Nigeria is targeting a reduction in inflation to single-digit levels before the end of 2027, a move the Federal Government believes could create room for lower interest rates, cheaper borrowing and stronger economic growth.

Finance Minister Taiwo Oyedele recently outlined the government’s ambition, explaining that reducing inflation would help ease financial pressures on households and businesses while improving the country’s broader economic outlook.

Nigeria’s economy is currently growing at 4.43%, but the benchmark interest rate remains at 23%, while inflation stands at approximately 15%.

The government’s inflation target is therefore aimed at addressing the high cost of borrowing, improving purchasing power and creating a more favourable environment for investment and business expansion.

Government Seeks Lower Interest Rates and Affordable Credit

Oyedele believes that achieving single-digit inflation would provide an opportunity for borrowing costs to decline, making loans more affordable for businesses and individuals.

High interest rates have increased the cost of accessing credit, creating difficulties for companies seeking financing to expand operations, invest in equipment and maintain working capital.

Households have also faced financial pressure as expensive borrowing and rising living costs affect their ability to manage essential expenditure.

The government expects that a sustained reduction in inflation would eventually allow monetary authorities to consider lower interest rates, although the timing and scale of any reduction would depend on economic conditions and monetary policy decisions.

The administration also wants household incomes to grow faster than the prices of goods and services, thereby improving the real purchasing power of Nigerians.

Tinubu Administration Defends Economic Reforms

The inflation target builds on economic reforms introduced since President Bola Tinubu assumed office in 2023.

Among the major measures are the removal of petrol subsidies and the devaluation of the naira, alongside other policies intended to strengthen government finances, increase foreign reserves and improve investor confidence.

The government has maintained that these reforms are necessary to address structural weaknesses in the Nigerian economy and establish a more sustainable foundation for long-term growth.

The measures have, however, created considerable economic difficulties for households and businesses, particularly through increased living costs.

Higher fuel expenses have affected transportation and production costs, while currency depreciation has increased the naira cost of imported goods, machinery and raw materials. These pressures have contributed to the cost-of-living crisis that continues to affect millions of Nigerians.