The World Bank has warned that high fuel prices could slow Nigeria’s poverty reduction, even as growth is expected to improve and inflation to fall sharply in 2026.
In its latest Africa Economic Update, the bank projected that Nigeria’s economy will grow by 4.3 per cent in 2026, up from 4.0 per cent in 2025, before edging up to an average of 4.4 per cent in 2027 and 2028. It attributed the improvement to stronger macroeconomic stability, better investor confidence and a gradual recovery in private investment.
Growth, it said, continues to be driven mainly by services, particularly financial services, ICT and real estate, which have benefited from digitalisation and resilient domestic demand. Agriculture is expected to recover in 2026, while industrial growth is projected to moderate because of weaker oil production and manufacturing.
On inflation, the bank forecast a drop from 23.0 per cent in 2025 to 15.7 per cent in 2026, and further to 12.2 per cent by 2028. It credited monetary tightening, exchange rate stabilisation and improving supply conditions.
Lower inflation, the report said, should boost household purchasing power and support a gradual decline in poverty. But it cautioned that the pace of poverty reduction is likely to stay limited by elevated fuel prices linked to the Middle East conflict, which “weigh disproportionately on low-income households.”
The bank noted that higher global oil prices could cushion Nigeria’s fiscal and external accounts through stronger oil earnings. It projected the current account surplus to widen from 4.8 per cent of GDP in 2025 to 6.0 per cent in 2026, before narrowing to 3.4 per cent by 2028 as oil prices normalise and import demand rises.
Still, it warned that the outlook faces significant downside risks, including tighter global financial conditions, a prolonged Middle East conflict, insecurity, climate-related shocks and disruptions to oil production.
It also flagged rising government spending ahead of the 2027 general elections as a major domestic risk, saying it could weaken reform momentum and erode the social consensus needed to sustain ongoing macroeconomic adjustment.
The report also examined Nigeria’s place in Africa’s emerging artificial intelligence ecosystem. It found that 44 per cent of surveyed firms in Nigeria and Kenya with at least 20 employees use AI, compared with 61 per cent in the United States. However, adoption remains shallow: only 36 per cent of AI-using firms in the developing-country sample use AI agents or automation, against 56 per cent in the US.
The bank listed unreliable electricity, limited internet access, high data and device costs, and inadequate computing infrastructure as the main constraints.
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