The World Bank has projected that Nigeria and other sub-Saharan African economies will grow by 3.8% in 2025, driven by stabilising prices and policy easing across the region.
According to the bank’s latest Africa Pulse report released on Monday, the growth forecast marks an upgrade from the 3.5% projection made in April. The report attributed the improvement to easing inflation and foreign exchange stability, which have given room for central banks to cut interest rates.
The upward revision comes shortly after the Central Bank of Nigeria (CBN) reduced its benchmark interest rate from 27.5% to 27% in a bid to stimulate economic activity.
The World Bank said it upgraded growth forecasts for Nigeria, Ethiopia, and Ivory Coast—three of sub-Saharan Africa’s largest economies. It added that real incomes are also expected to rise faster this year and over the next two years.
“While this marks a gradual recovery from a decade of successive shocks, the rebound has yet to gain strong momentum,” the report stated.
Regional growth is projected to further accelerate to an average of 4.4% over the next two years, slightly higher than the previous forecast of 4.3%. The bank noted that growth prospects improved for 30 of the 47 economies in the region, driven by stronger private consumption and investment.
“These favourable conditions are fuelling a recovery in private consumption and investment,” the report said, but cautioned that fiscal consolidation in some countries may slow the pace of recovery.
Andrew Dabalen, the World Bank’s Chief Economist for Africa, noted that inflation has dropped significantly, with the median rate now below 4%. He added that many African currencies that had depreciated sharply against the U.S. dollar have since stabilised.
However, Dabalen warned that the region still faces major risks, including trade uncertainties linked to U.S. President Donald Trump’s policies, high debt levels, and the growing need for job creation.
“Trade challenges remain very high. We don’t know how this is going to be resolved because there are lots of negotiations going on,” he said, referring to the pending expiration of the African Growth and Opportunity Act (AGOA)—a key trade pact between the U.S. and African nations.
The World Bank urged African governments to focus on creating quality jobs by improving the business environment and supporting small and medium-sized enterprises (SMEs).
“These jobs have to be jobs that provide a living wage and secure lives,” Dabalen stressed, noting that three-quarters of jobs in the region are informal.
He also pointed out that persistent unemployment and economic grievances have fuelled youth-led protests in countries such as Kenya, Nigeria, and Madagascar.
“The consequences of not solving these problems are hard to contemplate. They will be very disruptive, and I think we’re beginning to see the signs of it,” Dabalen warned.