IMF Warns Poverty Remains High in Nigeria Despite Economic Growth

The International Monetary Fund (IMF) warned on Wednesday that poverty persists in Nigeria despite the country's steady economic growth. The Fund advised the federal government to provide targeted, temporary assistance to vulnerable households as soaring food and energy prices continue to erode living standards. In response, Nigeria's Minister of Finance, Taiwo Oyedele, cautioned against imposing higher taxes on the most disadvantaged citizens and called for policy alignment to unlock the potential of the African Continental Free Trade Area (AfCFTA).

The IMF revised Nigeria's economic growth forecast for 2026 upward by 0.1 percentage point to 4.2%, while retaining its projection for 2027 at 4.3%. The Fund's assessment emerged as the G-24, chaired by Oyedele, urged the IMF and the World Bank to make development financing more accessible. At the IMF/World Bank Annual Meetings in Bangkok, Thailand, Oyedele emphasized the need for African countries to improve policy coordination, break down trade barriers, and mobilize private capital to accelerate economic transformation via the AfCFTA.

The IMF also commended the Central Bank of Nigeria (CBN) for its data-driven approach to inflation, while stressing the necessity of stronger capital and liquidity buffers, effective bank supervision, and timely recognition of bad loans. IMF's Research Department Division Chief, Deniz Igan, stated that policymakers must balance immediate household needs with long-term fiscal stability, particularly in light of the disproportionate increase in food and energy prices.

Igan highlighted that, despite Nigeria's position as an energy exporter, the benefits of growth have yet to significantly alleviate widespread poverty and household hardship.

The IMF recommended offering targeted and temporary income support, such as cash transfers, to mitigate the impact of higher living costs on the most vulnerable households. Such measures, according to Igan, could alleviate poverty and enhance food security, provided they were consistent with a sustainable medium-term fiscal framework. Igan emphasized the importance of improving public expenditure quality, strengthening revenue collection, and ensuring the long-term sustainability of social protection programs.

Meanwhile, the IMF acknowledged improvements in Nigeria's inflation outlook, suggesting that a less restrictive monetary policy stance could become appropriate, provided economic data continued to support such a decision. IMF Assistant Director in the Monetary and Capital Markets Department, Jason Wu, noted that progress made on inflation warranted a potentially less tight monetary policy stance, but cautioned that central banks needed to remain responsive to changing economic conditions and communicate their decisions clearly.