The International Monetary Fund (IMF) has raised an alarm over the limited impact of Nigeria’s ongoing economic reforms on its vulnerable population, warning that without robust social safety nets, millions of citizens may continue to suffer the brunt of inflation and economic hardship despite macroeconomic gains.
In an article published on its official website on Monday, July 7, the global financial institution commended Nigeria’s bold fiscal and monetary policy reforms under the administration of President Bola Tinubu but stressed that the benefits have yet to trickle down to the majority of the population.
Co-authored by the IMF’s Mission Chief to Nigeria, Axel Schimmelpfennig, and its Resident Representative in Nigeria, Christian Ebeke, the report emphasized that while Nigeria is on a path to recovery, widespread poverty and food insecurity remain persistent.
“Nigeria lacks an effective social safety net to cushion the impact of shocks on the most vulnerable,” the IMF said. “Scaling up the existing cash transfer system would be key to making growth more inclusive.”
According to the IMF, between 2014 and 2023, Nigeria’s real per capita GDP shrank by an annual average of 0.7 per cent. As of 2023, about 42 per cent of Nigerians were living in poverty, a statistic that continues to overshadow the country’s economic potential.
Despite this bleak backdrop, the IMF acknowledged that President Tinubu’s government has taken significant steps toward reversing Nigeria’s economic decline. These include the liberalisation of the foreign exchange market, cessation of central bank deficit financing, and the controversial removal of fuel subsidies.
The reforms, the Fund said, have helped stabilize some macroeconomic indicators. Foreign exchange access through official channels has improved, external reserves are recovering, and Nigeria returned to the international capital market in December 2024 with relative success.
However, the IMF noted that inflation remains stubbornly high—still above 20 per cent—and inadequate infrastructure, especially in the power sector, continues to constrain growth and industrial development. Oil, which still accounts for nearly 30 per cent of government revenues, also remains vulnerable to global market volatility.
To achieve inclusive and sustainable growth, the IMF highlighted three key policy priorities for Nigeria:
Expand Cash Transfer Programmes: The Fund urged the government to urgently scale up targeted support for poor households to shield them from rising living costs and economic shocks.
Strengthen Public Financial Management: There is a need for a more transparent and effective budgetary system to ensure infrastructure, education, and health investments reach intended beneficiaries.
Increase Domestic Revenue Mobilisation: The IMF called for continued reforms to broaden the tax base and improve compliance. It suggested that tax rates could later be adjusted to align with regional peers once inflation stabilizes and social buffers are in place.
The Fund further stressed that Nigeria must ensure fuel subsidy savings are reinvested directly into sectors that impact the lives of ordinary Nigerians—such as healthcare, education, transport, and rural electrification.
“Nigeria’s potential is beyond doubt,” the report concluded. “But achieving it will require continued reforms and an effective social safety net to carry the most vulnerable along.”