Nigeria’s economic reforms yielding gains, but poverty levels remain high – IMF

Nigeria’s tough economic reforms are bearing fruit as they continue to foster economic stability and bolster investor confidence, much as poverty levels remain elevated, the International Monetary Fund (IMF) said on Tuesday.

The economy has improved in recent years, helping Africa’s most populous nation become more resilient to external shocks, but early gains could be eroded by global shocks, especially the reverberations of the US-Israel war against Iran, the Washington-based institution stated, following the conclusion of 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 taking office in May 2023, President Bola Tinubu has introduced hordes of investor-friendly but tough reforms across different sectors of the economy in order to win back international investors and accelerate an economy that slipped twice into recession under his predecessor.

Such reforms include scrapping costly fuel subsidies, unifying exchange rates across multiple FX windows, adopting an orthodox monetary policy, revamping the tax system and rebasing the GDP.

Recent reforms comprise a recapitalisation of the banking industry and the insurance sector as part of the government’s broader push to attain a trillion-dollar economy by 2030. Even though the reforms have been lauded by Bretton Woods institutions, they have fuelled a cost-of-living crisis amid galloping energy costs and soaring food prices.

The IMF said recent spikes in global fuel, food and fertiliser prices are expected to boost Nigeria’s export earnings and government revenues, but warned they could worsen inflationary pressures and deepen hardship for vulnerable households.

Projections

The IMF projected a growth rate of 4.1 per cent for 2026, slightly higher than the 4 per cent it forecasted for 2025.

However, it cautioned that rising food and transportation costs, which have inflated the prices of other commodities, could constrain 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.

Meanwhile, the Nigerian Government has welcomed the assessment, describing it as an endorsement of the economic strides achieved under President Tinubu.

In a statement issued on Tuesday, Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele said the assessment recognised improvements in macroeconomic stability, foreign exchange market reforms, 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 added that the parallel market premium has remained below five per cent, while sovereign spreads have remained broadly stable, despite rising global energy prices.

According to him, Nigeria could benefit from stronger export earnings, increased fiscal revenues and higher foreign exchange inflows if elevated energy prices persist.

He said the government intends to maximise such opportunities through increased crude oil production, expanded domestic refining capacity and greater investment across the energy sector.

“Economic growth must be inclusive and must translate into tangible improvements in the welfare of Nigerians,” he added.

The minister said the government would continue to implement social protection measures, including cash transfers to vulnerable households, support for small businesses, student loans through the Nigerian Education Loan Fund, consumer credit initiatives and healthcare investments.

“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.