Nigeria’s Reforms Growing Economy, But Poverty Still Pervades — IMF

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LAGOS – The International Monetary Fund (IMF) has raised fresh concerns over worsening living conditions in Nige­ria, warning that poverty and food insecurity remain widespread despite significant macroeconomic improve­ments achieved through the Federal Government’s reform programme over the past three years.

In its 2026 Article IV Consultation on Nigeria, on Tuesday, the IMF ac­knowledged that reforms implemented by the authorities have strengthened economic stability, boosted foreign re­serves and improved resilience against external shocks.

However, it stressed that the benefits of these gains have yet to translate into better living standards for millions of Nigerians.

According to the Fund, poverty has climbed to 63 percent of the population based on the national poverty line, while an estimated 27 million Nigeri­ans experienced food insecurity in the latter part of 2025.

The report highlights a growing disconnect between macroeconomic progress and household welfare, underscoring the challenge facing President Bola Tinubu’s administration as it seeks to balance economic reforms with social protection measures. ­

“Strong reforms over the past three years have yielded improved macroeconomic out­comes and built resilience. Still, conditions for many Nigerians remain difficult,” the IMF stat­ed.

The Fund noted that rising global prices of fuel, food and fertiliser are expected to boost Nigeria’s export earnings and government revenues but could simultaneously intensify inflationary pressures, further worsening poverty and food in­security across the country.

Nigeria’s economy grew by an estimated 4.0 percent in 2025 and is projected to expand mar­ginally to 4.1 percent in 2026.

However, the IMF warned that higher transportation and food costs continue to weigh heavily on economic activity and household spending.

Inflation, which had been declining for more than a year, rose to 15.4 percent year-on-year in March 2026 as the effects of rising international fuel and food prices filtered into the do­mestic economy.

While the Fund expects infla­tionary pressures to ease later in the year, it cautioned that the short-term impact could further erode purchasing power among vulnerable households.

The IMF’s assessment comes amid ongoing concerns about the social consequences of reforms such as fuel subsidy removal, exchange rate liber­alisation and tighter monetary policies, which have been cred­ited with restoring macroeco­nomic stability but have also contributed to higher living costs.

Despite the hardship, the Fund commended Nigerian authorities for achieving no­table gains in key economic indicators.

Nigeria’s gross international reserves rose significantly to $46 billion in 2025 from $40 billion at the end of 2024, driven by a current account surplus, for­eign investor participation in central bank securities and a successful Eurobond issuance. Net international reserves also improved sharply, increasing to $35 billion from $23 billion during the same period.

The IMF also praised efforts by the Central Bank of Nigeria (CBN) to reduce inflation and stabilise the economy through disciplined monetary policy.

However, the Fund empha­sised that sustaining economic stability will require continued fiscal and monetary discipline alongside stronger social inter­vention programmes targeted at vulnerable citizens.

Executive Directors of the IMF called on Nigerian author­ities to maintain a neutral fiscal stance in 2026 while safeguard­ing critical social and develop­mental spending.

They welcomed recent tax reforms but suggested that ad­ditional revenue measures may be required over the medium term, particularly to finance an expanded cash transfer pro­gramme capable of providing meaningful relief to poor and vulnerable households.

The Fund also expressed con­cerns about off-budget spending and complex financing arrange­ments, urging the government to accelerate reforms aimed at improving public financial management, transparency and accountability.

On the financial sector, the IMF noted that Nigeria’s bank­ing system remains resilient fol­lowing recent recapitalisation efforts but advised regulators to remain vigilant over rising non-performing loans and po­tential risks associated with government borrowing.

Beyond macroeconom­ic management, the Fund stressed that long-term poverty reduction would depend on ad­dressing deep-rooted structural challenges that continue to con­strain inclusive growth.

These include insecurity, weak governance, inadequate electricity supply, poor infra­structure, low agricultural pro­ductivity and deficiencies in education and healthcare.

“Directors emphasised the need for reforms to support in­clusive growth and diversifica­tion,” the IMF said, identifying governance, security, electricity, agriculture, infrastructure and human capital development as priority areas.

The report suggests that while Nigeria’s reform agenda is beginning to deliver mea­surable economic results, the country faces an equally press­ing challenge: ensuring that growth translates into tangible improvements in the lives of ordinary citizens.

For millions of Nigerians grappling with rising food pric­es, unemployment and declin­ing purchasing power, the IMF’s latest assessment underscores a stark reality — macroeconom­ic stability alone may not be enough to reverse the country’s deepening poverty crisis unless accompanied by stronger social protection and broad-based eco­nomic opportunities.