The World Bank has forecasted Nigeria's inflation rate to average 22.1% in 2025, down from current levels, attributing the decline to the Central Bank of Nigeria's (CBN) sustained tightening of monetary policy.
The projection, released alongside the latest Nigeria Development Update (NDU) report titled "Building Momentum for Inclusive Growth," reflects cautious optimism amid ongoing economic reforms.
Though inflation remains a challenge — headline inflation rose to 24.23% in March 2025 — the report notes that CBN's aggressive moves, including increasing the Monetary Policy Rate to 27.5%, are beginning to stabilise price expectations.
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Why This Matters for MSMEs:
- Cost Management Relief: A drop in inflation means lower costs for goods, transport, and raw materials, improving profit margins for micro and small business owners.
- Improved Lending Climate: Stabilised inflation enhances access to credit, as lenders gain confidence in long-term planning and businesses may begin to see slightly reduced borrowing costs over time.
- Consumer Purchasing Power: Lower inflation may gradually restore consumer confidence and spending, especially for businesses in retail, FMCG, and hospitality.
The World Bank also noted that Nigeria's economy grew by 3.4% in 2024, its strongest performance since 2014 (excluding COVID recovery years), with fiscal discipline improving. The government's revenue grew from N16.8 trillion in 2023 to N31.9 trillion in 2024, driven by subsidy reform and exchange rate changes.
Opportunity for Growth
According to Acting World Bank Country Director Taimur Samad, the country now has a "historic opportunity" to boost development spending in infrastructure and social protection — areas that could directly benefit MSMEs, especially in rural and underserved regions.
World Bank Lead Economist Alex Sienaert highlighted the need for private-sector-driven growth to create jobs and stimulate inclusive development, stating that while finance and ICT are growing, more labour-intensive sectors must be strengthened.
For small business owners, the message is clear: stay alert to economic shifts. A stabilising macroeconomic environment, if sustained, could mean a more predictable business climate — crucial for planning, pricing, and investment decisions.
