World Bank Questions Feasibility of Nigeria’s Single-Digit Inflation Target

The World Bank has expressed doubts over Nigeria’s ability to achieve its ambitious goal of bringing inflation down to single digits in the near term, citing persistent structural challenges, policy inconsistencies, and global economic pressures. The global financial institution made this observation following recent statements by Nigerian policymakers that ongoing fiscal and monetary reforms could lower inflation to below 10 percent within a few years.

In its latest economic outlook on Nigeria, the World Bank noted that while the country has made significant strides in implementing macroeconomic reforms — including the unification of the foreign exchange rate and removal of fuel subsidies — inflationary pressures remain stubbornly high, eroding household purchasing power and threatening growth prospects. Nigeria’s inflation rate currently stands above 27 percent, driven largely by high food prices, transportation costs, and supply chain inefficiencies.

The report emphasized that despite the Central Bank of Nigeria’s (CBN) aggressive tightening measures and increased interest rates, inflation has remained well above the government’s target range. The World Bank pointed out that achieving single-digit inflation will require not only monetary adjustments but also a sustained effort to address structural problems such as poor infrastructure, low productivity in agriculture, and fiscal leakages that continue to undermine the stability of the economy.

According to the institution, Nigeria’s reliance on imports for essential goods, coupled with exchange rate volatility, has further complicated efforts to tame inflation. The World Bank stressed that for inflation to decline sustainably, domestic production must increase, and policies must be geared toward boosting supply rather than merely controlling demand. “Nigeria’s inflation challenge is deeply rooted in structural weaknesses that monetary policy alone cannot resolve. To attain single-digit inflation, the government must complement CBN efforts with targeted interventions that enhance productivity, improve logistics, and stabilize energy costs,” the report stated.

The World Bank also highlighted the impact of insecurity on agricultural production, noting that attacks on farming communities in the North and Middle Belt regions have disrupted food supply chains, leading to higher prices nationwide. It urged the government to prioritize security and invest in rural infrastructure to facilitate agricultural output. “Until food production and distribution are stabilized, food inflation will continue to drive overall inflation, regardless of monetary tightening,” it warned.

In response to the report, Nigerian economic authorities defended the country’s inflation target, maintaining that the government’s reform agenda is designed to produce medium- to long-term stability. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, reiterated that the government is committed to reducing inflation through comprehensive policy measures that promote fiscal discipline, encourage investment, and strengthen the value of the naira. “Our objective is realistic. We understand that reforms take time, but the trajectory is positive. Inflationary pressures are being addressed from multiple angles — including improved agricultural funding, energy sector stabilization, and tighter monetary policy coordination with the CBN,” Edun said.

CBN Governor Olayemi Cardoso, in a recent media briefing, also expressed optimism that inflation would ease as ongoing reforms begin to take effect. He emphasized that the apex bank’s priority remains stabilizing the foreign exchange market, enhancing transparency in monetary operations, and restoring investor confidence. “We are aware of the challenges, but we are determined to restore price stability through evidence-based and transparent policies. The return to single-digit inflation is achievable if current reforms are sustained,” Cardoso affirmed.

However, economic analysts have echoed the World Bank’s caution, warning that Nigeria’s inflation trajectory is likely to remain elevated in the short term. Analysts from the Lagos-based Centre for Development Studies noted that while the government’s reforms are commendable, their immediate impact on inflation may be limited due to existing bottlenecks in food supply and logistics. “Without a comprehensive framework that tackles production inefficiencies, foreign exchange scarcity, and fuel distribution challenges, inflation could remain in double digits for several years,” the report observed.

The private sector has also raised concerns about the implications of high inflation on business operations and consumer welfare. Manufacturers and small business owners lament that rising production costs, driven by unstable energy prices and exchange rate fluctuations, have forced them to reduce output or increase prices, further fueling inflationary trends. “Our input costs have doubled in the past year, and this affects our competitiveness. We need more consistent policy measures to reduce volatility and support domestic production,” said Mrs. Olabisi Fadeyi, an entrepreneur in Lagos.

Meanwhile, households continue to feel the brunt of rising living costs, with food and transportation expenses consuming a large portion of disposable incomes. Data from the National Bureau of Statistics (NBS) show that food inflation alone accounts for over 60 percent of the overall inflation rate. Economists have urged the government to prioritize agricultural incentives, expand irrigation systems, and provide affordable credit to farmers to boost productivity and reduce dependence on imports.

The World Bank’s report concluded by advising Nigeria to maintain policy consistency and avoid abrupt reversals that could undermine the progress already made. It recommended that fiscal and monetary authorities improve coordination to ensure that reforms complement each other rather than work at cross-purposes. “Achieving single-digit inflation will require patience, coordination, and structural transformation. The right policies must be sustained to rebuild public confidence and attract long-term investment,” the Bank advised.

 

In conclusion, while Nigeria’s vision of achieving single-digit inflation reflects its determination to stabilize the economy, experts agree that the journey ahead will be challenging. The success of this target depends largely on the government’s ability to sustain reforms, enhance local production, and strengthen macroeconomic management. Unless these efforts yield tangible improvements in food security, energy supply, and fiscal stability, inflation may continue to hover above target — delaying the full recovery of Africa’s largest economy.