By Williams James, Abuja
The World Bank has warned that rising inflation and fuel costs could undermine Nigeria’s economic recovery, despite signs of growth in the first half of 2026.
The bank made this known during the Nigeria Development Update (NDU) presentation held in Abuja on Tuesday, where its Lead Economist for Nigeria, Fiseha Haile, said recent global shocks, including the Iran war, are already impacting prices.
“Overall business activity has been expanding over the past few months, suggesting the impact on growth has been relatively contained. But the shock is still being felt through higher inflation,” Haile said.
He noted that although inflation dropped significantly to 15.06 per cent in February from about 33 per cent in December 2024, it remains high and is rising again due to external pressures.
“Fuel prices have risen more than 50 per cent during the Iran war, feeding into transport, food and production costs.
“Inflation is still elevated and under increasing pressure, and that poses risks to incomes and poverty reduction,” he added.
Haile further disclosed that Nigeria’s fiscal deficit rose slightly to 3.1 per cent of GDP in 2025 but remains lower than levels recorded before recent reforms.
“The debt-to-GDP ratio fell for the first time in a decade, helped by stronger fiscal performance and exchange rate valuation gains,” he said.
The World Bank projected Nigeria’s economy to grow by about 4.2 per cent in 2026, urging authorities to sustain tight monetary policies, save windfalls from higher oil prices, and avoid blanket subsidies to curb inflation.
On his part, the World Bank Country Director for Nigeria, Mathew Verghis, described inflation as the biggest threat to household welfare.
“We suggested in the last update that reducing high inflation is probably the single fastest way to allow people to feel the benefits of reforms,” Verghis said.
He warned that even at 15 per cent, inflation continues to erode purchasing power and weaken living standards.
Verghis also stressed the need for urgent reforms in the energy sector, noting that Nigeria’s growth ambitions depend heavily on fixing the electricity system.
“Without that, Nigeria’s ambition of building a $1 trillion economy could remain out of reach,” he said.
The World Bank also highlighted a worsening child development crisis in the country, revealing that about 110 out of every 1,000 children die before the age of five.
The report further emphasised the need for stronger fiscal governance and better coordination among federal and state governments in delivering critical infrastructure.
Meanwhile, the bank’s latest gender report revealed significant disparities in employment, showing that only 10.5 per cent of employed Nigerian women are in wage and salaried jobs as of 2025.
According to the report, although 80.7 per cent of women aged 15 and above participate in the labour force, most are engaged in low-quality and vulnerable jobs.
It noted that 79.1 per cent of female workers are in vulnerable employment, compared to 54.8 per cent of men.
“Vulnerable employment typically includes self-employment and unpaid family work, often lacking job security, stable income, and legal protections,” the report stated.
The bank added that women’s wage employment in Nigeria falls below the Sub-Saharan Africa average of 16.9 per cent and the global average of 54.6 per cent.
It also observed that support systems for implementing gender-equal laws remain weak, with only 49 per cent of the required frameworks in place and enforcement estimated at 34 per cent.
The report noted that no reforms were introduced between October 2023 and October 2025 to address these gaps.
