World Bank Warns Nigeria’s Persistent Inflation Threatens Poverty Reduction and Economic Recovery
Nigeria’s Inflation Crisis: World Bank Warns of Rising Poverty and Economic Risks
The World Bank has highlighted Nigeria’s persistently high inflation as a major impediment to economic recovery, cautioning that household incomes are being eroded and poverty rates could rise unless decisive measures are taken. Mathew Verghis, Country Director for Nigeria, stressed that inflation, particularly in food prices, disproportionately affects low-income households and undermines purchasing power nationwide.
Speaking in an interview with NHM, Verghis described inflation as the most urgent macroeconomic challenge facing Nigeria, noting that food inflation is currently hovering around 20 percent. He indicated that the government’s fiscal and monetary policies must remain coordinated and cautious, warning that premature easing could destabilize ongoing stabilization efforts.
“The priority must be bringing inflation down to protect the most vulnerable and enable sustained economic growth,” Verghis said.
Structural Drivers of Inflation
The World Bank official identified structural constraints that continue to fuel price pressures, including poor transportation infrastructure, multiple road checkpoints, limited power supply, and insufficient irrigation systems for agriculture. These bottlenecks, he noted, exacerbate costs along supply chains and contribute to higher consumer prices.
Verghis recommended targeted policy measures that could provide more immediate relief, such as reviewing import tariffs and restrictions on essential commodities that are widely consumed by low-income households.
Monetary Policy and Exchange Rate Considerations
The Country Director endorsed the Central Bank of Nigeria’s decision to maintain the benchmark interest rate at 27 percent, arguing that firm monetary policy is necessary until inflation demonstrates a sustained downward trend. On exchange rate management, he highlighted the importance of expanding Nigeria’s export base and attracting foreign investment to support long-term stability.
Revenue Growth and Debt Management
Verghis acknowledged recent improvements in non-oil revenue collection, facilitated by subsidy reforms and a more realistic exchange rate regime. He observed that enhanced revenue inflows have contributed to stabilizing Nigeria’s debt indicators and reducing the debt-to-revenue ratio for the first time in several years. However, he emphasized that borrowing must be transparent and directed toward productive sectors to avoid future fiscal risks.
Inclusive Growth and Social Protection
The World Bank official underscored the importance of directing public spending toward the poor. He praised the federal government’s plan to reach 15 million vulnerable households through digital cash transfers, framing it as a key initiative to reduce inequality. Verghis further noted that investments in water, nutrition, education, and health are critical for building a productive population and sustaining inclusive economic growth.
Long-Term Outlook
According to Verghis, Nigeria’s economic recovery depends on a combination of immediate inflation management and structural reforms to enhance productivity, investment, and resilience. “Sustained policy implementation, coupled with strategic social interventions, is essential to restore confidence, expand economic opportunities, and achieve durable growth for millions of Nigerians,” he concluded.
