Nigeria’s economic chiefs meet World Bank president to bolster reform support
Nigeria’s top economic team met with World Bank President Ajay Banga on Tuesday to solidify strategic partnerships and seek support for the nation’s ongoing macroeconomic reforms during the 2026 IMF/World Bank Spring Meetings. Central Bank of Nigeria (CBN) Governor Olayemi Cardoso and the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, held the high-level talks at the World Bank headquarters to align Nigeria’s fiscal and monetary trajectories with international development goals. The engagement comes at a critical juncture as Nigeria manages a projected debt-to-GDP ratio of 34.5% and continues its push for currency stability. The meeting focused on deepening cooperation in areas of infrastructure financing, technical support for monetary policy, and social safety nets designed to cushion the impact of recent economic shifts. While specific financial commitments were not immediately disclosed, the presence of both the CBN Governor and the Finance Minister underscores a unified front in addressing Nigeria’s liquidity challenges and inflation targets. Discussions are believed to have touched upon Nigeria’s industrial expansion and the institutionalization of regional real estate and energy markets, which remain central to the government’s growth agenda for 2026. By engaging directly with Banga, the delegation aims to boost investor confidence and de-risk the Nigerian debt capital market for global institutional players. Same Tuesday, Wale Edun, chairing the Group of Twenty-Four (G24) Ministerial Meeting on the sidelines of the World Bank Group Spring Meetings, demanded urgent multilateral support to shield developing nations from heightening global economic instability and geopolitical shocks. The Spring Meetings continue through the week, with the Nigerian delegation expected to participate in further sessions regarding private sector activity across West Africa and global energy benchmarks.
World Bank: Nigeria’s growth stays on track despite Iran War and price hikes
LAGOS — the World Bank on Tuesday projected that Nigeria’s economy will remain resilient and achieve growth through the first half (H1) of 2026, even as the escalating conflict involving Iran threatens global market stability. In its latest economic assessment, the Washington-based lender noted that while the country’s macroeconomic foundations are strengthening, rising fuel costs and “persistently high” inflation risk stalling poverty reduction efforts. Despite the geopolitical volatility in the Middle East, the World Bank maintained a positive outlook for Nigeria’s GDP, citing the continued impact of structural reforms and improved fiscal management. The report suggests that Nigeria’s position as a non-Middle Eastern oil producer has allowed it to partially buffer the shocks that have disrupted other emerging markets. “Overall business activity has been expanding over the past few months, suggesting the impact on growth has been relatively contained. But the shock is still being felt through higher inflation.” Fiseha Haile, World Bank Nigeria lead economist said during a presentation in the capital Abuja. However, the bank warned that this growth remains fragile. The conflict has driven global energy prices higher, which has translated into a sharp spike in domestic pump prices and logistics costs. The most significant headwind remains the “inflationary squeeze.” Although sound monetary policies from the Central Bank of Nigeria (CBN) had previously cooled prices to 15.1% in February 2026, the “second-round effects” of the Iran war are now pushing food and energy costs back into a high-risk zone. “Inflation is still elevated and under increasing pressure, and that poses risks to incomes and poverty reduction,” Haile said. “The gains made in stabilizing the economy are being tested by external shocks,” “Without targeted interventions, the rise in living costs will likely offset the benefits of recent growth for the most vulnerable populations.” On the fiscal side, the World Bank highlighted a stabilized debt-to-GDP ratio and a significant jump in non-oil revenue collection, which has now reached 8.5% of GDP. This improvement is credited to the successful N4.65 trillion banking sector recapitalization completed in March. To sustain this momentum, the bank urged Nigerian policymakers to resist a return to broad-based subsidies. Instead, it recommended “saving the windfall” from current high oil prices to build a sovereign buffer.
World Bank: climate resilience and private investment key to Zambia’s economic future
Zambia can overcome escalating climate threats and achieve inclusive, private-sector-led growth through strategic investments and policy reforms, according to a new World Bank Group report released Thursday. The Zambia Country Climate and Development Report (CCDR) warns that extreme weather—specifically recurrent droughts—is no longer a future threat but a present constraint on the nation’s development, disrupting agriculture, hydropower, and household incomes for the most vulnerable rural populations. Building a “Climate-Smart” Economy The report argues that by prioritizing cost-effective investments, Zambia can safeguard its growing young population and stabilize its economy against climate-related shocks. “Climate risks are no longer in the distant future for Zambia—they are already shaping development outcomes today,” said Achim Fock, World Bank Country Manager for Zambia. He emphasized that targeted reforms would not only protect citizens but also accelerate job creation and economic expansion. The Four Pillars of Strategy To navigate these challenges, the World Bank recommends a strategic pathway focused on four priority areas: Unlocking Private Sector Potential A central theme of the report is the necessity of mobilizing private sector participation. Analyst note that a predictable policy environment and stronger institutions are essential to “crowding in” the private investment needed to supplement development finance. Dominick de Waal, Senior Economist at the World Bank, noted that Zambia’s primary challenge lies in institutional reform. Success, he suggests, depends on the country’s ability to manage natural resources and translate reforms into higher living standards that reduce household vulnerability. The report concludes that by aligning development goals with global climate targets, Zambia can transform its climate challenges into an opportunity for modern, sustainable growth.
World Bank: Seychelles pivots to high-value tourism to combat 6% GDP threat
A landmark report released, by the World Bank and the Government of Seychelles reveals that the nation’s economic future depends on a fundamental shift in its tourism model. The Country Climate and Development Report (CCDR) warns that without urgent intervention, climate-driven sea-level rise and coastal erosion could slash the archipelago’s GDP by more than 6% annually by 2050. A strategy of “quality over quantity” As the first high-income country in Africa, Seychelles is utilizing this report as a roadmap to transition from volume-based tourism to a high-value, low-impact sustainable model. With 46% of the national GDP currently tied to tourism, the stakes are exceptionally high. The report highlights a geographic crisis: approximately 90% of the population and nearly all critical infrastructure—including the international airport and luxury resorts—are concentrated in vulnerable coastal zones. To safeguard these assets, the CCDR outlines a “3R” framework (Reorient, Reduce, Reinforce) that requires a total investment of $810 million over the next 25 years. To kickstart this transition, the report suggests Seychelles must invest roughly 2.8% of its GDP annually through 2031. Economic resilience through sustainability The report emphasizes that sustainability is an economic imperative. By scaling the Seychelles Sustainable Tourism Label (SSTL) and shifting toward renewable energy, the country can achieve 20% lower electricity costs and reduce its heavy reliance on imported fuel, which currently makes up 20% of all imports. “Smart, resilient investments in nature-based coastal defenses could halve projected economic losses,” the report notes. By moving from the current 3.6% renewable energy share to the national goal of 15% by 2030, Seychelles aims to remain a global success story, balancing high-income growth with the protection of its unique natural heritage.
Ndiame Diop becomes Nigeria’s World Bank Country Director after Shuham Chaudri
Ndiame Diop resumed office yesterday as the new World Bank country director after Shubham Chaudri, the man that occupied the office since 2019 left last month. This is the second time in under a year that the Bretton Woods institution are changing their leadership in Nigeria. The International Monetary Fund (IMF) replaced Ari Aisen as its country representative in October 2023 with Christian Ebeke. It is also the first time that the two positions are occupied by Africans. Ndiame Diop, the new country director for the World Bank is a Senegalese national while Christian Ebeke is a Cameroonian. Shubham Chaudri before he left was perhaps the most visible World Bank country director, at least since the Victoria Kwakwa. Under his leadership, the World Bank portfolio in Nigeria expanded significantly, with about 30 projects and programmes approved under his leadership. Some of the programmes / projects include the recent combined US $2.25 billion for reforms for economic stabilization to enable transformation (RESET) development policy financing programme (DPF) for US $1.5 billion, and the US $750 million for the Nigeria accelerating resource mobilization reforms (ARMOR) programme for results (PforR). Indeed, under Chaudri leadership in Nigeria, the World Bank approved an estimated US $19 billion for about 30 projects in the country between 2019 and 2024. Nonetheless, Nigerians will not easily forget the US $1.5 billion that was not approved for the Nigerian government as budget support in 2020, following the Bank’s policy credibility concerns. At the time, sources close to the Bank said, ““There is skepticism about the commitment to structural reform. They are trying to ensure the reforms started are followed through and the commitment is credible. Therefore, unless the i’s are dotted and the t’s are crossed, the fund will not be released.” At the time, the focus of the credibility concerns by the Bank were the multiple exchange rates, and fuel subsidy. The reason the government was able to access the funds four years after is because it has now adopted a single exchange rate market and removed fuel subsidies June 2023. Diop arrives in Nigeria with similar credentials to Chaudri. According to the statement released by the Bank, he “served as the World Bank country director for Brunei, Malaysia, Philippines, and Thailand, based in Manila. In this position, he more tripled the Bank’s financing to the Philippines to scale up the Bank’s support to key economic reforms (policy based budget support programme) and the nation’s endeavour to bridge disparities in various sectors, including nutrition, stunting, healthcare, social protection delivery, education, agriculture, and digital connection.
Interest rate decisions cannot be arbitrary … Let’s focus on stability first
Later this month, the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) will meet to determine interest rates – unchanged, raise, or reduce. The committee at the 295th meeting of the MPC held on 20th and 21st of May 2024 raised the monetary policy rate by 150 basis points to 26.25% from 24.75%. See fig. 1. Fig. 1. The Dynamics of the Monetary Policy Rates of the Central Bank of Nigeria 2014 – 2024. Following recent ferocious argument about lowering interest rates, the 296th meeting on the 22nd and 23rd of July now has greater significance. Yes, the recent argument that the CBN should lower its interest rates is not new. The argument is as old in Nigeria and elsewhere as the notion of interest rate itself. It is an enduring argument that will continue to be made. In Nigeria, the main proponents have always been the Nigerian Association of Chambers and Commerce, Industry, Mines, and Agriculture (NACCIMA), the Lagos Chambers of Commerce and Industry (LCCI), and the Manufacturers Association of Nigeria (MAN), all for obvious reasons. However, the latest argument was forcefully made by Aliko Dangote, an industrialist and Africa’s richest man. He said at the opening session of a three-day national manufacturing policy summit organized by MAN in Abuja, “nobody can create jobs with an interest rate of 30%. No growth will happen. No power, no prosperity. No affordable financing, no growth, no development. What these arguments stresses is that monetary policy does not work in Nigeria like it does in other countries. Essentially, that the increases in interest rates do not lead to a reduction in consumption and investments. According to these arguments, price increases are caused by supply constraints because of large informal markets, and lower interest rates is required to deal with unemployment and poverty in the country. I understand these sentiments, but while monetary policy does not work perfectly, it does work. Before the MPC can start to lower interest rates, I expect that it will look out for when current trajectory of inflation peaks. The current trajectory started in May 2022 on the back of the Russian / Ukraine war that started in February 2022. Before that could peak, the removal of fuel subsidy and exchange rate reforms of June 2023 led to another spike from July 2023. Between May 2022 and May 2023, inflation increased from 17.7% to 22.4%, and between June 2023 and May 2024, inflation increased from 22.8% to 33.95%. Contrary to what many people may think, all central banks, including CBN prefers a trajectory of low interest rates, but the conditions and macroeconomic environment must be right for doing so. Any arbitrary, forceful, or pressurized lowering of interest rates will only jeopardise the growth and jobs we seek. Any arbitrary reduction in interest rates that fails to take into consideration prevailing macroeconomic conditions will only lead to further instability, jeopardise future growth and jobs. Fig. 2. The Policy Rates for Nigeria, South Africa, Ghana, Kenya, US, and the UK 2014 – 2024. As fig. 2 shows, the global economy started to see increases in interest rate in early 2022, all responding to different levels of inflation in their economies. In these other economies, just as in Nigeria, the risk of inflation remains elevated. Indeed, I shared most recently in the 2024 board retreat of Vitafoam Plc, all macroeconomic risks are currently elevated. Exchange rate, growth, income, and interest rates risks are all elevated. In such prevailing circumstances, there is not a magic wand, and the arbitrary reduction of interest rates will certainly make the situation worse. The elevated risks for interest rates come from rising inflation, rising government debts and deficits, and the weak Naira. Between April 2023 and April 2024, money supply increased by 173%, energy prices by 122%, exchange rate by 81.32%. These are not circumstances that dictate a reduction in interest rates. Interest rate decisions are considered based on macroeconomic conditions and environment. This includes balancing consumption, savings, and investments. That is often fairly understood. What is often not obvious is that all global economies compete for the pool of capital available. So, in addition to using the changes in interest rates to check inflation, central bankers are also mindful of capital flight. For instance, fig. 2 and 3 show the dynamics of the policy rates and inflation in six countries, including Nigeria. The other countries are Ghana, Kenya, South Africa, UK, and US. For four of those countries – Kenya, South Africa, UK, and US, the rate of inflation is less than 10%. Only Nigeria and Ghana have inflation currently above 20%. Ghana has inflation at 23% while Nigeria’s inflation is at 33%. But what is even more important is that the recent inflation trajectory has peaked in all the countries except for Nigeria. Despite that, interest rates trajectory has not started to come down because the central bankers are careful not to reduce interest rates too early. Fig. 3. Inflation dynamics for Nigeria, South Africa, Ghana, Kenya, US, and UK 2020 – 2024 Also, for all the countries considered, Nigeria has the highest gap of negative real interest rates – that is the gap between interest rates, which is the reward for savings, and inflation, which is the costs of savings. Any arbitrary reduction in interest rates will expand the gap between the reward and costs of savings, declining savings further, and worsen Nigeria’s capital flight. Indeed, Nigeria is the only country currently with a negative real interest rate. And as the graph in fig. 4 shows, it is the rate raises by the CBN in the last three meetings that have closed that gap. There is no greater evidence than this that the CBN is not as hawkish as some would like us to believe. Fig. 4. Nigeria’s inflation and the dynamics of the CBN’s monetary policy rate 2020 – 2024. Finally, the same argument that higher interest rates do not generate growth and jobs works in the other
