The African Development Bank (AfDB) in its latest African Economic Outlook 2025 (AEO) projected that Nigeria was expected to record an average inflation of 24.7 per cent for 2025 before recording a significant decline to 17.3 per cent in 2026.
The report highlighted inflation as one of the most pressing challenges facing Nigeria’s economy in the short term, driven by exchange rate depreciation, high energy and food costs, and ongoing structural reforms.
Also, yesterday Nigeria approved a fresh $500 million replenishment of the Nigeria Trust Fund (NTF) at AfDB, extending the facility for another 15 years.
President of the AfDB, Dr. Akinwumi Adesina, announced this during his opening remarks at the ongoing AfDB Annual Meetings in Abidjan, as he expressed appreciation to President Bola Ahmed Tinubu and Vice President Kashim Shettima for their continued support.
Also, the Secretary-General of the United Nations, António Guterres, praised Adesina, for his transformative leadership and unwavering commitment to Africa’s development over the past decade.
The AEO report also projected that monetary tightening, improved agricultural output, and easing global supply constraints could contribute to a notable drop in inflation by 2026.
However, the bank warned that further fiscal and structural adjustments would be critical to sustaining disinflation.
On the growth front, Nigeria’s real Gross Domestic Product (GDP) was projected to expand by 3.2 per cent in 2025, slowing slightly to 3.1 per cent in 2026.
This reflects a downward revision of 0.3 and 0.5 percentage points, respectively, from earlier AfDB forecasts. The weaker outlook was attributed to global economic headwinds, reduced external demand from key partners like the U.S. and China, and lingering uncertainty in financial markets.
Despite these challenges, the bank noted that improving oil output and increased local refining capacity—especially with the ramp-up of the Dangote refinery—have helped strengthen Nigeria’s external position.
The country’s current account surplus, which stood at an estimated 9.2 percent of GDP in 2024, was forecast to moderate to 4.7 per cent in 2025, and 3.9 percent in 2026 as global conditions tighten.
Nigeria’s fiscal deficit was projected to remain elevated, at four per cent of GDP in 2025 and –4.2 per cent in 2026, underscoring the need for stronger revenue mobilisation efforts.
The report noted that West Africa’s real GDP growth was expected to average 4.3 per cent in both 2025 and 2026, slightly lower than earlier projections.
Nigeria, Ghana, and Sierra Leone are expected to grow below the five per cent regional threshold, while other economies in the bloc are set to benefit from stronger domestic demand, new oil and gas production notably in Senegal and Niger, and rising value addition in agriculture.
The report stated: “Real GDP is projected to moderate to 3.2 per cent in 2025 and 3.1 per cent in 2026, as global uncertainty has increased.
“Services and industrial expansion will drive the economy as inflation moderates and higher oil production reaches 1.8 mbpd.
“Inflation is projected to moderate to 24.7 per cent in 2025 and 17.3 per cent in 2026, supported by tight monetary policy. The fiscal deficit is projected to remain at four per cent of GDP. The current account surplus is projected to narrow to 4.7 per cent of GDP in 2025 and 3.9 per cent in 2026, as imports start to normalise.
“The risks to the outlook include rising geopolitical tensions and greater policy uncertainty, volatile commodity prices, lower oil prices, slowdown in reform momentum, insecurity, and adverse weather events.”
Furthermore, on the Nigerian economy, it stated: “Through fiscal and tax reforms, the government is poised to increase tax revenues for higher public investments in critical public infrastructure, like electricity and transport, which will further drive economic growth.
“The tax reforms are aimed at simplifying the tax structure, increasing compliance, and adjusting tax rates all expected to increase collections.
“The government’s ambition is to raise domestic revenue to 18 per cent of GDP by 2030 from 13 per cent of GDP in 2024.
“The ongoing monetary reforms need to be matched with reforms on the fiscal side. Accelerating tax policy and administration reforms to reduce complexity will help improve domestic resource mobilisation.
“To support the policy objective of the trillion-dollar economy, the central bank has increased the financial sector’s minimum capitalisation requirements, building resilience to shocks. In the high-interest rate environment, innovations in concessional or blended finance will help investment in growth- and job-enhancing sectors.”
Meanwhile, Nigeria has approved a fresh $500 million replenishment of the NTF at the AfDB, extending the facility for another 15 years.
President of the AfDB, Dr. Akinwumi Adesina, who announced this, expressed appreciation to Tinubu and Shettima for their continued support.
“To President Bola Ahmed Tinubu, and to Vice President Kashim Shettima, for your support over the past two years, I am profoundly grateful. Thank you for graciously approving the replenishment of the Nigeria Trust Fund for another 15 years for $500 million”
The NTF established in 1976 by the Nigerian government, is a concessional financing window managed by the AfDB to support low-income African countries with critical development financing at affordable terms.
The NTF established through a formal agreement between the Nigerian government and the African Development Bank Group, operates as a self-sustaining, revolving facility. Its primary mandate is to support the development agendas of low-income regional member countries whose economic and social conditions warrant concessional financing.
In his message of commendation, Guterres hailed Adesina’s bold vision, notably through the Bank’s “High 5” agenda powering, feeding, industrialising, integrating Africa, and improving quality of life as a game-changer that has improved millions of lives across the continent.
He said: “Dr. Adesina, your vision and dedication to just and sustainable development have changed countless lives across Africa. You set a bold course to help shape the continent for the better through your high-fives agenda, powering, feeding, industrialising, integrating Africa and improving the quality of life.:
Guterres noted that under Adesina’s leadership, the AfDB tripled its capital base and responded decisively to urgent global challenges, including the COVID-19 pandemic. He also recognised Adesina’s role in advancing long-term solutions such as clean energy access, climate-resilient agriculture, and innovative financial frameworks for developing nations.
He added: “As president of the African Development Bank, you tripled the bank’s capital base. Lead responses to urgent crises, including COVID-19, while advancing long-term solutions from clean energy to climate-resilient agriculture, and your leadership on Special Drawing Rights has opened new avenues in financing for development.
“This is essential to support countries facing crushing debt climate shocks and limited fiscal space.”
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