Nigeria Remains Africa’s Largest Economy – World Bank

Nigeria has retained its position as Africa’s largest economy by Gross Domestic Product (GDP), despite ongoing challenges in its private sector, according to the World Bank’s Country Director for Nigeria, Dr. Ndiame Diop. Speaking at the Country Private Sector Diagnostic (CPSD) and Stakeholder Engagement in Abuja, Dr. Diop acknowledged that while Nigeria attracts significantly less Foreign Direct Investment (FDI) than expected—especially compared to countries like Indonesia and South Africa—it continues to lead the continent economically.

He noted that an upcoming CPSD report will highlight how private sector constraints impact economic growth and emphasized that removing these barriers could unlock Nigeria’s full economic potential. Current macroeconomic reforms, including exchange rate adjustments and improved access to foreign exchange, have already created a more favorable investment environment.

Dr. Diop identified four key sectors—Information Communication Technology (ICT), agribusiness, solar photovoltaic (PV), and pharmaceuticals—that could attract substantial investments and create jobs. The ICT sector alone has a $4 billion investment potential and could generate over 200,000 jobs, but high and unpredictable right-of-way fees remain a major hurdle. Addressing these regulatory inconsistencies, he said, would significantly boost broadband expansion. The World Bank, in collaboration with government agencies, is working to resolve these issues, with support from private investors and the International Finance Corporation (IFC).

In agribusiness, targeted reforms could unlock $6 billion in investments and create over 275,000 jobs. The solar PV industry has an estimated $8.5 billion investment potential, offering over 129,000 jobs, while the pharmaceutical sector could attract $1.6 billion and generate 30,000 to 40,000 jobs. Dr. Diop highlighted that renewable energy, particularly solar power, remains a bright spot for private sector investment despite past challenges with high costs and unviable tariffs. He pointed to blended finance mechanisms supported by the World Bank and IFC as key to making off-grid solar solutions more viable.

The IFC’s Regional Director for Central Africa and Anglophone West Africa, Dr. Dahlia Khalifa, stressed the importance of regulatory consistency, particularly in customs duties and revenue agency fees. She warned that unpredictable policies discourage investment, as businesses require stability for long-term planning. She also noted that while direct job creation in the pharmaceutical sector may be lower than in other industries, improved healthcare access would have broad economic benefits.

Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, commended the IFC’s support across various critical sectors, including agriculture, infrastructure, and pharmaceuticals. He highlighted major financing partnerships such as the $1.2 billion facility for Indorama’s fertilizer expansion in Eleme and a $70 million SME financing initiative with First City Monument Bank. He also acknowledged IFC’s recent $70 million commitment to five Nigerian companies under the Distributive Access to Renewable Energy programme, which aligns with the federal government’s Mission 300 initiative.

Edun reaffirmed President Bola Tinubu’s administration’s commitment to economic reforms, emphasizing that the removal of wasteful subsidies has strengthened government finances. He noted that improved security has boosted oil production and revenue, leading to increased investor confidence. While acknowledging the short-term inflationary impact of subsidy removals and market-based pricing, he assured that targeted interventions—such as direct cash transfers to vulnerable citizens with World Bank support—will help cushion the effects. The government, he added, is leveraging technology to ensure swift, biometric-enabled financial assistance for those in need.