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Nigeria retains lower middle-income status -World Bank

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Nigeria retains lower middle-income status -World Bank

Nigeria retains lower middle-income status -World Bank

Nigeria has maintained its status as a lower middle-income (LMI) country in the World Bank’s annual income classification for 2024-2025. This categorization, which places Nigeria among 23 African nations in the same bracket, underscores the nation’s ongoing economic growth despite significant challenges.

Historical Context and Progress
Nigeria’s journey to its current LMI status has been marked by considerable economic shifts. In 1987, Nigeria was classified as a low-income country. However, due to progressive economic development and an increase in gross national income (GNI) per capita, Nigeria ascended to the lower middle-income category by 2022. This classification includes countries like Angola, Benin, Cape Verde, Cameroon, the Republic of the Congo, Côte d’Ivoire, Djibouti, Egypt, Eswatini, Ghana, Guinea, Kenya, Lesotho, Morocco, Papua New Guinea, São Tomé and Príncipe, Senegal, Tanzania, Tunisia, Zambia, and Zimbabwe.

The World Bank’s Classification System
The World Bank categorizes global economies into four groups based on GNI per capita: low, lower-middle, upper-middle, and high income. These classifications are updated annually on July 1st, based on the previous year’s GNI data. For lower-middle-income economies, the GNI per capita is higher than that of low-income economies but below a set higher threshold. These figures are adjusted using the Atlas method, which standardizes comparisons by accounting for differences in price levels and currency exchange rates.

Since 1989, the Atlas method has been instrumental in providing a consistent framework for economic comparisons. This method ensures that the classifications reflect real-world economic conditions, factoring in inflation and exchange rate fluctuations.

Demographic and Economic Projections
A study from the International Futures (IFs) modeling platform projects significant demographic changes for Lower Middle-Income Africa (LMI Africa) by 2043. In 2019, LMI Africa had a total population of 697.8 million. This figure is expected to rise to 1.17 billion by 2043, representing a substantial increase of approximately 472.2 million people over 24 years.

The study links these demographic changes to the African Union’s Agenda 2063, particularly its third ten-year implementation plan. Agenda 2063 is a long-term vision aimed at promoting inclusive growth and sustainable development across Africa. It focuses on economic prosperity, social equity, and environmental sustainability.

Nigeria, with the largest economy among LMI Africa nations, had a GDP of $560.7 billion in 2019, while São Tomé and Príncipe had the smallest economy at $317 million. The study also highlights Nigeria’s significant agricultural potential, noting that average crop yields in LMI Africa could increase by 44%. Such improvements in agricultural productivity are projected to reduce the percentage of people living in extreme poverty by nearly five percentage points, bringing it down to 33.3% by 2043.

Implications for Nigeria
Nigeria’s retention of its LMI status signals both achievements and ongoing challenges. While the country has made strides in economic growth, the substantial proportion of low-income countries in Sub-Saharan Africa, including Nigeria, highlights the need for continued development efforts.

The World Bank’s report indicates that, despite progress, Sub-Saharan Africa still has a significant number of low-income countries compared to other regions. In 1987, 74% of Sub-Saharan African countries were classified as low-income. By 2022, this proportion had decreased to 46%, reflecting regional improvements but also underscoring persistent economic disparities.

For Nigeria, maintaining its LMI status involves addressing key areas such as economic diversification, infrastructure development, and social services enhancement. The country’s economic policies must continue to focus on sustainable development to ensure long-term growth and stability.

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