AfDB Expects Nigeria’s Economy to Grow 3.2% in 2025, 3.1% in 2026

This comes as the lender expects Africa’s economic output to grow by 3.9 per cent this year from last year’s pace of 3.3 per cent.

However, this year’s forecast, which covers economies of all its 54 member states, represents a 0.2 percentage points downgrade from the bank’s initial forecast.

The development lender, which is currently holding its annual meeting in Ivory Coast, said this is mainly due to the shocks caused by new trade tariffs imposed by the United States.

The bank also cut its initial 2026 growth forecast by 0.4 percentage points to 4.0 per cent, citing the same uncertainty from trade tariffs.

“Since January 2025, the world has experienced additional shocks, exacerbating an already complex global macroeconomic landscape,” the AfDB said in the report.

“These shocks include a plethora of new tariffs imposed by the United States and retaliatory measures announced and implemented by its trading partners.”

The turmoil is likely to curb global demand due to the resultant economic slowdown, curbing Africa’s exports to the rest of the world, the AfDB said.

“The fluidity of the situation and evolving uncertainty means that the growth impact will depend on the decision of the 90-day pause of “Liberation Day” tariffs announced by the United States,” the lender said.

AfDB warned that although the US accounts for just 5 per cent of Africa’s annual global trade, the continent has already been impacted by a drop in prices of commodity and the downward revaluation of financial assets.

The projected growth in the region for this year will be supported by a growth rate of more than 5 per cent in 21 economies, the AfDB said, with Ethiopia, Niger, Rwanda, and Senegal growing by at least 7 per cent, the lender said in the report.

In the report, the bank also charged Nigeria towards revenue administration reforms. It recommended the creation of online portals for assessment and payment of stamp duties (e-stamp); digitalization of tax clearance certificates (e-TCC); and automation of withholding tax remittances by ministries, departments, and agencies (MDAs).

Others include deployment of the Integrated Tax Administration System (ITAS) to tax offices; expansion of the taxpayer register; creation of a specialized collection enforcement function; improvement of integrity of the audit process and staff capacity and infrastructure; compliance levels across all levels of tax payments remain low; and strengthening collection efforts and one-off initiatives such as the Nigerian Voluntary Asset and Income Declaration Scheme (VAIDS).