World Bank Report Examines How Higher Revenues Reshaped Nigerian State Spending
World Bank Nigeria Development Update finds real GDP grew 4.2% in first half of 2026 and examines how higher revenues changed state spending priorities.
The story in focus
Nigeria's economy grew 4.2% in real terms in the first half of 2026, the World Bank reports, as federation revenues rose and states recorded the largest increase in revenue flows. A Nigeria Development Update special topic examines how states spent the additional funds between 2023 and 2025.
- Real GDP grew 4.2% in the first half of 2026, up from 3.9% and 3.5% in the same periods of 2025 and 2024.
- Gross federation revenues rose 69% in real terms between 2023 and 2025, with states recording the largest increase in revenue flows.
- The current account surplus reached $12 billion, or 7.1% of GDP, in the first half of 2026, and gross external reserves rose above $54 billion in September.
Growth and external position
The World Bank's latest Nigeria Development Update reports real GDP growth of 4.2% in the first half of 2026, compared with 3.9% in the same period of 2025 and 3.5% in 2024. Services drove most of the expansion, with agriculture contributing more. The report says the uptick stabilized the poverty rate for the first time since 2019.
Higher oil prices linked to the Middle East conflict lifted export earnings. The current account surplus rose to $12 billion, or 7.1% of GDP, from $8.6 billion a year earlier, while gross external reserves exceeded $54 billion in September, supported largely by foreign portfolio inflows.
Revenue gains and state priorities
The report's special topic examines how higher public revenues reshaped state finances. Between 2023 and 2025, gross federation revenues increased by 69% in real terms, which the report attributes largely to exchange-rate reforms, removal of the petrol subsidy and stronger revenue administration.
States recorded the largest increase in federation revenue flows, benefiting from higher statutory allocations as well as refunds and settlement of longstanding federal obligations, dedicated intervention funds and stronger VAT collections. The World Bank says sustaining reform momentum will ensure the benefits are widely shared.
Inflation pressures
Headline inflation fell from 27.6% in January 2025 to 15.2% in December 2025, supported by tight monetary policy and reduced exchange rate volatility. Higher fuel prices after the conflict began, along with lean season food prices, then slowed further progress. The report says inflation remains elevated and continues to weigh on household purchasing power.
What did the World Bank report say about Nigeria's growth in the first half of 2026?
The report says real GDP grew 4.2% in the first half of 2026, up from 3.9% and 3.5% in the same periods of 2025 and 2024, driven largely by services with a stronger agricultural contribution.
Sources & further reading
- From Higher Revenues to Better Lives: Strengthening State Spending for Growth, Jobs, and Services ↗worldbank.org
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