Nigeria

Chart 1 is a political map of Nigeria.

Located in West Africa, Nigeria is by far the most populous country in Africa and a key regional player in West Africa. 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 geo-political 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 transition to democracy only began in 1999.

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. 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.

In 1993, Babangida annulled the results of nationwide elections, prompting widespread unrest. Under pressure, he handed over power to an interim civilian government, which was quickly overthrown by General Sani Abacha. His regime, marked by extreme repression, became Nigeria’s most brutal dictatorship. 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.

The legacy of military rule left deep economic and social scars. By the 1980s, nearly 45% of foreign exchange earnings were allocated to debt servicing, while poverty and crime surged. Political leadership was increasingly characterised by ethnic divisions and patronage.

Obasanjo was re-elected in 2003, though the election was marred by irregularities and violence. In 2007, he was succeeded by Umaru Yar'Adua, whose ill health led to Vice President Goodluck Jonathan assuming office shortly before Yar'Adua’s death in 2010. Jonathan later won the 2011 elections.

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. He secured a second term in 2019, despite opposition parties contesting the results.

Bola Ahmed Tinubu succeeded Muhammadu Buhari as Nigeria's president on 29 May 2023, following his victory in the February 2023 presidential election. Tinubu, representing the APC, won the election amidst allegations of electoral fraud from opposition parties. Despite these challenges, he was inaugurated as the nation's leader, marking a continuation of APC's governance. The transition from Buhari to Tinubu represents a significant moment in Nigeria's political landscape, reflecting both continuity and change within the nation's leadership.

Nigeria is also the largest crude oil exporter in Africa 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. Nigeria has the third-largest number of people living in extreme poverty in the world, and high youth unemployment. Overdependence on oil exports, leadership failure 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 symbolic 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 161 out of 193 countries in the UN Human Development Index 2024.

However, there are reasons to be optimistic about the future of Nigeria. President Tinubu has continuously pledged to turn around the economy and ensure security across the country. Since assuming office, he has introduced key socioeconomic reforms in an attempt to address these challenges and revitalise the economy. One of his first major policy decisions was the removal of the longstanding fuel subsidy, aimed at reallocating resources to critical sectors such as infrastructure and education. His administration has also unified exchange rates to stabilise the currency and attract foreign investment. These reforms are part of a broader strategy to foster economic resilience and sustainable growth, positioning Nigeria for long-term development.

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.

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 regionally. On average, women in rural areas give birth to 5.6 children over their lifetime, while urban women give birth to 3.9 children. 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 modestly increase to 23 years 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 years of age dependency age group, while 3% are in the 65 and above dependency age group. On the Current Path, the share of these two dependency age groups is projected to be, respectively, 35.8% and 4.8% by 2043. About 56% of the Nigerian population is in the 15-64 working-age group, and this will increase to 59 % by 2043. The structure of Nigeria’s population is typical of countries with a 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 generate income growth, 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 dependant. 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 generation to successfully harness their productive power, the growing labour force could turn into a demographic ‘bomb’ instead of 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 dependants 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 between 15 and 29 years old relative to its 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 necessity of reducing the 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 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 helps governments and parents invest more in each child in terms of education and health, which has 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 natural resource locations. The highest rural densities are found in the South-West, while the highest urban densities are located in the cities of Lagos, Kano, Ibadan, Kaduna, Port Harcourt, Benin City and Maiduguri. On the Current Path, Nigeria’s population density will be about four people per hectare in 2043, compared with an average of 2.5 people per hectare in 2023.

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. As of 2023, 53.4% of the country’s population—approximately 122 million people—lived in urban areas. Lagos, for example, has experienced a dramatic increase in population, 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 fastest urbanising nations in the world.

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 focus from agriculture and light manufacturing bases in favour of 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 and 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 2.7% in 2015, and further to -1.6% in 2016, leading to a budgetary crisis.

Nigeria's growth rates remained low until 2023, with an average rate of 1.5%. The economy recovered slowly after the 2016 recession, with growth rates rebounding to 0.8% in 2017, 1.9% in 2018, and 2.2% in 2019. However, the outbreak of the COVID-19 pandemic negatively impacted the economy. The collapse of commodity prices during the crisis led to a contraction of -1.8% in 2020, its deepest recession in four decades, but growth resumed in 2021 at 3.6% as pandemic restrictions were eased and oil prices recovered.

Nigeria’s growth rate slowed from 3.6% in 2021 to 3.3% in 2022 and 2.9% in 2023 due to high inflation and sluggish growth in the global economy, which declined from 3.5% in 2022 to 3.2% in 2023. Growth was driven by services and agriculture on the supply side and by consumption and investment on the demand side. Inflation rose from 18.8% in 2022 to 24.5% in 2023, due to rising fuel costs and a depreciating naira. This was primarily due to policy missteps and external shocks. Monetary and exchange rate policies became more distortive, eroding confidence. Fiscal deficits grew due to reduced oil production and expensive subsidies (for electricity, gasoline and the maintenance of an increasingly overvalued official exchange rate), while trade protectionism intensified. The economy also faced external shocks, including the rising global food and fertiliser prices following Russia’s invasion of Ukraine. Domestic shocks, such as the disruptive demonetisation policy in early 2023 and the devastating floods of October 2022, further exacerbated the situation.

Since the new administration took office in May 2023, Nigeria 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, committing about US$650 million annually to drive economic transformation, build resilience and foster broad-based prosperity across the country.

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. 

The new strategy aligns with Nigeria’s long-term development plan (the Agenda 2050) and supports Nigeria’s efforts to capitalise on opportunities offered by the African Continental Free Trade Area (AfCFTA) by boosting energy access, improving transportation networks and enhancing market access for farmers, agro-entrepreneurs and businesses.

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

An informal economy (informal sector or shadow economy) is the part of any economy that is 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 as a consequence of 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 makes it unable to achieve inclusive growth. According to the World Bank, a one per cent 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.

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 size of 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, the GDP per capita of Nigeria 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 GDP per capita.

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, is now US$3.65 in 2017 values.

Like many sub-Saharan African countries, poverty in Nigeria presents a paradox: despite being rich in natural resources, the majority of the population lives in poverty. Over time, both the poverty rate and the number of people living in extreme poverty have remained high. At the international poverty line of US$2.15 per day, Nigeria's poverty rate peaked between 1995 and 2000, at 58% of its population, before declining steadily 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 largest population of extremely poor people globally. Without bold and proactive policy action, the country is set to fall far short of achieving the Sustainable Development Goal of eradicating 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 the National Development Plan of Nigeria.

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 and knowledge-based economy that generates inclusive and sustainable development.

To this end, Nigeria Agenda 2050 espouses policies, strategies and initiatives that will be implemented to position Nigeria as an African regional power and global economic force. The plan envisages an annual average of 7% GDP growth rate 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) in the Current Path and each of the eight sectoral scenarios, plus the synergistic effect and the Combined scenario. The data is from 2020 with a forecast to 2043.

GDP per capita increases in all the scenarios above the Current Path. However, the AfCFTA scenario has the most significant positive impact with an increase of US$435 per person above the Current Path in 2043. While this does not reflect income distribution, it indicates a general improvement in productivity and potential income. The findings, in line with many other studies that point out that deepening regional trade through AfCFTA presents a major opportunity for Nigeria to advance its economic prosperity. 

The second most significant impact on the GDP per capita is achieved in the Manufacturing scenario (US$378.5 above the Current Path in 2043), followed by the Demographics and Health scenario (US$250 above the Current Path in 2043) and the Government scenario (US$194 above the Current Path in 2043). The growth in GDP per capita in the Demographics and Health scenario occurs in spite of Nigeria’s economy being smaller than in other scenarios, since lower population growth means more income to fewer people. This means that Nigeria could mechanically improve some of its development indicators if its demographic challenges are effectively tackled.

The Governance scenario is one of the scenarios with the largest positive impact on Nigeria’s GDP and income per capita. This implies that, if the government of Nigeria adopts a more progressive tax system, strengthens its efforts to combat corruption, enhances government effectiveness, promotes social stability, address insecurity and fosters social inclusion through improved democracy, gender empowerment and 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 providing support to 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, but also indirectly through different channels such as enhancing human capital and decreasing 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.

In the short term, agriculture has a big impact on GDP and GDP per capita, second only to the ACFTA scenario. In 2043, the GDP per capita in the Agriculture scenario is US$165 larger than the Current Path. Until 2034, the Agriculture scenario is better than any other scenario for poverty reduction. On the one hand, institutional change, infrastructure development, human capital accumulation and economic transformation (i.e. the transitions inherent in the other scenario components) require time to reach a level that can significantly enhance economic growth, while crop yields and agricultural production can be increased in a relatively short period. On the other hand, agriculture has a well-deserved reputation for its contribution to poverty reduction.

The Financial Flows scenario shows a relatively modest impact on GDP per capita, with an increase of only US$112 compared to the Current Path by 2043. This limited effect reflects structural challenges that reduce the growth potential of financial inflows, such as foreign direct investment (FDI), aid and remittances, in Nigeria. 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.

Weak governance often undermines the effective use of both FDI and aid, with the latter frequently focused on short-term relief rather than long-term development. Moreover, foreign aid is commonly tied to burdensome reporting requirements and conditionalities (given experience with corruption in the sector) that do not always align with Nigeria’s development priorities, limiting its effectiveness.

Poor infrastructure further restricts the country’s ability to benefit from the potential spillover effects of FDI. Meanwhile, remittances are predominantly used for immediate consumption, such as food, housing and healthcare, rather than being channeled 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 thus critical for converting remittances into productive investments. In underdeveloped financial environments, limited access to credit, weak financial infrastructure and low banking penetration hinder the mobilisation of remittances for business creation, capital accumulation or infrastructure development. Instead, remittances are often directed toward informal or short-term consumption. By contrast, in countries with robust financial systems, well-functioning institutions can help channel remittances 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.

So far, the analysis has focused on the sectoral scenarios. These sectors are, however, not isolated; they are strongly interlinked. For instance, infrastructure and human capital development are crucial for industrialisation and economic diversification. Similarly, the provision of rural roads is vital for agricultural commercialisation and food self-sufficiency. Agriculture can also pave the way to manufacturing through agro-processing, while improving governance and security cuts across all sectors. Thus, a holistic approach or a coordinated policy push across industries is the best option to achieve inclusive, sustained growth in Nigeria. Therefore, the Combined scenario combines all eight sectoral scenarios and represents an integrated development push to remove the binding constraints on sustained, inclusive growth and development in Nigeria.

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) will be about US$2 000 higher than in the Current Path in 2043, indicating that an integrated push across all the development sectors could significantly improve the living standard of the people of Nigeria.

Chart 30 presents poverty in the Current Path and for each scenario, from 2023 to 2043. The user can select the number of extremely poor people or the percentage of the population.

All the scenario interventions contribute to reducing poverty in Nigeria; however, because of high growth, the AfCFTA scenario eventually has the most significant impact. Under this scenario, the extreme poverty rate (measured at US$2.15 per day) will decline to 20.8% by 2043, compared to 23.5% in the Current Path. This represents approximately 10 million fewer people living in extreme poverty than in the baseline scenario.

Nigeria has substantial potential in key sectors such as manufacturing, agriculture and services. The implementation of the AfCFTA can unlock access to larger African markets, enabling Nigerian firms to expand exports and increase production. This expansion is expected to drive job creation and boost incomes. Furthermore, the AfCFTA will promote the development of regional value chains and attract investment, particularly in labour-intensive industries such as agro-processing, textiles and pharmaceuticals. These sectors have the capacity to absorb large numbers of low-skilled workers, making them especially effective in reducing poverty on a broad scale.

The AfCFTA scenario is followed by the Manufacturing, Education and Governance scenarios in poverty reduction by 2043. The extreme poverty rate in the Manufacturing scenario will be 21% in 2043, compared with the Current Path of 23.5% in the same year. Also, good governance as embodied, for example, in the control of corruption and the design and implementation of effective regulatory policies, significantly improves the ability of the poor to participate in and benefit from economic growth. Corruption, for instance, affects poor people by reducing the government’s ability to allocate public services in an efficient and equitable manner.

However, in the short term (until 2034), the agriculture scenario has the lowest number of poor people compared to other scenarios. These findings imply that in the short to medium term, growth in the agriculture sector has the most potential to raise income and consumption among poor Nigerians. In other words, a revitalised agriculture sector will be the low-hanging fruit to improve Nigeria’s human and economic development outcomes. In the long run, as productivity in the sector improves, it eventually starts to shed jobs.

The Combined scenario, which brings together all intervention clusters, demonstrates that an integrated, cross-sectoral policy approach can significantly accelerate poverty reduction in Nigeria. By 2043, the extreme poverty rate (measured at the US$2.15 per day threshold) will fall to approximately 11%, or 39 million people, compared to 23.5% (89 million people) in the Current Path. This represents a reduction of 50 million people living in extreme poverty.

Given Nigeria’s status as a lower-middle-income country, the World Bank also recommends using the US$3.65 per day poverty line. At this higher threshold, 36% of Nigerians—or 136 million people—would be living in poverty by 2043 under the Combined scenario, compared to 54% (205 million people) in the Current Path.

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

Chart 31 presents GDP in the Current Path and in the Combined scenario from 2020 to 2043. The data is in US$ 2017 and at market exchange rates (MER).

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 will experience a significant improvement in its growth prospects to 2043, on average 5.9% compared with 3.8% on the Current Path. As a result, the size of the Nigerian economy measured in GDP at market exchange rate (MER) at US$1.3 trillion will be US$412 billion larger than the Current Path in 2043. Whereas, on the Current Path, Nigeria will have the 30th largest economy globally by 2043, it would have the 20th largest economy, marginally larger than the Polish economy, under the Current Path trajectory.

Chart 32 presents the value-add by sector in the Current Path and in the Combined scenario, for 2023 and 2043. The data is in US$ 2017 and as a percentage of GDP.

Implementing the Combined scenario will increase the value-add of all the sectors above the Current Path across the forecast horizon to 2043. In 2043, the agriculture value-add in the Combined scenario is about US$39.5 billion, larger than the Current Path in the same year. The manufacturing and services value-add are US$85.8 and US$232 billion, respectively, higher than the Current Path in 2043. The average output growth rate in the manufacturing sector is 6.9% over the period 2025-2043, compared with the Current Path of 4.5% over the same period.

The services sector remains the dominant sector in the economy, with its contribution to GDP in the Combined scenario (55.8% in 2043) is slightly above the Current Path of 55.6% in the same year. Labour productivity in manufacturing is significantly higher than in services, making it economically beneficial to transfer labour from the less productive, largely informal, service sector to the more productive manufacturing sector.

Chart 33 presents the size of the informal sector in the Current Path and in the Combined scenario, from 2020 to 2043.

With limited formal sector opportunities, most of the workforce in Nigeria is employed in the low-value-add informal sector. The size of the Nigerian 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 level of informality will likely decline to 35.8% by 2043, still above the projected average of 27% for lower-middle-income Africa in that year. Assuming that all policies and reforms in the Combined scenario are implemented, the size of the informal sector could decline to 31% of GDP in 2043, below the projected average for lower-middle-income Africa. As a result, informal labour as a percentage of total labour in Nigeria could decline to 55.6%, compared with 66.8% in the Current Path in 2043. 

Chart 34 compares life expectancy in the Current Path with the Combined scenario from 2020 to 2043.

In Nigeria, life expectancy at birth has improved by about 12 years from 54 years in 2000 to 65 years in 2023. On the Current Path, life expectancy at birth will further improve to 70 years by 2043. In the Combined scenario, the average Nigerian could expect to live about 5 years longer at 75 years, three years above the projected average for lower-middle-income Africa in 2043.

Chart 35 compares the Gini coefficient in the Current Path with the Combined scenario in 2023 and 2043.

Inequality is a significant driver of poverty in Nigeria, where national wealth is heavily concentrated in the hands of a small elite. Notably, around one-third of sub-Saharan Africa's billionaires are Nigerian, and the country is home to approximately 194 multimillionaires with assets exceeding US$30 million, 93% of whom reside in Lagos State. According to Oxfam International, the combined wealth of Nigeria’s five richest individuals, estimated at US$29.9 billion, would be sufficient to eradicate extreme poverty in the country. Oxfam also highlights how a small group of wealthy elites have disproportionately benefited from Nigeria’s economic growth, leaving the majority of citizens behind.

High levels of income inequality weaken the impact of economic growth on poverty reduction and contribute to social and political instability. Rising social unrest and the proliferation of armed gangs engaged in kidnappings for ransom are linked to widespread unemployment, poverty, limited economic opportunities and the unequal distribution of national resources. With little hope for economic advancement and enduring life in extreme poverty, some Nigerians may become sympathetic to armed groups or resort to criminal activity as a means of survival.

The intensity of income inequality in Nigeria captured by the Gini index has slightly declined by 32.5%, from 0.519 to about 0.348 in 2023, over the period 1996-2023. On the Current Path, income inequality in Nigeria will slightly increase with a Gini coefficient of 0.357 by 2043. The implementation of the Combined scenario could, however, reverse this projected trend by generating inclusive growth and improving income distribution in the country. In the Combined scenario, the Gini index will decline to 0.33 by 2043, about 8% lower than the Current Path in the same year. 

Chart 36 compares carbon emissions in the Current Path with the Combined scenario from 2020 to 2043. Note that the data is in million tons of carbon, not CO₂ equivalent.

Given its heavy reliance on oil and gas, Nigeria is indeed one of the largest carbon emitters in Africa. In 2023, Nigeria released about 44.6 million tons of carbon from fossil fuels, and in the Current Path, it will release 126.6 million tons by 2043.

In Nigeria, increasing climate unpredictability is bringing more severe and unexpected rains. Flash floods, landslides and gully erosion have exacerbated the degradation of land in one of the ten most susceptible countries to climate change impacts. The National Emergency Management Agency stated in its 2022 reports on the consequences of climate change in Nigeria that 612 Nigerians were killed by disastrous floods, while 1.4 million Nigerians were forced into refugee camps.

One of the major impacts of climate change in Nigeria is rapid desertification. The northern part of the country is experiencing increasing levels of drought and desertification due to rising temperatures and decreasing rainfall, leading to soil degradation, erosion and loss of biodiversity. This has negative impacts on agriculture and food security, as well as the livelihoods of many communities. Reducing greenhouse gas emissions is essential to mitigate the impacts of climate change. This requires a transition away from fossil fuels and towards renewable energy sources, such as solar and wind power. It also requires improvements in energy efficiency, changes in land use and the adoption of sustainable agriculture and forestry practices.

The realisation of the Combined scenario and the associated rapid economic growth in Nigeria will increase carbon emissions to 144.5 million tons by 2043, 18 million tons above the Current Path in the same year.

Chart 37 compares energy demand and production in the Current Path with the Combined scenario from 2020 to 2043. Production is done in nine types, namely oil, gas, coal, hydro, nuclear, solar, wind, geothermal and other renewables. The data is converted into billion barrels of oil equivalent (BBOE) to allow for comparisons. Note that energy production could be for domestic use or for export.

According to our modelling, Nigeria produced a total of 844.6 million barrels of oil equivalent (BOE) in 2023, while domestic energy demand stood at 589.3 million BOE—suggesting a surplus of 255 million BOE. However, this apparent surplus is misleading, as the country continues to struggle to meet its internal energy needs. This paradox is largely due to the nature of its energy production: crude oil, which constitutes the bulk of Nigeria's energy output, is a raw material that must be refined before it can be used as fuel or electricity. Until recently, Nigeria was not able to refine sufficient fuel for domestic use because its refining capacity was both limited and poorly maintained. As a result, most of the crude oil was exported, while refined petroleum products were imported, often at high costs and subject to supply delays. In 2023, crude petroleum made up 71.3% of Nigeria’s total exports, whereas refined petroleum products accounted for 26.6% of total imports.

Additional challenges—including poor infrastructure, inefficiencies in the electricity sector and persistent security issues in oil-producing regions—further undermine the country’s ability to convert its abundant energy resources into reliable and accessible energy for its population.

In the Current Path, total energy demand in Nigeria will continue rising steadily, while energy production remains nearly stagnant throughout the forecast period. By 2043, this will result in an energy production deficit of 688.8 million BOE. In contrast, under the Combined scenario, which assumes the implementation of policy reforms and investment in the energy sector, the deficit is expected to be lower, at 400 million BOE, reflecting a large increase in energy production.

Currently, oil and gas dominate Nigeria’s energy production, while contributions from other sources remain negligible. However, renewable energy—particularly solar—is projected to grow significantly from 2035, albeit from a very low base. In the Combined scenario, solar contributes 7% to Nigeria’s total energy production in 2043. Currently, it contributes less than 0.01%.

In the Combined scenario, the most notable shift will be the increased contribution of natural gas and the declining role of oil. By 2043, gas will account for 59% of total energy production, making it the country’s largest energy source. Natural gas is considered a "transition fuel" — cleaner than coal and oil, but still a fossil fuel. While it can help reduce emissions in the short to medium term, relying too heavily on gas risks delaying full decarbonisation of Nigeria. Nigeria should balance investment in gas with parallel investments in renewables and energy efficiency to avoid carbon lock-in, where long-lived assets lock Nigeria into fossil fuel dependence for decades.

Overall, Nigeria could look forward to a significantly brighter future if the Combined scenario were successfully implemented. However, achieving this vision will demand strong political will and unwavering commitment from the country's leadership, alongside substantial financial resources. Currently, 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. As such, the development of robust domestic financial markets, increased foreign investment, enhanced domestic revenue mobilisation and strategic public–private partnerships (PPPs) will be essential to turning this scenario into reality.

Chart 38 summarises the policy recommendations for Nigeria.

This report shed 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. Alarmingly, if Nigeria stays on its current development trajectory, it is projected to host the largest number of people living in extreme poverty globally by 2043—an estimated 89 million. 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, the full implementation of the African Continental Free Trade Agreement (AfCFTA) stands out as the most transformative for long-term development. However, 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.

Without security, peace and social cohesion, economic prosperity will remain out of reach. The Nigerian government must take bold and decisive action to restore order and protect its citizens. To this end, the capacity of security forces must be significantly strengthened. This includes increasing funding for operations, modern equipment, training and logistics to enable rapid and effective responses to armed threats and unconventional security challenges.

Equally important is the need for improved coordination among security agencies. 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.

Furthermore, enhanced cooperation with neighbouring countries and international partners is critical to dismantling transnational criminal networks involved in kidnapping, trafficking and other illicit activities. Ultimately, tackling insecurity in Nigeria requires a holistic, multi-pronged approach. This includes not only strengthening security forces but also investing in education, socioeconomic development, community engagement and effective governance. Only through such an integrated strategy can Nigeria build a secure foundation for lasting peace and sustainable development.

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 on spending will allow Nigeria to better manage its resources 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 the most impoverished areas. Special attention should be given to northern Nigeria, where poverty is most acute. 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 allows 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.

The government should also 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 disputes over land use and tenure and promotes equitable access.

Furthermore, 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 a low-hanging fruit, to significantly reduce poverty.

Nigeria still has a long way to go to equip workers with the skills they need for productive jobs and to establish, maintain and grow firms. Given their health and education outcomes, a child born in Nigeria in 2020 will only achieve 36% of the productivity he or she could have attained with full health and education.

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 therefore engage religious leaders as key partners in both.

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. At the same time, expanding access to reliable electricity, particularly through decentralised mini- and off-grid renewable energy solutions, is critical to fostering job creation and ensuring sustainable power supply in underserved urban and rural areas.

In the oil and gas sector, boosting domestic refining capacity is critical to achieving energy self-sufficiency. The full operationalisation of the Dangote Refinery presents a strategic opportunity to reduce reliance on imported fuel, strengthen the local value chain and enhance energy security in Nigeria.

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.

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.

Currently, it is estimated that Nigeria spends approximately US$30 billion annually on imported manufactured goods, accounting for over half of its import bill. A robust local manufacturing sector could significantly reduce this dependence. Therefore, 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.

Also, Nigeria should prioritise the full implementation of the AfCFTA, which is essential for increasing the size of the export market and upstream help to domestic firms while also 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 significantly improve tax administration and increase domestic revenue mobilisation. The adoption of e-government tools—such as e-filing and e-invoicing—has proven effective in other African countries like South Africa, Kenya, São Tomé and Príncipe, where such reforms have broadened the tax base, improved efficiency and helped reduce corruption in the tax collecting 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 for sustainable poverty reduction, 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.