The World Bank has cautioned that high fuel prices could hold back Nigeria’s progress on poverty even as the economy grows faster and inflation falls sharply in 2026. The warning is contained in the bank’s October 2026 Africa Economic Update, released on Tuesday.
In the report, the World Bank raised its forecast for Nigeria’s economic growth to 4.3 per cent in 2026, up from 4.0 per cent in 2025, with growth projected to settle at 4.4 per cent a year in 2027 and 2028. It attributed the improvement to steadier macroeconomic conditions, firmer investor confidence and a gradual return of private investment.
According to the bank, growth is being carried mainly by the services sector, especially financial services, information and communications technology, and real estate, all of which have gained from digitalisation and resilient domestic demand. It expects agriculture to recover in 2026, while industrial activity is projected to soften on the back of weaker oil output and manufacturing.
On prices, the report projects headline inflation falling from 23.0 per cent in 2025 to 15.7 per cent in 2026, and easing further to 12.2 per cent by 2028. The bank credits the decline to monetary tightening, a more stable exchange rate and improving supply conditions working their way through the economy.
Lower inflation, the World Bank said, should lift household purchasing power and support a gradual reduction in poverty. The qualification is where the caution lies. “The pace of poverty reduction is likely to remain constrained by elevated fuel prices associated with the conflict in the Middle East, which continue to weigh disproportionately on low-income households,” the report stated.
That warning carries weight because poverty in Nigeria has been rising rather than falling. In April 2026, the World Bank put the national poverty rate at 63 per cent in 2025, noting that household incomes had not grown fast enough to offset still high inflation even as price growth slowed. The bank projected at the time that poverty would begin easing from 2026, falling to about 59 per cent by 2028, on the condition that food inflation and prices continued to moderate.
The fuel price caveat matters for ordinary spending. Petrol remains far above the levels Nigerians paid before subsidy was removed in May 2023, and the National Bureau of Statistics put the national average pump price at N1,596.25 a litre in May 2026, its most recent published reading, against N1,027.76 a year earlier. Fuel feeds directly into transport and food costs, which is why the World Bank ties pump prices to the welfare of the poorest households.
The bank also pointed to possible upsides from the same oil market that worries it. Higher international crude prices, it said, could strengthen Nigeria’s fiscal and external accounts through stronger oil earnings. It projected the current account surplus widening from 4.8 per cent of gross domestic product in 2025 to 6.0 per cent in 2026, before narrowing to 3.4 per cent by 2028 as oil prices normalise and imports pick up.
Set against that, the report listed several risks that could knock the outlook off course. These include tighter global financial conditions, a prolonged Middle East conflict, insecurity, climate shocks and disruptions to oil production.
One domestic risk was singled out. The bank flagged rising government spending ahead of the 2027 general elections, warning that it could weaken the momentum of reform and erode the social consensus needed to sustain the ongoing adjustment. “These factors could weaken reform momentum and erode the social consensus needed to sustain ongoing macroeconomic adjustment efforts,” the report stated.
The update placed Nigeria’s recent performance in a longer arc. World Bank data put real growth at 3.3 per cent in 2023, 3.4 per cent in 2024 and 4.0 per cent in 2025, with this year’s 4.3 per cent marking a further step up. The bank’s chief economist for Africa, Andrew Dabalen, said the region had stayed resilient despite geopolitical tension, climate shocks, falling development aid and fiscal pressure, with forecasts upgraded for close to three-quarters of countries.
Even so, the bank was careful not to oversell the numbers. It said the 4.3 per cent projection, while an improvement, should not be read as proof of sufficient transformation, and that growth remained too weak to generate enough productive jobs or materially cut poverty in a country adding an estimated 3.5 million people to its labour force each year.
The report also examined Nigeria’s place in Africa’s artificial intelligence economy. It found that 44 per cent of surveyed firms with at least 20 employees across Nigeria and Kenya reported using AI, compared with 61 per cent in the United States, though adoption remained shallow. The bank identified unreliable electricity, limited internet access, high data and device costs and weak computing infrastructure as the main constraints.