World Bank Upgrades Nigeria’s Growth Outlook to 4.3%
…Warns That Jobs Must Follow
By Patience Ikpeme
The World Bank has raised its growth forecast for Nigeria, placing the country among a group of Sub-Saharan African economies expected to perform better in 2026 despite global tensions, high borrowing costs, climate shocks and pressure on government finances.
Nigeria is among countries such as Angola, Ethiopia and Zambia whose forecasts were increased in the Bank’s latest Africa Economic Update. The report projects that growth across Sub-Saharan Africa will rise from 4.1 per cent in 2025 to 4.3 per cent in 2026. This is 0.3 percentage points higher than the Bank’s April 2026 projection.
The World Bank said the better outlook for Nigeria and other countries reflects the effect of economic reforms and improved management of their economies. However, it warned that stronger growth must now translate into more jobs, higher incomes and better opportunities for citizens.
The World Bank Chief Economist for the Africa Region, Andrew Dabalen, said the region had continued to show strength in spite of a difficult global environment. “Despite a challenging global environment, economic activity in Sub-Saharan Africa continues to demonstrate remarkable resilience,” he said.
He said growth forecasts had been raised for nearly three-quarters of the countries in the region, including Nigeria, adding that the improvement reflected “years of reforms and improved economic management.”
The Bank, however, said the bigger challenge for Nigeria and other African economies is to make sure that growth creates enough jobs for their fast-growing populations. “The next challenge is turning growth into more jobs and better opportunities,” Dabalen said.
According to the report, the recovery in the region is being driven by stronger domestic demand, improved ability to withstand economic pressure, and investments linked to the global shift towards cleaner energy and the spread of digital technologies. For Nigeria, the improved outlook comes after major reforms meant to strengthen economic stability, improve the investment climate and support long-term growth.
Despite the good news, the World Bank warned that the outlook still faces serious risks. These include conflicts between countries, uncertainty over international trade policies, tighter global financial conditions, natural disasters, disease outbreaks and insecurity. For Nigeria, these risks could mean higher energy and food prices, weaker investment inflows, higher borrowing costs and pressure on government revenue and household incomes.
Inflation also remains a worry across the region. The Bank expects the median inflation rate in Sub-Saharan Africa to rise from 3.7 per cent in 2025 to 5.5 per cent in 2026. It said this is partly due to higher global prices of fuel, fertiliser and food, which could undo some of the recent progress in bringing prices down. For Nigeria, higher international prices could raise the cost of production, transport and food, adding to the burden on families and businesses.
The Bank also said public debt, though largely stable at about 57 per cent of gross domestic product across the region, continues to strain government budgets because of the high cost of paying it back. This reduces the money available for healthcare, education and infrastructure. With foreign development aid also falling, African countries are under growing pressure to raise more revenue at home, build their local capital markets and find more sustainable ways of funding their budgets. The World Bank said this is especially relevant to Nigeria as the government works to increase domestic revenue and ease pressure on public finances.
The Bank said the risks to the regional outlook lean towards weaker-than-expected growth. It explained that a worsening of conflicts around the world could push up commodity prices, raise inflation and weaken the finances of countries. Climate shocks could also damage farming and worsen hunger, especially if the effects of El Niño become more severe. Tighter global financial conditions could make it harder and more expensive for governments and businesses to raise funds.
Even so, the World Bank named artificial intelligence (AI) as one of the major opportunities that could help Nigeria and other African economies raise productivity and create jobs. The special focus of the report looks at how AI can make work more efficient, improve public services and open new areas of employment.
The Bank said most African countries are still at an early stage in using the technology, but activity is already more visible in Nigeria, Kenya and South Africa. For Nigeria, it said the opportunity could be significant because of the country’s large population, growing technology industry, expanding digital economy and wide financial services market.
The World Bank said African countries should not necessarily chase the most advanced AI systems at the expense of more practical uses. It said the bigger opportunity may lie in affordable, locally adapted AI tools that can work even with limited internet bandwidth. Such tools could be used to improve education, farming, healthcare, banking, transport and logistics, and government services.
According to the Bank, getting these benefits will require investment in steady electricity, affordable internet, digital skills, quality data and computing infrastructure. It also called for stronger institutions, technical capacity and good governance so that AI supports growth that reaches many people.
Dabalen said investing in the basics needed for an AI-ready economy could help African countries grow productivity and encourage new ideas. “By investing in the foundations of an AI-ready economy, African countries can unlock productivity gains, spur innovation, and accelerate the structural transformation needed to raise living standards and reduce poverty,” he said.
The World Bank also called for closer cooperation among African countries so that the benefits of AI can be shared across borders. It named the African Union’s Continental AI Strategy and the African Continental Free Trade Area as important frameworks for supporting the development and wider use of AI-based solutions.
For Nigerian businesses, wider use of locally developed AI tools could reduce operating costs, improve efficiency and open new opportunities in agriculture, finance, transport, healthcare and education. However, the World Bank’s assessment suggests that technology will deliver these gains only if Nigeria and other African countries close the gaps in basic infrastructure and skills. Reliable electricity, affordable internet, access to finance, digital education and effective institutions will be needed to make sure the benefits go beyond a small group of technology companies.
The latest World Bank outlook therefore gives Nigeria a more positive growth signal, while also setting out serious challenges. The upgraded forecast reflects stronger resilience and the effect of reforms, but the Bank’s message is that growth must finally be judged by what it does for jobs, household welfare, productivity and poverty.
