The International Monetary Fund (IMF) has warned that Nigeria’s ongoing economic reforms are yet to deliver tangible benefits to the majority of its citizens, especially the poor, due to the absence of a strong social safety net.
In a detailed article published Monday on the IMF website, the Fund acknowledged that Nigeria has made notable progress since the start of reforms in 2023. However, it expressed concern that widespread poverty and food insecurity continue to threaten inclusive growth.
The article was co-authored by Axel Schimmelpfennig, the IMF Mission Chief to Nigeria, and Christian Ebeke, the IMF’s Resident Representative in Nigeria. It stated that “Nigeria lacks an effective social safety net to cushion the impact of shocks on the most vulnerable,” stressing that expanding the nation’s cash transfer system is critical to inclusive development.
The IMF noted that President Bola Tinubu’s administration inherited a fragile economy characterized by slow growth, falling per capita income, and rising poverty levels. Between 2014 and 2023, Nigeria’s real per capita GDP shrank by 0.7% annually, with 42% of the population living below the poverty line as of last year.
Despite bold policy shifts, including the removal of fuel subsidies, liberalization of the foreign exchange market, and a halt to central bank deficit financing, the IMF said the economic pain remains palpable among millions of Nigerians.
“While economic reforms have started stabilizing the economy and improving investor confidence, the impact on average Nigerians remains limited due to the lack of a robust social safety structure,” the article read.
The IMF also highlighted Nigeria’s low tax-to-GDP ratio, still among the lowest in the world, but praised efforts to boost revenue collection, noting that the country’s return to international capital markets in December 2024 was a positive signal of restored investor confidence.
However, challenges persist. Inflation remains above 20%, infrastructure, especially electricity, continues to hinder growth, and oil revenues remain vulnerable to global price shocks, still accounting for about 30% of government income.
To chart a more inclusive path forward, the IMF proposed three key priorities for Nigeria:
- Expand cash transfer programs to protect vulnerable households and reduce poverty.
- Enhance budget transparency and efficiency to improve spending on infrastructure and social sectors.
- Increase domestic revenue through broader tax reforms to fund sectors like agriculture, energy, and climate resilience.
The IMF emphasized that removing fuel subsidies must be matched by strategic investment of the financial savings into high-impact development projects that directly benefit citizens.
“Nigeria’s potential is beyond doubt,” the IMF concluded. “But achieving it will require continued reforms and an effective social safety net to carry the most vulnerable along.”
