The International Monetary Fund (IMF) says Nigeria can make real progress if it increases its revenue, builds a better national budget system, and expands its cash transfer programme to help the poorest citizens. This comes as the country continues to face high inflation, poverty, and food insecurity, despite tough economic reforms in the last two years.
The IMF made this known in its latest economic report on Nigeria, which gives an annual assessment of the country’s financial health. The report looked at the steps taken by President Bola Ahmed Tinubu’s government since coming into office in 2023, and what more can be done to grow the economy and protect vulnerable Nigerians.
According to the IMF, Nigeria started from a difficult position. Between 2014 and 2023, the country’s real per capita GDP—the income of the average person—fell by an average of 0.7 percent each year. By 2023, about 42 percent of Nigerians were living in poverty. The situation worsened because people had limited access to foreign exchange at official rates, forcing many to buy dollars at higher rates on the black market. At the same time, fuel subsidy spending was draining government funds and causing fuel scarcity, while the Central Bank of Nigeria (CBN) was printing money to finance budget deficits, which pushed inflation even higher.
To solve these problems, the government took bold steps. It ended fuel subsidies, unified the foreign exchange market, stopped central bank financing of the budget, and improved revenue collection. These moves helped boost Nigeria’s foreign reserves and reopened the door to international investors. By December 2024, Nigeria returned to the global capital market and received improved ratings from major agencies. The opening of a major private oil refinery also placed Nigeria in a stronger position in the petroleum value chain.
However, the IMF warned that Nigeria still faces serious economic difficulties. Inflation is still above 20 percent, and infrastructure—especially electricity supply—is too poor to support growth. Hunger and poverty are still widespread, and many Nigerians are not covered by any form of social protection.
The IMF also pointed out that Nigeria’s economy remains heavily dependent on oil, with crude revenues making up 30 percent of government income in 2024. As global oil prices continue to swing up and down, this leaves the country exposed to financial shocks. High global interest rates also make borrowing more expensive for Nigeria and other developing countries.
To move forward, the IMF advised Nigeria to focus on three main areas. First, it said the government must drive stronger and more inclusive economic growth. This means creating jobs, boosting agriculture and industry, and improving access to markets. To reduce suffering while the economy recovers, the government should expand its cash transfer programme to reach more poor families.
Second, Nigeria needs a better budget framework. The IMF urged the government to make realistic spending plans, manage expenses carefully, and publish clear financial reports. This will help build trust and ensure public funds are spent where they are needed most. It also said the Central Bank should continue to use its tools to fight inflation.
Third, the IMF stressed the need to increase revenue. Tax collection in Nigeria remains one of the weakest in the world. To fix this, the government has started tax reforms to simplify payments and widen the tax base. Once inflation comes down and the cash transfer system is working fully, Nigeria can also start adjusting its tax rates to match those of neighbouring countries.
Right now, the country spends too much of its income on interest payments and too little on education, healthcare, roads, and electricity. To change this, the IMF said savings from subsidy removal must be used wisely to benefit the people.
The Fund concluded that Nigeria’s economic potential is not in doubt, but meaningful reforms and strong social protection systems are needed to carry everyone along and build a better future.
