The International Monetary Fund (IMF) has raised concerns over Nigeria’s lack of significant economic progress, 18 months after the federal government implemented major reforms.
In its latest outlook for sub-Saharan Africa, the IMF excluded Nigeria from the list of reforming nations, instead grouping it among countries struggling to achieve desired economic outcomes.
According to the report, the region’s average economic growth rate is projected to remain at 3.6% in 2024, but Nigeria’s growth rate of 3.19% falls short.
Presenting the findings at the Lagos Business School, IMF Deputy Director Catherine Patillo highlighted macroeconomic improvements in some sub-Saharan African countries but noted Nigeria’s continued challenges.
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“More than two-thirds of countries have undertaken fiscal consolidation,” Patillo stated, citing Côte d’Ivoire, Ghana, and Zambia as examples of reform progress. In contrast, Nigeria continues to grapple with persistent inflation and exchange rate instability.
While inflation in many sub-Saharan countries has eased, Nigeria’s inflation resumed an upward trend in September and October 2024, currently at 33.8%, far exceeding the 21% annual target.
Patillo flagged Nigeria as one of the region’s inflation hotspots, alongside Angola and Ethiopia, with monetary policies struggling to anchor price stability.
The IMF also highlighted Nigeria’s foreign exchange challenges. While exchange rate stability has improved in much of the region, Nigeria faces ongoing pressures, including significant currency depreciation and market instability.
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The report underscored the fiscal challenges posed by Nigeria’s debt servicing. Interest payments in the country consume over 20% of government revenues, a threshold linked to high fiscal stress.
Nigeria, Angola, Ghana, and Zambia were identified as nations where debt servicing absorbs substantial portions of revenue, exacerbating fiscal constraints.
IMF also attributed Nigeria’s slow progress to social and political resistance to reforms. Oil-exporting countries like Nigeria have particularly struggled, with the report stating, “Political and social pressures are making it increasingly challenging to implement policy adjustments and reforms.” It urged a rethink of reform strategies to build public trust and support.
Nigeria’s food security crisis on the other hand remains dire, with the country ranking fifth globally in food insecurity and third in Africa, according to ActionAid Nigeria (AAN).
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Andrew Mamedu, AAN’s Country Director, criticized the limited impact of reforms on food security, noting persistently high food prices that many Nigerians cannot afford.
“All Farmers Association of Nigeria (AFAN) President Arc Ibrahim Kabir described agricultural reforms as necessary but slow. He called for better mechanisms to reduce the pain of implementation and improve their impact on food production and affordability.”
IMF therefore, emphasized the need for recalibrated policies and deeper stakeholder engagement to address Nigeria’s economic challenges.
It recommended pro-growth coalitions, improved communication strategies, and compensatory measures to mitigate reform impacts on citizens.
As Nigeria continues to face inflation, food insecurity, and fiscal instability, experts agree on the urgency of decisive action to unlock the country’s economic potential and improve the lives of its citizens.
