The removal of fuel subsidies by the Nigerian government has exacerbated poverty levels, with vulnerable households bearing the brunt of rising costs, according to a recent report presented at a stakeholders’ dialogue in Abuja.
The research, presented by Mohammed Shuaibu of the University of Abuja at an Agora Policy forum on Thursday, revealed that poverty in Nigeria jumped from about fifty percent before the subsidy removal to sixty-three percent afterward.
“When social protection measures such as cash transfers were introduced, the poverty rate moderated to around fifty-six point two percent, but relief was limited due to delays and small-scale implementation,” Shuaibu noted.
Focus group discussions across Nigeria’s six geopolitical zones highlighted the coping strategies households adopted. Families reduced consumption, walked instead of using public transport, rationed electricity, and borrowed funds to survive. Vulnerable populations, including women, children, retirees, and rural dwellers, were disproportionately affected, while wealthier households largely avoided immediate hardship.
Hussaini Abdul, Country Director of CARE International, emphasized the uneven impact on the most vulnerable: “Social protection must reach those most at risk.”
From a policy perspective, Muhammad Sani Abdullahi, Deputy Governor for Economic Policy at the Central Bank of Nigeria, defended the reforms, citing the need to address distortions in the foreign exchange market, declining investment inflows, and rising inflation. He said the combined effects of fuel subsidy distortions and multiple exchange rates cost Nigeria roughly six percent of GDP, with a backlog of about seven billion dollars in foreign exchange obligations, of which four point five billion dollars has been cleared.
The report also reviewed electricity tariff reforms, which initially increased consumer prices by zero point two six percent and later by zero point five two percent after social protection measures. The adjustments had modest positive effects on economic growth, with real GDP rising zero point four two percent before moderating to zero point two one percent. Firm-level investment improved slightly, tempered by the social protection rollout.
Samer Matta, Senior Economist at the World Bank, urged the government to expand social protection programmes, strengthen the National Social Register, and ensure timely support for vulnerable populations.
Event participants recommended gradual implementation of economic reforms, targeted support for critical sectors such as food production, logistics, and transportation, and improved communication between government and citizens to minimize social shocks.
Attendees included officials from the Central Bank of Nigeria, the Office of the President, the World Bank, CARE International, and the Lagos Chambers of Commerce and Industry.
The study underscores the importance of complementary social safety nets alongside structural reforms to protect vulnerable Nigerians from the unintended consequences of policy shifts.
