The World Bank urged Nigeria to end import bans in order to lower food prices as it estimated that around 50% more Nigerians were living in poverty than six years ago.

Nigeria’s economy grew 3.9% in the first half of this year, compared to 3.4% in 2024, the bank said in an assessment this week. Growth improved due to government interventions such as subsidy removals, which have resulted in higher revenues, a stronger naira currency, rising foreign reserves, and an increase in exports.

But 139 million people are estimated to be living in poverty this year — 60% of the population — compared to 81 million six years ago: “Recent reforms are correcting past policy missteps, but meaningful improvements in livelihoods will hinge on sustained disinflation, stronger inclusive growth, better public services, and continuous targeted support to the most vulnerable,” said the report.

Despite falling for five consecutive months, inflation remains high at 20.1%, and an increasing number of Nigerians are unable to buy food. Import barriers, introduced by successive administrations to protect local industry, have created “extraordinarily high tariffs” that are stifling the availability of food staples, the bank warned. Some of Nigeria’s highest import duties are on sugar (70%), cement (50%) and rice (up to 60%).

Nigeria’s labour market, which should play a leading role in raising productivity to solve the poverty problem, is in a “critical state,” said the Nigeria Economic Summit Group, a private advisory group, in a new report published this week. Poor infrastructure, erratic power supply, and insecurity continue to impede private sector job creation, confining many of the 90% of workers in the informal sector to “survivalist activities with limited opportunity,” the group said.

Soon after taking over a struggling economy in May 2023, Nigeria’s President Bola Tinubu scrapped a petrol subsidy regime that had cost the government $10 billion in 2022, surpassing the amount spent on health and education combined.

A combination of monetary tightening by the central bank and an overhaul of the tax system to boost revenues has also defined the government’s economic recovery plan.

The administration has achieved “a high interest-earning environment that has attracted a lot of foreign direct investment, which has helped to boost reserves,” said Amaka Anku, head of Eurasia’s Group Africa practice. Nigeria’s net foreign exchange reserves rose from under $4 billion at the end 2023 — Tinubu’s administration had inherited multiple foreign exchange rates that fueled currency speculation — to more than $40 billion this year.

Improved foreign exchange supply has helped strengthen the naira at a time when the US is mulling interest rate cuts, with investor interest in emerging market assets becoming more robust, said Mike Kruiniger of London-based Fitch Solutions. Meanwhile, importers’ demand for dollars — a factor that weakens the naira — “has also moderated due to greater fuel self-sufficiency as the Dangote refinery has ramped up production,” Kruiniger said.

Still, there is room for policy action to actually improve Nigerian livelihoods, particularly by solving food inflation. Ostensibly intended to boost local production, import bans and high tariffs have mostly served to “undermine competition, encourage tax evasion, and drive up prices,” the bank said, making food inflation consistently higher in Nigeria than in neighbors including Benin, Cameroon, and Niger.

• **Foreign exchange speculation in Nigeria is falling **to “an all-time low” as the gap between the official and parallel market rates for the naira to the dollar becomes ever smaller, the Lagos-based BusinessDay reported this week.