Nigeria

Chart 1 is a political map of Nigeria.

Located in West Africa, Nigeria is the continent's most populous country and a key regional player. The country is a multi-ethnic and culturally diverse federation made up of 36 states and the Abuja Federal Capital Territory (FCT), grouped into six geopolitical zones (North-West, North-Central, North-East, South-West, South-East, and South-South).

For nearly four decades, following its independence in 1960, Nigeria was under military rule, with only brief periods of civilian governance (1960–1966 and 1979–1983). The First Republic (1960–1966) was a missed opportunity, particularly in realising its agricultural potential.

At independence, Nigeria had one of the strongest agricultural economies in Africa, but failed to transform that advantage into sustained productivity growth and structural transformation. Agriculture accounted for roughly two-thirds of GDP, more than 60% of exports, and employed about 70% of the labour force. Nigeria was the world's largest exporter of palm oil and palm kernels, one of the largest exporters of cocoa and a major producer of groundnuts, cotton and rubber. Among many policy errors, commodity marketing boards established under colonial rule and intended to stabilise produce prices became instruments for extracting revenue from farmers after independence. With little investment in rural infrastructure such as roads, irrigation, electricity and storage, Nigeria’s promising agricultural sector declined as intense regional rivalry, corruption and ethnic competition took precedence over coherent national agricultural policy. Instead of modernising agriculture before oil wealth transformed the economy, political instability and short-term fiscal priorities accelerated the negative effects of oil.

Oil was first discovered in Nigeria in 1956, and Shell-BP's first commercial crude oil exports followed two years later. Before oil, Nigeria was a major exporter of cocoa, groundnuts, palm oil and rubber, given its huge agricultural potential. As oil's contribution to the economy grew, agricultural production collapsed, and Nigeria shifted from being food self-sufficient to a major food importer.

Before 1971, oil exploration and production in Nigeria were almost entirely controlled by multinational companies—including Shell-BP, Mobil, Gulf (later Chevron), Elf and Agip—with the Nigerian government holding no significant participation interests in their operations. Following the establishment of the Nigerian National Oil Corporation (NNOC) in 1971 and Nigeria's accession to OPEC, the government negotiated participation agreements that acquired 35% equity stakes in the major oil companies in 1973. These were increased to 55% in 1974, giving the Nigerian state majority ownership in the principal joint ventures, and further expanded during the remainder of the decade. In 1976, the NNOC began its own exploration and production activities. In 1977, it merged with the Federal Ministry of Petroleum Resources to form the Nigerian National Petroleum Corporation (NNPC), which combined commercial operations with regulatory responsibilities.

The state now had a 55% stake in oil operations. It used the proceeds to expand the civil service and adopt various import-substitution industries in steel, fertiliser, oil refining, and shipping. Civil service wages increased, driven by a belief that the state, not markets, was the engine of economic growth. The 1978 Land Use Act and subsequent constitutional provisions declared that all oil and minerals belonged to the federal government. During these years, oil revenues rose sharply as international prices increased. Nigeria's heavy dependence on oil exports became the core of the political economy, squeezing out other productive sources, even as tensions in the Niger Delta over environmental damage and the unequal distribution of benefits intensified. Import licenses were distributed as political patronage, and the Naira was maintained at an artificially high value, destroying export competitiveness.

Oil also came to dominate politics. The first military coups in January and July of 1966 triggered the Biafra War (1967–1970), which resulted in over a million deaths, mostly due to starvation. The war was preceded by a series of escalating political, ethnic and constitutional crises, including the January 1966 coup, the July counter-coup and widespread anti-Igbo massacres in northern Nigeria. In simple terms, the war began because the Eastern Region tried to break away, and the federal government moved to stop it.

In 1979, General Olusegun Obasanjo's military government handed over power to an elected civilian administration. However, economic mismanagement under President Shehu Shagari led to a military coup in 1983, bringing Major General Muhammadu Buhari to power. Two years later, he was overthrown by General Ibrahim Babangida, who, in 1986, was forced to accept a Structural Adjustment Program, devaluing the naira even as the government simultaneously maintained multiple exchange rate windows, signalling that it did not trust the market. Privatisation transferred state assets to political insiders at below-market prices, and ethnic divisions and patronage increasingly characterised political leadership.

In 1993, Babangida annulled the results of nationwide elections, prompting widespread unrest. Under pressure, he handed over power to an interim civilian government, which General Sani Abacha quickly overthrew. His regime, marked by extreme repression, became Nigeria's most brutal dictatorship. Huge sums of money were stolen from the CBN as multiple exchange rate windows were re-imposed and private business assets were seized by political decree. Following Abacha's death in 1998, General Abdulsalami Abubakar took over, released political prisoners and initiated democratic reforms. In 1999, elections were held, and former military ruler Olusegun Obasanjo was elected president, marking Nigeria's return to civilian rule.

Obasanjo embarked on various reforms, including banking consolidation, debt relief, privatisation and liberalisation, but the major challenge, the division and accountability of oil revenues, was left unaddressed.

Obasanjo was re-elected in 2003, though irregularities and violence marred the election. In 2007, he was succeeded by Umaru Yar'Adua, whose ill health led to Vice President Goodluck Jonathan assuming office shortly before Yar'Adua died in 2010. Jonathan later won the 2011 elections, even as fuel subsidies continued to increase, consuming 25% of the federal budget by 2012.

In 2015, Muhammadu Buhari returned to power, this time through democratic elections under the All Progressives Congress (APC), promising to combat terrorism, corruption and economic instability and secured a second term in 2019. Nigeria maintained multiple exchange rates during these years, despite IMF/World Bank advice to the contrary; restricted imports; combined state intervention and control, especially of oil and foreign exchange; and pursued anti-corruption and selective reforms, such as the introduction of social welfare programmes. Buhari’s policies were widely seen as mixed and contested. Despite more investment in infrastructure and social programs, slow growth and limited diversification contributed to persistent macroeconomic instability.

Bola Ahmed Tinubu succeeded Muhammadu Buhari as Nigeria's president on 29 May 2023. As in previous elections, the events were accompanied by numerous allegations of electoral fraud from opposition parties.

In the early 1970s, Nigeria had become the largest crude oil exporter in Africa (although Libya and, at times, Angola occasionally surpassed production during periods of severe disruptions), and holds the continent's largest natural gas reserves. However, despite some socioeconomic progress in recent years, the country continues to face serious economic, social and security challenges. In 2025, Nigeria had the second-largest number of people living in extreme poverty in the world, and high youth unemployment. Overdependence on oil exports, leadership failures and weak institutions, deplorable infrastructure, human capital bottlenecks, low tax revenue mobilisation, deeply embedded corruption, and decades of mismanagement have impeded economic development and made Nigeria a symbol of unfulfilled potential. In addition, security concerns, including banditry, kidnappings, terrorism, communal clashes and separatist agitations in the south-east, further threaten economic stability and limit foreign investment inflows. These issues, coupled with vast income inequality, have resulted in low socioeconomic indicators. Many Nigerians lack adequate healthcare, nutrition and education. As a result, Nigeria ranks [161st] out of 193 countries in the 2024 UN Human Development Index.

However, there are reasons to be optimistic about Nigeria's future as its leadership confronts its manifold structural challenges. President Tinubu has, for example,  pledged to turn around the economy and ensure security across the country. Since assuming office, he has introduced key socioeconomic reforms to address these challenges and revitalise the economy. One of his first major policy decisions was the removal of the longstanding fuel subsidy, intended to reallocate resources to critical sectors such as infrastructure and education. His administration has also unified exchange rates to stabilise the currency and attract foreign investment. In July 2026 he announced These reforms are part of a broader strategy to foster economic resilience and sustainable growth, positioning Nigeria for long-term development. The ambitions have been boosted by the completion of the massive Dangote petroleum refinery and recent announcements relating to further expansion which would make the facility, already the largest in Africa, one of the biggest in the world, with the promise to make Nigeria a significant refined fuel exporter.

The subsequent section on its likely Current Path examines Nigeria's long-term development challenges, which are unusually complex because the country must simultaneously manage rapid population growth, structural economic transformation, governance reform, climate change, and national cohesion. If current trends continue, Nigeria is likely to become the third most populous country in the world by around 2050, with a population approaching 400 million and potentially exceeding 500 million by the 2070s. This creates enormous opportunities but also unprecedented development pressures.

Chart 2 presents the Current Path of the population structure from 1990 to 2043.

The composition of a country's population plays a crucial role in shaping its long-term social, economic and political landscape. Therefore, analysing a nation’s demographic profile provides valuable insights into its development prospects. Despite its importance for national planning, Nigeria's last completed population census was conducted in November 2006. Plans for a new census in 2023 were postponed. This means that Nigeria has relied on projections and estimates for almost two decades, complemented by periodic surveys such as the Demographic and Health Surveys (DHS) and Multiple Indicator Cluster Surveys (MICS), which provide updated estimates of fertility, mortality and health trends.

These estimates concur that Nigeria is experiencing rapid population growth. At the time of its independence in 1960, the country had an estimated population of 45 million. Today, that number has surpassed 200 million, making Nigeria the sixth most populous nation in the world. If the current demographic trends persist, Nigeria’s population will grow from 228 million in 2023 to around 380 million by 2043. This would position Nigeria as the third most populous country globally, behind only India and China.

Nigeria's fertility rate was about 4.5 children per woman in 2023, a decline from 6.45 in 1990, currently ranked 15th highest globally. The Current Path is that Nigeria's fertility rate will decline to 3.7 children per woman by 2043, making it the 8th highest globally.

Fertility is much higher in rural areas than in urban areas, and it varies regionally. On average, women in rural areas give birth to 5.6 children over their lifetimes, while urban women give birth to 3.9. The population of the northern states is also growing much faster than that of the southern states.

Nigeria is among the countries with the most youthful age structure, with a median age of about 19. This means that half of the Nigerian population is younger than 19. On the Current Path, the median age will increase modestly to 23 by 2043.

Due to this youthful age structure, the dependency ratio is high, as a large portion of the population depends on the small workforce to provide for its needs—this constrains savings and investment in human and physical capital.

As of 2023, about 41% of the population is in the below-15 dependency age group, while 3% are in the 65+ dependency age group. On the Current Path, the share of these two dependency age groups is projected to be 35.8% and 4.8%, respectively, by 2043. About 56% of the Nigerian population is in the 15-64 working-age group, and this will increase to 59 % by 2043. Nigeria’s population structure is typical of countries with low life expectancy and high fertility rates.

The large cohort of children below 15 requires more investment in education, health and infrastructure. An increase in the working-age population relative to dependent children and elders can drive income growth, a phenomenon known as the demographic dividend. Generally, the demographic dividend materialises when a country reaches a ratio of at least 1.7 people of working age for each dependent. When there are fewer dependants to take care of, it frees up resources for investment in both physical and human capital formation, and eventually increases female labour force participation.

However, the growth in the working-age population relative to dependants does not automatically translate into rapid economic growth unless the labour force acquires the needed skills and is absorbed by the labour market. Without sufficient education and employment to successfully harness their productive power, the growing labour force could turn into a demographic ‘bomb’ rather than a demographic dividend, as many people of working age may remain in poverty, potentially creating frustration, social tension and conflict. Currently, the private sector's limited capacity makes it challenging to accommodate the large number of young job seekers in the country.

Nigeria is unlikely to fully benefit from its demographic dividend within the Current Path forecast horizon. In 2023, the ratio of working-age individuals to dependents was just 1.2—meaning nearly one working-age person for every dependant. This ratio will rise slowly, reaching only 1.45 by 2043—still below the average of 1.6 for African lower-middle-income countries and short of the 1.7 threshold needed to enter the demographic window of opportunity. On the Current Path, Nigeria is not expected to cross this critical threshold until around 2061, nearly a decade later than the average for its income group on the continent.

Nigeria also has a large youth bulge at 47%. Youth bulge is the percentage of the population aged 15-29 relative to the total adult population. It will get to 40.9% by 2043. In addition to the requirement for more spending on education, health services and job creation, large numbers of young adults can lead to positive political change in a country through youth activism, but they can also increase the likelihood of criminal violence, conflicts and instability, mainly when the needs of the youth, such as employment, cannot be met. Nigeria has one of the highest youth unemployment rates; two-thirds of the youth are either jobless or underemployed, while one-third of the country's working-age population is unemployed.

Successive Nigerian governments have recognised the need to reduce rapid population growth, but efforts to implement a comprehensive demographic policy have often been met with religious objections. Family planning policies are a topic of fractious debate among religious leaders in the country. According to the country’s latest Demographic and Health Survey (DHS) 2023–2024, the contraceptive prevalence rate is only 20% among currently married women and 50% among sexually active unmarried women aged 15-49.

Better management of population growth is key to a nation's development. The decline in the below-15 dependency age group enables governments and parents to invest more in each child in education and health, with positive implications for human capital formation and long-run economic growth.

Chart 3 presents a population distribution map for 2023.

Nigeria’s population is unevenly distributed across the country, concentrating along trade routes and in areas rich in natural resources. The highest rural densities are found in the South-West region, known for its agricultural productivity and strategic trade routes. Urban population densities are notably high in major cities such as Lagos, Kano, Ibadan, Kaduna, Port Harcourt, Benin City, and Maiduguri. These cities serve as economic hubs, attracting migrants from rural areas seeking employment opportunities, better living standards, and improved access to services. On the Current Path, Nigeria's population density will be about four people per hectare in 2043, compared with an average of 2.5 in 2023. 

Lagos, as Nigeria's largest city and commercial centre, exemplifies this urban concentration. The city's strategic coastal location and its infrastructure supporting trade and industry attract a diverse population, contributing to its high density. Similarly, Kano serves as the economic and cultural heartbeat of Northern Nigeria, with its rich history as a trade centre and its current role in manufacturing and agriculture. These urban centres, while contributing significantly to Nigeria's GDP, also face challenges such as congestion, inadequate infrastructure, and environmental degradation due to their burgeoning populations.

Compared with many lower-middle-income African countries, Nigeria's population density is higher. This is partly due to its large population base, currently the largest in Africa, and the rapid urbanisation rate driven by both natural population growth and rural-to-urban migration. The demographic trend in Nigeria aligns with the broader African experience, where urban areas are expanding rapidly, creating both opportunities and challenges for sustainable development.

The projection for 2043 indicates a population density of about 4 people per hectare. This anticipated growth underscores the urgent need for comprehensive urban planning and policy interventions to manage the pressures of urbanisation. As Nigeria continues on its demographic path, the potential to harness a demographic dividend exists, given the increasing proportion of the working-age population. However, realising this potential depends on strategic investments in education, healthcare, and infrastructure to enhance productivity and economic growth.

The concept of a demographic dividend emphasises the economic benefits arising when a country's working-age population exceeds the non-working-age population. For Nigeria, capitalising on this demographic transition could significantly boost economic development, provided the labour force is adequately skilled and employed. However, the challenge remains in ensuring that the benefits of growth are equitably distributed across regions, particularly in addressing the rural-urban divide.

Policy implications of Nigeria's population distribution are profound. Government and policymakers must prioritise investments in infrastructure, such as transportation and housing, to accommodate the growing urban populations. Additionally, enhancing rural development through improved agricultural practices and rural industrialisation can help balance the population distribution, reducing excessive pressure on urban centres.

Chart 4 presents the urban and rural population in the Current Path from 1990 to 2043.

Nigeria’s rapid population growth is closely tied to accelerated urbanisation, with the urban population exceeding 50% as of 2020. As of 2023, 53.4% of the country’s population—approximately 122 million people—was estimated to live in urban areas. Lagos, for example, has experienced a dramatic population increase, rising from 300 000 in 1950 to 16.5 million in 2024. With an annual urban population growth rate of about 4%—twice the global average and higher than Nigeria’s overall population growth rate of 3%—the country ranks among the world's fastest urbanising nations.

If current trends continue, an estimated 63% of Nigeria’s population—around 237 million people—will reside in urban areas by 2043. However, this rapid urban expansion presents significant challenges, including rising unemployment, poverty, inadequate healthcare, poor sanitation, the spread of urban slums and environmental degradation. Currently, it is estimated that between half and two-thirds of Nigeria’s urban population lives in slum conditions.

Historically, cities have been key drivers of economic growth, industry and commerce worldwide. When well-managed, they provide opportunities for social and technological advancement and facilitate the exchange of ideas through cultural interaction. Cities have also served as hubs for political activities, governance systems and employment generation, reinforcing their critical role in national development.

Chart 5 presents GDP in market exchange rates (MER) and growth rate in the Current Path, from 1990 to 2043.

At the time of Nigeria's independence, its economy showed significant potential, with agriculture serving as its backbone. The country embraced an import substitution industrialisation policy, aiming to produce locally most of the goods it previously imported. However, the discovery of crude oil in commercial quantities marked a turning point in Nigeria's economic trajectory. As oil prices surged and demand increased, crude oil extraction and export became the dominant economic activity. The influx of petrodollars made it easier to import a variety of goods and services, which led to the neglect of agriculture and manufacturing. Over time, these sectors have become less competitive.

Today, Nigeria's exports remain heavily reliant on crude oil, which accounts for more than 80% of total exports, half of government revenues and the majority of foreign currency earnings. Since the late 1960s, when the country shifted its focus from agriculture and light manufacturing to an unhealthy dependence on crude oil and gas, Nigeria's economic growth has been marked by volatile boom-bust cycles driven by fluctuations in oil prices. As a result, the country has experienced volatile, low-average growth.

Between 2000 and 2014, Nigeria recorded an average growth rate of 7%. However, a sharp drop in oil prices from mid-2014 to 2016 plunged the economy into a recession. Growth fell from 6.3% in 2014 to -1.6% in 2016, leading to a budgetary crisis. The subsequent recovery was slow, and the collapse of commodity prices during the COVID-19 crisis led to a contraction of -1.8% in 2020. This was Nigeria's deepest recession in four decades, although it resumed in 2021 at 3.6% as pandemic restrictions were eased and oil prices recovered. By 2023, growth rates had recovered to 2.9%, but were now constrained by high inflation and sluggish global growth. Domestic shocks, such as the disruptive demonetisation policy in early 2023 and the devastating floods of October 2022, further exacerbated the situation.

Since the May 2023 elections, the administration of President Tinubu has launched ambitious reforms to restore economic stability and growth. Key actions include removing most gasoline subsidies, unifying the exchange rate to reflect market conditions and tightening monetary policy. These steps have improved fiscal performance and reduced economic distortions. The Central Bank of Nigeria has also refocused on its price stability mandate, facilitated by the authorities’ commitment to end budget deficit monetisation (deficit financing through money printing). Despite progress, inflation and poverty remain high. To cushion the impact on vulnerable groups, the government is providing temporary cash transfers to 15 million households. These ongoing macroeconomic reforms enhance Nigeria’s global competitiveness, attracting both domestic and foreign investment, and begin to ease fiscal pressures linked to debt, creating more budgetary space. If sustained and expanded, they could lay a solid foundation for renewed growth and set Nigeria on a better development path.

Between 1990 and 2023, Nigeria’s GDP more than tripled, rising from US$118 billion to US$423 billion. On the current development trajectory, it will reach US$530 billion in 2030 and US$888 billion in 2043, maintaining its position as Africa’s largest economy. In the Current Path, the average annual growth rate between 2023 and 2043 is expected to be 3.7%. However, this positive growth outlook is contingent upon tackling longstanding and potentially binding constraints to growth, including inadequate infrastructure, particularly unreliable power supply, trade barriers, an unfriendly business environment and insecurity, among other structural issues.

In this regard, the African Development Bank Group has a new five-year Country Strategy Paper (2025-2030) for Nigeria. Under the new strategy, the Bank will provide US$2.95 billion over the first four years, complemented by an estimated US$3.21 billion in co-financing from development partners. The strategy focuses on two key priority areas: promoting sustainable, climate-smart infrastructure to enhance competitiveness and industrial development; and advancing gender and youth-inclusive green growth through industrialisation. 

Chart 6 presents the size of the informal economy as a percentage of GDP and a percentage of total labour (non-agriculture), from 2020 to 2043. The data used in our modelling are largely estimates and may therefore differ from other sources.

An informal economy (informal sector or shadow economy) is typically considered neither officially taxed nor monitored. Countries with high informality have a whole host of development challenges, such as low revenue mobilisation, and economic growth tends to be below potential.

Informality in poorer countries arises not only from burdensome regulations or weak enforcement but also from underdevelopment. In wealthier countries, where advanced production technologies and favourable economic conditions prevail, workers prefer formal wage employment because of higher wages. Similarly, managers are more likely to register and operate formal businesses, as the greater income potential in developed markets makes formality more profitable, even with the associated costs of taxes and regulations. As countries advance economically, the size of the informal sector typically shrinks. A recent World Bank study found that about 30% of the increase in aggregate output driven by higher productivity is linked to a roughly 25% reduction in the average size of informal enterprises.

Nigeria’s crude oil-dependent economy prevents it from achieving inclusive growth. According to the World Bank, a 1% increase in economic growth leads to only a 0.1% increase in employment in Nigeria. This low elasticity of employment to economic growth shows the extent to which the Nigerian oil-driven growth path is jobless. The informal sector has therefore become the lifeblood of millions of Nigerians. Estimates by the International Labour Organisation (ILO) show that 93% of all employment in Nigeria is informal, with 95% of women working in the informal sector compared to 90% of men.

While the informal sector contributes a significant portion of GDP, its productivity is markedly lower than that of the formal sector. The large number of individuals employed informally, juxtaposed with their relatively smaller economic output, underscores the low productivity and precarious nature of these jobs. Such employment is often characterised by a lack of job security, a lack of legal protection, and insufficient earnings, which, overall, contribute to social and economic vulnerabilities.

The persistence of informality in Nigeria can be attributed to several structural challenges. Rapid population growth, coupled with inadequate formal job creation, exacerbates the reliance on the informal sector. Regulatory complexity and the high cost of compliance deter small businesses from entering the formal economy. Additionally, limited access to finance and inadequate education systems restrict opportunities for formal employment and entrepreneurship. Gender disparities also play a role, as women are often overrepresented in the informal sector, engaging in lower-paid and less secure forms of employment.

The implications of a dominant informal sector are profound. The low productivity associated with informal employment constrains economic growth and reduces potential fiscal revenues, as these activities are largely untaxed. Moreover, the lack of formal employment opportunities limits economic resilience and exacerbates socio-economic inequalities. For Nigeria to foster a more dynamic and inclusive economy, targeted policy interventions are necessary. Improving governance, simplifying regulatory frameworks, and expanding access to education and financial services are crucial steps toward facilitating the transition to formal employment.

The size of the country's informal economy was estimated at 39.5% of GDP in 2023, above the average of 30.5% for lower-middle-income Africa. On the Current Path, the informal sector is expected to slowly decline to 35.8% by 2043. However, this figure will still remain above the forecast of 27% for lower-middle-income African countries in 2043.

Chart 7 presents GDP per capita in the Current Path, from 1990 to 2043.

Nigeria boasts the largest GDP in Africa; however, in 2023, it ranked only 20th among the continent’s 54 countries in terms of GDP per capita (PPP). Between 2015 and 2023, Nigeria’s population grew at an average annual rate of 2.3%, outpacing the country’s average economic growth of 1.5% during the same period. As a result, GDP per capita has declined, returning to nearly the same level as in 2010. Projections along the Current Path suggest that Nigeria’s GDP per capita will remain below its 2015 level until at least 2040.

The country's inability to sustain economic growth and the rapid population growth dilute per capita income growth. On the Current Path, Nigeria's GDP per capita will increase from about US$5 000 in 2023 to US$5 650 by 2043, below the projected average of US$7 800 for lower-middle-income Africa in the same year. 

Nigeria’s economic development has been hindered by an over-reliance on crude oil, policy missteps, corruption and poor governance. For instance, Malaysia, once as poor as Nigeria in the 1960s, now has a GDP per capita nearly six times higher. From 1960 to 1975, the two countries had comparable GDP per capita levels. However, Malaysia pulled ahead significantly after it began diversifying its economy to reduce dependence on volatile commodity prices. In 1957, tin and rubber made up 85% of Malaysia’s exports, but starting in the 1970s, the country pursued a robust diversification strategy centred on commodity-based manufacturing. As a result, crude oil’s share in Malaysia’s petroleum exports fell from 95% to 20%, while processed palm oil exports rose from 0% in 1974 to 99% by 1994. Nigeria, by contrast, has remained heavily dependent on crude oil exports, leaving its economy vulnerable to external shocks and limiting growth in per capita GDP.

Chart 8 presents the rate and number of extremely poor people in the Current Path from 2020 to 2043.

In 2022, the World Bank updated the monetary poverty lines to 2017 constant dollar values, with the previous International/PPP $1.90 extreme poverty line now set at US$2.15, also for use with low-income countries. The US$3.20 for lower-middle-income countries such as Nigeria has now been raised to US$3.65. In June 2025, the World Bank announced an update to 2021 PPP values, with extreme poverty now at US$3.00 per person and using US$4.20 for lower-middle-income economies such as Nigeria.

Like many sub-Saharan African countries, Nigeria presents a paradox: despite its wealth of natural resources, the majority of its population lives in poverty. Over time, both the poverty rate and the number of people living in extreme poverty have remained high. At the previous international poverty line of US$2.15 per day, Nigeria's poverty rate peaked between 1995 and 2000 at 58% of its population, before steadily declining to 31% in 2018–2019, its lowest level since gaining independence in 1960.

According to the International Monetary Fund (IMF), Nigeria has experienced a slower reduction in poverty rates compared to other sub-Saharan African countries with similar GDP per capita growth. This is partly due to the ineffectiveness of successive poverty alleviation programmes, often undermined by corruption and poor governance. Corruption diverts public spending from critical sectors such as education and healthcare, limiting the impact of these initiatives on vulnerable populations.

Since 2019, poverty and hardship levels have worsened. The COVID-19 pandemic, sluggish economic growth and high inflation have pushed millions more into poverty. As a result, the poverty rate at US$2.15 increased from 31% in 2019 to 38.9% in 2023. The lower-middle-income poverty rate (US$3.65 in 2017 PPP) rose from 63.5% to around 70% over the same period.

To support the poorest and most economically vulnerable households, the Nigerian government is implementing targeted, temporary cash transfer programs. However, these efforts need to be significantly scaled up and sustained to make a meaningful impact.

Projections suggest that on the current trajectory, the extreme poverty rate (US$2.15) will gradually decline to 23.5% by 2043. Yet, this remains well above the projected average of 13.8% for lower-middle-income countries in Africa. Similarly, the lower-middle-income poverty rate (US$3.65) will decline to 54% by 2043, compared to an average of 35% for Nigeria’s peer group.

On the Current Path, the number of Nigerians living in extreme poverty is projected to remain alarmingly high, increasing slightly from 88.6 million in 2023 to 89 million by 2043—positioning Nigeria as the country with the second-largest population of extremely poor people globally. The country is set to fall far short of achieving the Sustainable Development Goal to eradicate extreme poverty by 2030.

Poverty in Nigeria also follows a stark regional pattern, with a disproportionate concentration in the northern part of the country. States such as Sokoto, Taraba and Jigawa report poverty rates well above the national average. Overall, the northern region lags behind the south across almost all human development indicators. According to the World Bank, 87% of Nigeria’s poor reside in the northern region, with nearly half located in the North-West.

Ongoing conflicts between farmers and herders have further deepened poverty in the North. The violence has severely disrupted agricultural activity, which provides livelihoods for about 80% of the region’s population. Farmlands have been destroyed or rendered inaccessible, contributing to increased food insecurity, poverty and malnutrition.

Moreover, poverty in Nigeria is predominantly rural. Access to infrastructure, financial services and economic opportunities remains limited in rural communities. For example, approximately 78% of financially excluded adults live in rural areas, compared to 22% in urban settings.

While this analysis has primarily focused on monetary measures of poverty, it is increasingly recognised that poverty is multidimensional. Even those who do not fall below the income poverty line may still lack access to essentials such as nutritious food, clean water, healthcare, housing, security and education.

The Multidimensional Poverty Index (MPI) captures these deprivations. According to the 2024 global MPI, 41% of Nigerians—approximately 81 million people—are multidimensionally poor. This figure makes Nigeria the largest contributor to multidimensional poverty in sub-Saharan Africa. It underscores Nigeria’s central role in achieving regional targets for both monetary and non-monetary poverty reduction.

In summary, the face of poverty in Nigeria is largely rural, predominantly female, mostly illiterate and deeply entrenched in the informal sector. Addressing this complex challenge is crucial not only for national development but also for ensuring peace and stability.

Chart 9 depicts Nigeria's National Development Plan.

The Nigeria Agenda 2050 (NA 2050) is a long- and medium-term development plan designed to tackle the country’s persistent economic and social challenges. By 2050, Nigeria aspires to become a dynamic, industrialised, knowledge-based economy that drives inclusive and sustainable development.

To this end, the Nigeria Agenda 2050 espouses policies, strategies and initiatives to position Nigeria as an African regional power and a global economic force. The plan envisages an average annual GDP growth rate of 7% during 2021-2050 and a per capita income of US$33 328 by 2050. Nigeria Agenda 2050 is premised upon three key factors that are critical to realising the nation’s potential:

• Reforming governance structure with strong institutions and administrative machinery capable of responding to the needs of the people;
• Inclusive and sustainable growth of a private sector-driven economy through the concentric diversification of the economy; and
• Empowerment of the Nigerian people by ensuring a balance between economic growth and social welfare.

Chart 29 presents GDP per capita in purchasing power parity (PPP) for the Current Path and each of the eight sectoral scenarios, as well as the Combined scenario. The chart runs from 2022 through 2043.

GDP per capita increases in all the scenarios above the Current Path. The Manufacturing scenario has the most significant positive impact at at an increase of US$780. While this does not reflect income distribution, it indicates a general improvement in productivity and potential income. It aligns with broader evidence that industrial deepening offers Nigeria a major opportunity to advance economic prosperity.

The second most significant impact on GDP per capita is achieved in the AfCFTA scenario followed by the Demographics and Health scenario. The growth in GDP per capita in the Demographics and Health scenario occurs despite Nigeria's economy being smaller than in other scenarios, because lower population growth means more income for fewer people. Nigeria could thus mechanically improve some of its development indicators if its demographic challenges are effectively tackled. Deepening regional trade through the AfCFTA likewise presents a major opportunity to advance economic prosperity, as confirmed by other studies.

GDP per capita in the Governance scenario improves ranks it fourth in terms of impact. If the government of Nigeria invested in more efficient tax systems, strengthened its efforts to combat corruption, enhanced government effectiveness, promoted social stability, addressed insecurity and fostered social inclusion through improved democracy, gender empowerment and additional well-targeted social grant programs to support the poorest and most vulnerable households, it could significantly boost economic growth and improve the living standards of its citizens. Social protection, for instance, can affect growth at different levels. At the micro level, by supporting vulnerable populations, social expenditure can increase household consumption, productivity and employment. At the macro level, social expenditure can affect GDP directly, especially during economic downturns, as an important countercyclical tool, and indirectly through channels such as enhancing human capital and reducing inequality. Good governance is crucial for the efficient use of public funds for development and improving the well-being of the population. When governance is good, public investments crowd in private investment by providing the energy, roads, logistics and communications links necessary for firms to function productively.

Agriculture also contributes meaningfully to GDP per capita (US$220), followed by education (US$214) and Infrastructure and Leapfrogging (US$199).

The Financial Flows scenario, consisting of aid, FDI and remittances, has the smallest impact on GDP per capita.

Given the size of the Nigerian economy and widely reported corruption, aid plays a declining role in Nigeria aid and tied to burdensome reporting requirements and conditionalities, limiting its effectiveness.

FDI in Nigeria is largely concentrated in the extractive industries, particularly oil and gas, which generate limited economy-wide benefits and contribute little to diversification or technology transfer. The absence of a strong industrial base further constrains the positive spillovers from FDI. The country has embarked on a raft of public-private partnerships (PPPs) as a critical mechanism to bridge its financing gaps in energy, deep-sea ports (such as the Bakassi Deep Seaport and the Port of Ondo), and power generation. The slow progress of the 360MW Gurara II hydropower project, which was expected to start construction in 2023 but has been repeatedly delayed, demonstrates the associated challenges. Poor infrastructure limits the country's ability to benefit from FDI's potential spillover effects, underscoring the importance of shifting to public-private partnerships to fund the large investments required.

Remittances are predominantly used for immediate consumption, such as food, housing and healthcare, rather than being channelled into investments that support sustainable growth. While remittances can support household welfare, recent research shows they have a limited direct impact on economic growth unless complemented by strong domestic financial systems.

Local financial development is critical for converting remittances and FDI into productive investments. In underdeveloped financial environments, limited access to credit, weak financial infrastructure and low banking penetration hinder the mobilisation of remittances and FDI for business creation, capital accumulation or infrastructure development. Remittances are then often directed toward informal or short-term consumption. By contrast, in countries with robust financial systems, well-functioning institutions can help channel remittances and FDI into growth-enhancing activities such as education, entrepreneurship and infrastructure. This underscores the importance of improving domestic conditions, especially financial sector development, infrastructure and governance, to unlock the full growth potential of international capital inflows.

The sectoral scenarios modelled for Nigeria are strongly interlinked. Infrastructure and human capital development are crucial for industrialisation and economic diversification. The provision of rural roads is vital for agricultural commercialisation and food self-sufficiency. Agriculture can pave the way to manufacturing through agro-processing, while improving governance and security cuts across all sectors. A holistic approach or a coordinated policy push across industries is the best option to achieve inclusive, sustained growth in Nigeria. The Combined scenario brings together all eight sectoral scenarios and represents an integrated development push to remove the binding constraints on sustained, inclusive growth and development in Nigeria.

Chart 30 presents poverty in the Current Path and for each scenario, from 1981 to 2043, using the US$4.20 poverty line for low-middle-income countries.

All the scenario interventions contribute to reducing poverty in Nigeria, with Governance emerging as the most impactful single-sector intervention by 2043. Under the Governance scenario, the extreme poverty rate (measured at US$4.20 per day) falls to 26.1% by 2043 (96.8 million), compared to 30.7% (113.9 million) in the Current Path, a difference of 17.1 million people. Most of the decline is due to the additional social transfers included in the scenario. In addition, good governance, as embodied in the control of corruption and the design and implementation of effective regulatory policies, significantly improves the poor's ability to participate in and benefit from economic growth. Corruption reduces the government's ability to allocate public services efficiently and equitably, and weak regulatory environments deter the investment needed to generate broad-based employment.

By 2043 the Governance scenario has the largest impact on poverty, followed by Manufacturing, Education, AfCFTA, then Demographics and Health, and Large Infrastructure and Leapfrogging. 

The Agriculture and Financial Flows scenarios deliver modest improvements on poverty rates. 

Chart 31 presents GDP in the Current Path and in the Combined scenario from 2022 to 2043.

The Combined scenario combines all eight sectoral scenarios: Governance, Demographics and Health, Education, Large Infrastructure and Leapfrogging, Agriculture, Manufacturing, AfCFTA and Financial Flows.

In the Combined scenario, Nigeria experiences a significant improvement in its growth prospects to 2043. The size of the Nigerian economy in 2043 reaches US$2 358 billion under the Combined scenario, US$822 billion (or 54%) larger than the Current Path value of US$1 536 billion, reflecting the compounding effect of integrated sectoral reforms over the projection horizon.

Chart 32 presents GDP per capita in the Current Path and Combined Scenario, 2022-2043.

If the Combined scenario were realised, Nigeria could expect a significant improvement in its human and economic development prospects. By 2043, GDP per capita (PPP) would reach US$13 190, US$3 830 (or 41%) above the Current Path value of US$9 360, indicating that an integrated push across all the development sectors could significantly improve the living standard of the people of Nigeria.

Compared to the Current Path, by 2043, GDP per capita in Nigeria will be 41% larger. In 2025, Nigeria’s GDP per capita was 3.5% below the average for Africa’s lower-middle-income countries. On the Current Path trajectory, it would decline to 10% below the 2043 average as Nigeria continued to fall further behind its peers. In the Combined scenario, Nigeri’s 2043 GDP per capita would be 126% of the average for low-middle income countries (US$13 190 vs US$10 430), now overtakes the peer average.

Chart 33 shows the composition of Nigeria's economy by sector value added from 2023 to 2043, comparing the Current Path with the Combined scenario.

Services have long been the dominant sector in Nigeria's economy. It accounted for 47.5% of GDP in 1981, dipped to 42.1% in 1990, and reached a historical peak of 59.8% in 2016. By 2025, services accounted for 48.6% of GDP, totalling US$345.1 billion. Under the Current Path, services rise to 57.5% of GDP and US$884 billion by 2043. In the Combined scenario, the sector's share is lower at 52.1% of GDP, but its absolute value is considerably higher at US$1 229 billion, reflecting a larger overall economy.

Agriculture's trajectory illustrates the structural shift away from primary production. Its share rose from 12.2% of GDP in 1981 to a peak of 37.0% in 2002, before declining to 19.3% of GDP and US$137.1 billion by 2025. By 2043, agriculture falls to 10.0% of GDP in the Current Path and 9.6% in the Combined scenario. The absolute value of agricultural output continues to expand, reaching US$153 billion in the Current Path and US$225 billion in the Combined scenario, indicating productivity gains rather than sectoral contraction.

Manufacturers have followed a more turbulent path. The sector accounted for 20.3% of GDP in 1981 but had collapsed to 6.6% by 2010. It recovered to 14.9% of GDP by 2025. In the Current Path, manufactures reach 16.0% of GDP and US$246 billion by 2043. The Combined scenario produces the largest sectoral divergence, with manufactures rising to 22.6% of GDP and US$532 billion — more than double the Current Path value — reflecting a substantive reindustrialisation.

Energy stood at 10.1% of GDP and US$72 billion in 2025. The contribution of the sector declines to 5.2% of GDP and US$80 billion in the Current Path by 2043, In 2043 the Combined energy share (5.1%) is marginally below the Current Path (5.2%) with the larger absolute value (US$121bn vs US$80bn) following Nigeria’s nuclear build that is included in this scenario. Materials remain a small contributor, at 2.3% of GDP in 2025, rising to 4.1% of GDP and and 3.8% of GDP in the Combined scenario. ICT expands from 4.9% of GDP to around 7% of GDP in both scenarios by 2043, reaching US$111 billion in the Current Path and US$161 billion in the Combined scenario.

The combined sectoral picture in 2043 underscores the scale of the reform dividend. Total value added across the six listed sectors means that the Combined scenario is US$822 billion larger om 2043 compared to the Current Path forecast. Eery sector records a higher absolute value added in the Combined scenario, even where its GDP share is lower. Manufactures show the largest scenario gap in share, signalling reindustrialisation as the most policy-sensitive structural lever. Services remain the largest sector by value in both scenarios, while agriculture and energy decline as shares of GDP but expand in absolute terms — consistent with diversification toward higher-productivity activities.

Chart 34 presents the estimated size of the informal sector under the Current Path and the Combined scenario from 2022 to 2043.

Estimates of Nigeria's informal economy vary depending on the methodology and definition used. IFs uses a modelled approach with the results on the lower end of most other estimates.

Nigeria has a very large informal sector. IFs estimates the size of the Nigerian informal economy at 39.5% of GDP in 2025. On the Current Path, the level of informality declines marginally, reaching 35.8% by 2043. Assuming that all policies and reforms in the Combined scenario are implemented, the informal sector could decline to 28.0% of GDP in 2043, 7.8 percentage points below the Current Path.

With limited formal-sector opportunities, most of Nigeria's workforce is employed in the low-value-added informal sector. Informal labour, which accounted for 65% of total labour in 2025, edges down to 63% by 2043 under the Current Path, but falls much more sharply to 46% under the Combined scenario.

Chart 35 presents the number and % of the population living below US$4.20 from 2022 to 2043.

Nigeria’s demographic transition has lagged behind its economic transition, leading to a situation in which labour force growth outpaces economic growth. Whereas 146.2 million Nigerians lived in poverty in 2025 (equivalent to 61% of the population), the Current Path forecast is a reduction to 113.9 million (or 30.7%) in 2043. The Combined scenario demonstrates that an integrated, cross-sectoral policy approach can significantly accelerate poverty reduction in Nigeria. This represents a reduction of more than 68 million people living in extreme poverty.

While the Combined scenario yields significant gains, it does not fully eliminate extreme poverty by 2043, underscoring the scale of the challenge and the sustained effort required to eradicate poverty in Nigeria

Nigeria's high poverty levels reflect a combination of rapid population growth, weak job creation, low agricultural productivity, regional inequalities and limited state capacity. Although the economy has expanded substantially over recent decades, growth has been concentrated in capital-intensive sectors, particularly the oil industry, generating relatively few jobs. At the same time, poverty reduction has been constrained by conflict, inadequate infrastructure, low levels of human capital and one of the lowest government revenue-to-GDP ratios in the world. As a result, economic growth has not translated into broad-based improvements in living standards for much of the population.

Chart 36 presents the trend in life expectancy in Nigeria from 2022 to 2043 under the Current Path and Combined scenarios.

Life expectancy is a key indicator of overall human development, reflecting the combined effects of health systems, nutrition, sanitation and broader socio-economic conditions. In Nigeria, gains have been substantial but uneven. At independence in 1960, Nigeria's average life expectancy was barely 43 years. By 2025, life expectancy had increased significantly to 65 years, with women's life expectancy three years longer than men's.  By 2043, the Current Path average forecast is a life expectancy of 70.3 years, potentially rising to 74.9 years. In the Combined scenario, male life expectancy increases to 73.4 years, and female life expectancy increases to 76.3 years.

The 4.6-year improvement in the Combined scenario over the Current Path by 2043 underscores the cumulative impact of integrated interventions across health, education, infrastructure and governance. Achieving this outcome will require sustained investment in primary healthcare, maternal and child health services, disease prevention and the social determinants of health, alongside broader economic and institutional reforms that lift living standards across the population.

Chart 37 compares carbon dioxide emissions from fossil fuels in the Current Path with the Combined scenario from 2022 to 2043.

Given its heavy reliance on oil and gas, Nigeria was the fourth largest carbon dioxide emitters in Africa in 2025 and on the Current Path it would, by 2043 be largest in Africa, overtaking Algeria, South Africa (which is largest in 2025) and Egypt. In the Combined scenario, emissions rise 2.5 times from 140 million tons in 2025 to 355 million tons compared to 532 million tons in the Current Path forecast on the back of a nuclear build and aggressive increases in solar.  

Yet, at COP26, President Tinubu announced Nigeria’s commitment to carbon neutrality by 2060.

Nigeria’s Energy Transition Plan (ETP) was unveiled shortly after, highlighting the scale of effort required to achieve the 2060 net-zero target whilst also meeting the nation’s energy needs.

The importance of reduced carbon emissions is reinforced by Nigeria’s increasing climate unpredictability, which is leading to more severe and unexpected rainfall. Flash floods, landslides and gully erosion have exacerbated land degradation. The National Emergency Management Agency NEMA stated in its 2022 reports on the consequences of climate change in Nigeria that disastrous floods killed 612 Nigerians and displaced 1.4 million. The impacts reported for 2024 were considerably worse, affecting 5.28 million people, displacing 1.24 million and causing 1 237 deaths across 35 states, underscoring the growing threat that climate-related disasters pose to food security, livelihoods and infrastructure. Flood severity and exposure are increasing despite improved forecasting and preparedness efforts. For Africa, Nigeria is generally not among the most vulnerable countries such as Chad, Central African Republic, South Sudan, Somalia, Niger and Sudan. However, it is still considered highly vulnerable because of its dependence on rain-fed agriculture, rapid population growth, high levels of poverty, coastal exposure in the Niger Delta and Lagos, desertification in the north, increasing flood and drought risks and limited adaptive infrastructure.

The northern part of Nigeria is already experiencing increasing levels of drought and desertification due to rising temperatures and declining rainfall, leading to soil degradation, erosion and biodiversity loss. This has negative impacts on agriculture and food security, as well as the livelihoods of many communities.

In addition to achieving net-zero emissions by 2060, Nigeria’s Energy Transition Plan [ETP] 2022–2060 include:

• Expanding electricity access to the approximately 85 million Nigerians without reliable power
• Increasing renewable energy deployment, particularly solar
• Using natural gas as a transition fuel under the Decade of Gas strategy
• Expanding clean cooking access
• Supporting industrialisation while reducing emissions

The plan estimates that Nigeria will require approximately US$410 billion in additional investment by 2060.

Chart 38 compares energy demand and production in the Current Path with the Combined scenario from 2022 to 2043. Production is broken down into nine types: oil, gas, coal, hydro, nuclear, solar, wind, geothermal and other renewables. The data are converted to billion barrels of oil equivalent (BBOE) to facilitate comparisons. Energy production (such as oil in Nigeria) could be for domestic use or for export.

Nigeria has adopted an ambitious long-term energy strategy centred on its Energy Transition Plan, which aims to achieve net-zero emissions by 2060 while expanding access to affordable and reliable electricity. Amongst many targets, the plan seeks to increase installed generation capacity to 30 GW by 2030, with renewables accounting for 30% of supply. Already, the Decade of Gas Initiative that was launched in 2021 positions natural gas as a transition fuel to support industrialisation, power generation and export earnings.

Nigeria possesses Africa's largest proven natural gas reserves, estimated at more than 200 trillion cubic feet, and is investing in additional liquefied natural gas capacity, including floating LNG projects. Natural gas production has increased substantially over the past three decades and is expected to play an increasingly important role in electricity generation, industrial development and export earnings.

By contrast, crude oil production remains below its historical peak because of underinvestment, theft, pipeline vandalism and operational disruptions.

Together, these initiatives reflect a dual strategy of accelerating energy access and economic development while gradually reducing the carbon intensity of the energy system. Studies indicate that the most cost-effective and optimal scenario involves coupling natural gas power plants with solar and other renewables to ensure grid stability and lower carbon emissions. Nigeria's roadmap is therefore not a rapid phase-out of fossil fuels. Instead, it argues that:

• Natural gas will drive industrialisation and electricity expansion for several decades;
• Solar energy will be the main source of new electricity access, especially through distributed systems and mini-grids; and
• Long-term decarbonisation will occur alongside, rather than before, economic development.

This approach seeks to balance climate commitments with the continent's pressing energy-poverty challenge.

Key elements of Nigeria’s energy strategy are already falling in place.

Until recently, the country was unable to refine sufficient fuel for domestic use because its refining capacity was both limited and poorly maintained. As a result, most of its crude oil was exported, while refined petroleum products were imported, often at high costs and subject to supply delays. For example, in 2023, crude petroleum accounted for 71.3% of Nigeria's merchandise exports, while refined petroleum products made up 26.6% of imports. In 2025, crude oil remained Nigeria's dominant export, but accounted for only 63% of total exports in the first quarter. The rapid expansion of domestic refining capacity, led by the Dangote Refinery, is significantly altering the country's trade profile with the 2026 announcement of a potential growth in the refining capacity to 1.4m b/d by 2028.  Already exports of refined petroleum products are increasing sharply. By contrast, imports of refined fuels decline substantially, moving Nigeria towards net-exporter status in refined petroleum products, marking an important shift towards greater domestic value addition within the energy sector. This transformation has allowed Nigeria to move further up the value chain without increasing overall hydrocarbon extraction. However, the country still needs to address persistent inefficiencies in the electricity sector and improve security in oil-producing regions to realise the benefits of its energy endowment fully.

The government has also removed the long-standing petrol subsidy. This reform has significantly reduced fiscal pressures and created additional budgetary space for infrastructure and development spending. However, the full fiscal gains have been partly offset by broader macroeconomic adjustment costs.

If these reforms are sustained and accompanied by improvements in governance, security and electricity supply, Nigeria's long-term economic prospects could improve considerably. Nevertheless, the challenge of accommodating one of the world's fastest-growing populations will continue to place pressure on employment creation, public services and infrastructure provision.

The government has also removed long-standing fuel subsidies, creating additional fiscal space for infrastructure and development investment. In the Current Path, total energy demand in Nigeria continues to rise each year. It was 846 million BOE in 2025, reaching 2.00 billion BOE by 2043, while production rises from 1 020 million BOE to about 1.25 billion BOE by 2043.

Oil and gas will continue to dominate Nigeria's energy production for many years, although renewable energy is projected to grow rapidly. Estimates of Nigeria’s solar potential vary widely, ranging from 400 to 600 GW (some estimates exceed 600 GW). By far Nigeria's largest renewable resource, solar should grow from a very low base, reaching 29 million BOE in the Current Path and 445 million BOE in the Combined scenario by 2043.

The most notable shift across the projection period is the rising contribution of natural gas, the declining role of oil, and rapid increases in solar and nuclear. Nigeria has the largest gas reserves in Africa, estimated at 209 trillion cubic feet (tcf) as of recent data and additional discoveries are included in the forecast. The scenario seeks to balance investment in gas with parallel investments in renewables (solar, wind and hydro) and energy efficiency to avoid carbon lock-in, in which long-lived assets lock Nigeria into fossil-fuel dependence for decades. However, the large investments in renewables are unable to close the demand/production gap, requiring additional baseload in the form of nuclear. Nigeria has enormous renewable energy potential across multiple sources, and tapping into it is key to achieving energy security, rural electrification, economic development, and climate resilience.

Under the Combined scenario, which assumes aggressive investment in energy efficiencies, solar, wind, a large nuclear build that comes online from 2037, expanded gas and other renewables in addition to comprehensive policy reforms, total energy production rises to about 1.838 billion BOE in 2043, still only 77% of demand, a gap of 558 million BOE, implying future reliance on imports.

Production in the Combined scenario would, by 2043, by about 1.5 times the Current Path forecast

Overall, Nigeria could look forward to a significantly brighter future if the Combined scenario were successfully implemented. Achieving this vision will require strong political will and unwavering commitment from the country's leadership, along with substantial financial resources. Federal government revenues rely heavily on crude oil exports, leaving the economy vulnerable to fluctuations in global commodity prices. This dependency poses a direct challenge to the government's capacity to finance the Combined scenario. The development of robust domestic financial markets, increased foreign investment, enhanced domestic revenue mobilisation and strategic public–private partnerships will be essential to turning this scenario into reality.

Chart 38 summarises the policy recommendations for Nigeria.

This report sheds light on the critical development challenges Nigeria faces and the bold steps needed to unlock its vast potential. Despite a well-educated elite, strong entrepreneurial spirit and abundant natural resources, Nigeria has long struggled to translate its immense potential into tangible progress. Six decades after gaining independence, Nigeria continues to grapple with underdevelopment. This is reflected in persistent issues such as non-inclusive economic growth, a rapidly growing population, insecurity, limited economic diversification and structural transformation, low agricultural productivity, an unfavourable business environment and severe infrastructure gaps, especially in transport and energy.

Without decisive, transformative action, the country risks remaining stuck in a cycle of underdevelopment. In 2025, Nigeria hosted the largest number of people living in extreme poverty (using US$3 per person) globally, although it has now been overtaken by the DR Congo. By 2043 only the DR Congo and Yemen would have more extremely poor people. The time to act is now, before this stark future becomes a reality.

In light of this distressing forecast, we list a set of bold yet achievable policy interventions across key sectors that could set Nigeria on a path to shared prosperity. Among the eight intervention clusters, a manufacturing transition and the full implementation of the African Continental Free Trade Agreement (AfCFTA) stand out as the most transformative for long-term development. In the near term, revitalising the agriculture sector offers the most immediate and accessible opportunity to reduce poverty—a true low-hanging fruit.

The Combined scenario, which integrates all intervention clusters, demonstrates that coordinated, cross-sectoral action holds the key to a dramatically brighter future for Nigeria.

Translating these possibilities into reality will require more than good policies—it demands bold, visionary leadership, an unwavering political will and the ability to cohere Nigerians behind such a direction, which will require sacrifice and pain. Nigeria's leaders must rise above personal interests and reorient the public purse toward inclusive, sustainable development. Their largest obstacle is likely to be convincing citizens that this time things are different.

The first and most urgent step toward Nigeria's development is addressing the country's security challenges. Nigeria faces a complex and multifaceted security crisis, ranging from terrorism and armed banditry to separatist movements. In the North, the threat of Boko Haram and other insurgent groups remains persistent. In the South, secessionist agitations—such as the Biafra movement in the Southeast and the Yoruba nation campaign in the Southwest—further complicate the national security landscape. These challenges pose a serious threat to the nation's unity, stability and development.

To this end, the capacity of security forces must be significantly strengthened, as indeed envisioned in the proposed expansion of the Nigerian Army announced in mid 2026, followed by announcements on better pay. This includes increasing funding for operations, modern equipment, training and logistics to enable rapid and effective responses to armed threats and unconventional security challenges. The coordination among security agencies needs improvement. Streamlined collaboration will ensure optimal resource allocation and more strategic deployment of personnel and assets. Agencies must shift toward a more proactive security posture that emphasises advanced intelligence gathering, data-driven decision-making and strategic partnerships.

Enhanced cooperation with neighbouring countries and international partners is critical to dismantling transnational criminal networks involved in kidnapping, trafficking and other illicit activities.

Strengthening governance, enhancing transparency, promoting accountability and intensifying the fight against corruption are essential steps to ensure that public funds earmarked for development are used effectively. Good governance and transparency in spending (including on security) will enable Nigeria to manage its resources more effectively and address the pressing needs of its population.

Unemployment, poverty, economic hardship and unequal distribution of wealth are key drivers of insecurity in the country, including kidnapping for ransom, terrorism and separatist movements. Deep spatial inequalities further compound the problem. While some regions of Nigeria perform on par with upper-middle-income countries, others, particularly in the North, lag far behind, falling below the average for low-income countries.

In regions where livelihoods are scarce, unemployed youth are especially vulnerable to recruitment by armed groups and criminal networks. To address these disparities and reduce instability, the government must focus on improving access to quality social services and expanding economic opportunities, particularly in these most impoverished areas. The government must scale up its targeted social protection programmes to support the poorest and most vulnerable households to reduce inequalities and poverty, which are destabilising factors in Nigeria.

Nigerian authorities must prioritise strategic investments in the agricultural sector to boost productivity, ensure food security and reduce poverty. A first step is to improve the basic infrastructure, roads in particular, that allow access to the market, then investments to increase crop yields through improved land-use practices and the adoption of modern, climate-smart technologies. This includes facilitating farmers' access to high-yield, disease- and drought-resistant seedlings, affordable fertilisers and credit guarantees. To this end, the government should increase public investment in key agricultural infrastructure, such as irrigation systems and storage facilities, while scaling up research and development (R&D) to drive innovation and support sustainable agricultural practices.

Sustainable management of agricultural resources will be crucial for long-term food security and national stability.

To reduce tension and promote equitable access, the country needs a robust land management system that addresses land-use and tenure disputes. To this end, federal and state governments should work collaboratively to foster peaceful coexistence between farmers and herders. This requires resolving conflicts through dialogue, implementing resource-sharing agreements, and reforming livestock production systems. By doing so, Nigeria can unlock the immense potential of its agricultural sector, which is low-hanging fruit, to reduce poverty significantly.

To address the dual challenges of human capital bottlenecks and rapid population growth, Nigeria must prioritise expanded access to family planning services, quality healthcare and education, clean water and improved sanitation. These foundational investments are essential to unlock the country's development potential. It is particularly important to enact policies that would advance Nigeria's demographic dividend, including raising the minimum legal age for marriage, much larger access to modern contraceptives and promoting girls' education and women's economic empowerment. These measures will contribute to lower fertility rates, improved health and education outcomes and greater gender equality.

Recognising the central role of religion in Nigeria's socio-cultural landscape, the active involvement of religious leaders is critical to the success of counter-insurgency and family planning initiatives. These leaders hold significant influence over community attitudes and can either support or hinder efforts to advance security and reduce fertility rates. The government should engage religious leaders as key partners in both.

In the oil and gas sector, boosting domestic refining capacity is critical to achieving energy self-sufficiency. The Dangote Refinery will effectively end reliance on imported fuel, strengthen the local value chain and enhance energy security in Nigeria. The governance implications of Nigeria's reliance on oil revenue have been profound. The country has long epitomised the 'resource curse', in which large oil revenues fuel corruption, patronage and inefficiency rather than broad-based development. Easy money from oil has undermined agriculture and manufacturing, leaving the country unable to benefit from its significant potential in both sectors. Over time, weak governance and rising insecurity, particularly in the Niger Delta, have discouraged investment, leading major international oil companies to scale back or shift their operations offshore, and contributing to a decline in exploration.

Nigeria must undertake bold reforms to deepen economic and export diversification, with a particular focus on expanding the manufacturing sector to drive domestic value addition, productive job creation and poverty reduction.

A pragmatic entry point would be to promote labour-intensive, commodity-based manufacturing. This approach would leverage Nigeria's existing comparative advantages in agribusiness, solid minerals and metals, and oil and gas. In May 2025, the Raw Materials Research and Development Council published its Raw Materials Sector Development Plan for 2025 to 2034, aimed at transforming Nigeria's raw materials sector into a globally competitive industry to support the structural transformation of the economy. The goal is to add 95% value to Nigeria's raw materials by 2034.

Over the long term, as comparative advantages evolve, Nigeria can move toward horizontal integration by expanding into higher-value manufacturing sectors. This progression will require sustained investments in industrial learning, capability development and technological upgrading.

In 2024, Nigeria imported approximately US$18 billion worth of manufactured goods, accounting for about 44% of its total merchandise import bill. l. A robust local manufacturing sector could significantly reduce this dependence. The government should prioritise reforms to improve the business climate, ensure macroeconomic stability and enhance economic freedom to attract both domestic and foreign investment into the manufacturing and other non-oil sectors. Public procurement should be strategically leveraged to promote locally manufactured goods, creating a stable demand base for domestic industries. Nigeria should scale up investments in transport and digital infrastructure, in partnership with the private sector, to better integrate the domestic market and support business expansion.

Key to a positive manufacturing and trade future, Nigeria should prioritise the full implementation of the AfCFTA, which is essential for expanding the export market, providing upstream support to domestic firms, and imposing competitive discipline to drive up productivity and earnings. By unlocking broader regional markets, the AfCFTA presents a vital opportunity to diversify exports beyond hydrocarbons, boost industrialisation, attract investment and accelerate economic diversification and job creation—ultimately contributing to sustainable poverty reduction.

The government should leverage digital technologies to improve tax administration and significantly increase domestic revenue mobilisation. New tax legislation signed into law in June 2025 has already gone a long way toward this direction. The adoption of e-government tools—such as e-filing and e-invoicing—has proven effective in other African countries, such as South Africa, Kenya, and São Tomé and Príncipe, where these reforms have broadened the tax base, improved efficiency, and helped reduce corruption in the tax-collection system. Nigeria can draw on these examples to implement similar digital solutions to create more fiscal space and improve public sector performance.

Nigeria needs more productive jobs to reduce poverty sustainably, but these are scarce. In Nigeria, as in many African countries, in-work poverty—a situation where individuals are employed but still live in poverty—is common, as many jobs are not productive and therefore do not generate sufficient earnings to escape poverty. To ensure that economic growth benefits poor and economically insecure Nigerians, it is essential to improve labour market outcomes. This requires labour-market policies that promote the creation of productive private sector jobs, which are key to lifting people out of poverty.

Efforts to address all these structural constraints must be anchored in a sustained commitment to maintaining macroeconomic stability.

Finally, none of these policy recommendations will yield results without strong political will and consistent implementation. Nigeria has formulated numerous development plans, but execution has often fallen short. What is urgently needed is a commitment by Nigeria's political elite to visionary, development-oriented delivery that promotes inclusive economic growth, builds strong institutions and improves social service delivery for the Nigerian population.