President Bola Tinubu has welcomed the World Bank’s October 2026 Nigeria Development Update, saying its findings indicate progress from the economic reforms introduced by his administration.
The report, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, examines Nigeria’s economic performance and how increased government revenues have influenced spending by state governments.
Tinubu said the findings showed that the economy was becoming more stable and better positioned for sustained growth. He also noted the report’s finding that Nigeria’s poverty rate had stabilised for the first time since 2019.
However, the World Bank stressed that maintaining reform momentum and improving public spending would be necessary to ensure that economic gains translate into better living conditions.
Nigeria’s Economy Records 4.2% Growth
According to the World Bank, Nigeria’s economy grew by 4.2 per cent in the first half of 2026, compared with 3.9 per cent in the corresponding period of 2025.
The bank projects average economic growth of 4.4 per cent between 2026 and 2028. It also expects inflation to gradually decline to around 12 per cent by 2028.
Inflation fell from 27.6 per cent in January 2025 to 15.2 per cent in December 2025, but higher global fuel prices and rising food costs have slowed further progress.
The report also highlighted improvements in Nigeria’s external position. The current account surplus rose to $12 billion in the first half of 2026, up from $8.6 billion a year earlier, while gross external reserves reached $53.8 billion at the end of August.
Government Revenues Rise as States Increase Spending
The World Bank reported that gross federation revenues increased by 69 per cent in real terms between 2023 and 2025, following reforms that included petrol subsidy removal, foreign exchange changes and improvements in revenue administration.
State governments were the largest beneficiaries of the increase in federal allocations and other revenue flows.
Their capital spending rose by 151 per cent in real terms over the same period, with much of the additional spending directed towards roads, transport infrastructure, agriculture, energy and housing.
Twenty-nine of 33 states covered by the report shifted more of their spending towards economic infrastructure. The bank also found that internally generated revenue increased in real terms in 31 of 35 states.
Meanwhile, 21 states reduced their debt-to-GDP ratios between 2021 and 2025.
The report noted that increased revenue provides states with an opportunity to improve infrastructure and public services, but warned that better spending efficiency and accountability would be needed to maximise the benefits.
Tinubu Urges States to Prioritise Living Standards
Tinubu called on state governments to use their increased revenues more prudently, with greater attention to projects that improve living standards, healthcare and education.
He also said the Federal Government would continue expanding targeted cash transfers, deploying compressed natural gas (CNG), improving agricultural productivity and increasing access to affordable healthcare and quality education.
The president acknowledged that more work was needed to ensure that economic reforms translated into lower food prices and decent jobs, particularly for young Nigerians.
Challenges Remain Despite Economic Improvements
Despite stronger growth and improved government revenues, inflation and high living costs continue to put pressure on households.
The World Bank said Nigeria’s economic outlook would depend on sustaining macroeconomic reforms, strengthening public service delivery and creating conditions for private-sector investment and job creation.
The bank expects poverty to begin declining gradually as economic growth outpaces population growth. However, it emphasised that improved public spending and investment in essential services would be important to achieving more inclusive development.
The findings point to progress in Nigeria’s economic indicators, but the extent to which these improvements benefit households will depend on how effectively federal and state governments convert additional revenues into better services, employment opportunities and living conditions.
