iran. This is according to the IMF after it finished its Article IV consultation with Nigeria.

"Strong reforms over the past three years have yielded improved macroeconomic outcomes and built resilience. Still, conditions for many Nigerians remain difficult," the IMF noted.

"Poverty reached 63 per cent (national poverty line), and 27 million Nigerians are estimated to have faced food insecurity in the fall of 2025."

Since he took office in May 2023, President Bola Tinubu has made tough but investor-friendly reforms. These reforms aim to attract international investors and boost an economy that went into recession twice under the previous president.

Some of these reforms include ending expensive fuel subsidies, unifying exchange rates from different FX windows, adopting strict monetary policies, changing the tax system, and updating the GDP numbers. Recent changes also include recapitalizing the banking and insurance sectors. This is part of the government's goal to create a trillion-dollar economy by 2030.

While these reforms have been praised by international bodies, they have also led to a rise in living costs. Energy prices are soaring, and food prices are also high. The IMF said that recent increases in global fuel, food, and fertilizer prices might boost Nigeria’s export earnings and government revenues. But they warned this could worsen inflation and create more hardship for those struggling.

Economic Outlook

The IMF predicts a growth rate of 4.1 per cent for 2026. This is slightly higher than the 4 per cent growth it predicted for 2025. But it warned that rising food and transport costs, which have made other prices go up, could limit economic activity.

"While the external shock to fuel and food prices will push up inflation in the short run, the disinflation path is projected to continue in the second half of the year," it said.

The Nigerian Government welcomed this assessment. They see it as proof of the achievements made under President Tinubu. In a statement on Tuesday, Finance Minister Taiwo Oyedele said the assessment showed improvements in economic stability, changes in the foreign exchange market, fiscal management, and investor confidence.

"The report provides further independent validation that the bold and necessary reforms undertaken under the leadership of President Bola Ahmed Tinubu are strengthening macroeconomic stability, restoring confidence, and laying the foundation for sustainable and inclusive growth," he said.

Mr Oyedele also mentioned that the parallel market premium has stayed below five per cent. He noted that sovereign spreads have remained stable, even with rising global energy prices. He said Nigeria could gain from stronger export earnings, increased government revenues, and higher foreign exchange inflows if current energy prices continue.

He added that the government plans to take advantage of these opportunities by increasing crude oil production, expanding domestic refining, and investing more in the energy sector. "Economic growth must be inclusive and must translate into tangible improvements in the welfare of Nigerians," he said.

The minister stated that the government will keep implementing social protection measures. This includes cash transfers to vulnerable households, support for small businesses, student loans through the Nigerian Education Loan Fund, consumer credit programs, and investments in healthcare.

"The ultimate objective of these reforms is not merely improved economic indicators, but better outcomes for every Nigerian; lower inflation, decent jobs, higher incomes, greater economic opportunity, and a better quality of life," he added.