…encourages CBN to tighten monetary policy
The World Bank has called on the Nigerian government to utilize current economic windfalls to strengthen fiscal cushions and protect the nation’s most vulnerable citizens.
In its April 2026 Nigeria Development Update (NDU) titled “Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development,” the Bank emphasized that while macroeconomic reforms are yielding results, the benefits must be more equitably distributed.
The report highlights that fiscal policy must transition away from broad, unsustainable blanket subsidies in favor of data-driven, targeted support for poor households.
This recommendation comes as Nigeria navigates the complex global economic impact of the ongoing Middle East conflict, which has driven up oil revenues while simultaneously increasing the costs of energy, fertilizer, and shipping.
According to the update, Nigeria’s economy grew by 4.0% in 2025, a trend expected to rise to 4.2% over the 2026–2028 period.
Inflation has shown a marked decline, dropping to 15.1% in February 2026 from 26.3% a year prior.
This improvement is attributed to a consistently tight monetary policy and a more stable exchange rate.
However, World Bank Lead Economist for Nigeria, Fiseha Haile, warned that monetary policy must remain restrictive to further anchor inflation expectations.
He also recommended lowering import barriers on essential food items and production inputs to alleviate cost pressures on the population.
Beyond fiscal management, the World Bank underscored that long-term prosperity depends on human capital.
World Bank Country Director for Nigeria, Mathew Verghis, noted that approximately 40% of Nigerian children are stunted and over half are not developmentally on track before starting school.
“Investing early in nutrition, health, caregiving, and safety is one of the most powerful ways Nigeria can convert today’s reform gains into higher productivity and lasting poverty reduction,” Verghis stated.
The Bank further urged the federal government to maintain a flexible exchange rate to cushion external shocks and to deepen structural reforms.
By rebuilding fiscal buffers now, the World Bank argues that Nigeria will be better positioned to withstand global volatility while ensuring that the reform dividend translates into tangible improvements in living standards and job creation for all Nigerians.