IMF ignores Abuja’s false narratives, says touted economic growth remains below potential
By Jeph Ajobaju, Chief Copy Editor
Nigeria’s usual propaganda about its economic growth through false data – without improvement in people’s living conditions – has again been exposed by the International Monetary Fund (IMF) whose latest figures omitted the country from the list of the fastest-growing economies in Africa.
Instead, the IMF disclosed that countries such as Benin Republic, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda continue to lead the continent’s growth trajectory.
It said the five countries are now among the world’s fastest-expanding economies, buoyed by sustained policy reforms, improved fiscal management, and investments in infrastructure and manufacturing.
IMF African Department Director Abebe Selassie made the disclosure at the launch of Sub-Saharan Africa (SSA’s) latest Regional Economic Outlook, where he credited fiscal reforms and macroeconomic stability with the strong growth in Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda.
Selassie noted that overall growth in SSA is projected to stabilise at 4.1 per cent in 2025, with a modest pick-up in 2026 powered by macro stabilisation and reforms in key economies.
Said he: “Six months ago, our assessment highlighted the region’s strong efforts and that growth had exceeded expectations last year. But we also noted sudden realignment of global priorities and increasing turbulent external conditions, marked by weaker demand, softer commodity prices and tighter financial markets.
“Today, these global headwinds continue to test the region’s recovery and resilience.
“Sub-Saharan Africa’s economic growth, we now estimate, is expected to hold steady at 4.1% this year, with a modest pick-up expected in 2026. In our view, this reflects ongoing progress in macroeconomic stabilisation and reform efforts across the major economies in the region.
“It is important to note that several countries in the region, Benin, Côte d’Ivoire, Ethiopia, Rwanda, Uganda, are among the fastest-growing economies in the world.”
Nigeria’s omission is despite the IMF’s recent upward revision of the country’s growth forecast at 3.9 per cent in 2025, driven by higher oil output, improved investor confidence, and a more supportive fiscal policy.
The figure reflected a 0.5 percentage point increase from previous IMF forecast and signalled renewed optimism about the country’s medium-term economic prospects.
In July, the IMF revised Nigeria’s economic growth projection for 2025 upward to 3.4 per cent, a 0.4 percentage point rise from 3.0 per cent published in its April 2025 World Economic Outlook.
The National Bureau of Statistics (NBS) reported last month that Gross Domestic Product (GDP) grew 4.23 per cent year-on-year (YoY) in real terms in the second quarter of 2025 (Q2 2025).
That marked a notable improvement from 3.48 per cent growth in Q2 2024, sequel to increased oil output, recovery in key non-oil sectors, and easing inflationary pressures.
But the latest IMF verdict shows that the growth remains below potential, and it urged the government to deepen structural reforms, improve electricity supply, curb inflation, and expand non-oil revenue through industrial diversification and better tax administration.
“We still have quite a few resource-intensive countries and conflict-infected countries continuing to face significant challenges with only modest gains in per capita incomes.
“The external environment remains challenging, global growth is slowing, and commodity prices are diverging. Notably, oil prices are declining, while the price of copper, coffee and gold are fairly elevated.”
Significant vulnerabilities in government borrowing
The IMF also raised concern over rising financial vulnerabilities in Nigeria and other SSA countries, warning that government’s growing dependence on domestic bank borrowing poses increasing risks to financial stability.
Selassie said many governments on the continent are forced to turn to domestic banks as external financing dries up, deepening the “sovereign-bank nexus.”
He estimated that in about half of these cases, public debt is now held by domestic financial institutions, a trend that heightens risks to banking sector stability.
As access to external financing tightens, he explained, several African governments have turned to domestic lenders to sustain public spending, a “double-edged sword” that could strain banks’ balance sheets and deepen the link between public debt and financial sector risks.
“It has been really good to see the region showing strong resilience. But this will continue to be tested in the coming months.
“Pressure points include rising debt service costs, which are crowding out development spending, a shift towards domestic financing that has deepened the sovereign bank nexus, inflation that has eased at the regional level but remains in double digits in quite a few countries in the region, and external buffers that are under pressure and need to be rebuilt.
“Against this backdrop, we see two broad policy priorities.
“The first is domestic revenue mobilisation. This is very important to increase our country’s potential, the significant potential to be tapped here also, and the reforms that need to be considered here include modernising tax systems through digitalisation, streamlining inefficient tax expenditures, and strengthening enforcement via targeted compliance strategies.
“And importantly, these efforts must go beyond technical adjustments. It will be essential to build public trust in tax institutions, strengthen institutional capacity, and conduct careful impact assessment, including distributional analysis, to ensure that these reforms are both effective and equitable.
“The IMF, of course, remains committed to supporting the region. Since 2020, we have disbursed nearly $69bn, including about $4bn so far this year. Our capacity development efforts also remain substantial, with countries in the region amongst the largest recipients of technical assistance.
“On the issue of domestic banks’ vulnerabilities to rising public debt levels. So again, this is a point that we’ve been highlighting for several years. At this moment, we estimate that about half of the total public debt is held by domestic institutions. This has gone up over the years.
“As always, it’s a double-edged sword. As access to external financing has declined over the years, our countries, our governments have been able to turn to domestic banks, have had to turn to domestic financial institutions to sustain spending levels, to sustain economies.
“That has been a source of resilience, but we are now seeing a situation where there are significant vulnerabilities, and in particular in those countries where public debt is at very elevated levels, the risk of distress is higher, we are seeing some pressures on bank balance sheets, or there could be potential pressures on bank balance sheets.
“So again, it varies from country to country, the extent to which there are vulnerabilities, but it is an area of some concern in those countries where public debt is high, where interest rates are high, and we’re working with governments to make sure that there is a robust regulatory framework, robust capitalisation plans for banks, and of course first and foremost, the first line of defence, making sure that public finances are in a healthy trajectory to ensure that their spillovers are limited.”
Selassie said reported decline in inflation in Nigeria is consistent with ongoing monetary tightening and a more flexible exchange rate regime.
But he warned that inflation remains sticky due to a “level shift”, meaning prices have settled at higher levels, and counselled continued policy discipline to hit targets.
“So starting with inflation in Nigeria, we find the decline in inflation consistent with the tightening of policies that have been undertaken in recent years, particularly on the monetary policy front, but also the effect of the exchange rate adjustment that took place over the last year or so and more, having come through the system.
“So it is consistent with the policy calibration and we are encouraged by it, but I think there are still some ways to go, towards the government’s target.
“Public debt is high, of course, in many countries in the region. Right now we estimate about 20 countries to be in a situation of high risk of debt distress. This comprises about 14 countries at high risk of debt distress and another six in actual debt distress ….
“Lastly, on illicit financial flows, I think, you know, this is the nature of, you know, what comprises things that we consider illicit financial flows vary. Some of it is just simple trade, you know, leakages to do with capital outflows.
“Others have related to people trying to circumvent the tax system. Still others are completely illegal flows, related to corruption or other flows. So I think the way to tackle this is to identify what the source of the particular flows is and tackle it through reforms.
“So, again, a lot of the reforms, the direction of reforms that countries are pursuing should go in a way to help address many of these challenges that we are seeing in terms of illicit financial flows.”
Read also:
Tinubu’s denial notwithstanding, World Bank doubles down on Nigeria’s galloping poverty rate
139m poor, yet counting “progress”: Nigeria’s poverty crisis demands more than policy
