A new study has revealed that about 63 percent of Nigerians now live below the poverty line following the removal of the petrol subsidy, highlighting the immediate social impact of the country’s recent economic reforms.
The research, presented during a stakeholders’ dialogue in Abuja on Thursday, showed that the national poverty rate surged from a baseline of roughly 49.8 percent to 63 percent after the subsidy was removed, before moderating slightly to 56.2 percent following the introduction of social protection measures such as cash transfers.
The dialogue, themed “Sustaining and Deepening Economic Reforms in Nigeria,” brought together policymakers, economists, civil society leaders, and private sector representatives to examine the Federal Government’s reform agenda.
Among attendees were the Deputy Governor for Economic Policy at the Central Bank of Nigeria (CBN), Dr Muhammad Abdullahi; the Special Adviser to the President on Finance and Economy, Ms Sanyade Okoli; the World Bank Senior Economist for Nigeria, Dr Samer Matta; and the Executive Director of Agora Policy, Waziri Adio.
The study, presented by Dr Mohammed Shuaibu, Senior Lecturer in the Department of Economics at the University of Abuja, focused on the welfare impact of key reforms, including the removal of the petrol subsidy and adjustments to electricity tariffs.
Shuaibu noted that the reforms triggered broad price increases, disproportionately affecting low-income households.
“After the subsidy removal, poverty increased from a baseline of about 50 percent to 63 percent,” he said, adding that social protection measures helped moderate the impact but did not fully reverse the deterioration in welfare.
The research showed that low-income and rural households experienced the sharpest declines in consumption due to rising fuel and electricity costs, while higher-income groups were largely insulated.
Poverty among low-income households rose from about 50 percent to 63 percent, and the national poverty gap widened from 31.6 percent to over 45 percent, indicating deeper deprivation.
Beyond household welfare, the study assessed macroeconomic impacts. Electricity tariff reforms produced modest increases in consumer prices—0.26 percent initially, rising to 0.52 percent after social protection measures but also led to slight gains in real GDP (0.42 percent) and firm-level investment.
In contrast, the removal of the petrol subsidy had contractionary effects, driving inflationary pressures and raising operating costs for businesses.
Focus group discussions conducted across Nigeria’s six geopolitical zones provided qualitative insights. Households reported coping strategies such as cutting consumption, rationing electricity, reducing transport, and borrowing to meet basic needs, while businesses noted higher costs, staff reductions, and reliance on alternative energy sources.
Many participants indicated that government support programs had been insufficient or delayed.Speaking from a monetary policy perspective, CBN Deputy Governor Muhammad Abdullahi explained that the reforms were necessary due to deep structural distortions in the economy.
He highlighted a sharp decline in oil revenue from $92 billion in 2012 to less than $2 billion in 2023 and the fiscal pressures created by a costly subsidy regime and exchange rate distortions, estimated to have reduced GDP by about 6 percent.
Abdullahi noted that reforms had strengthened foreign reserves from a net $800 million to $32 billion, lowered inflation, and boosted non-oil exports to around $6 billion in 2025.
Dr Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry, acknowledged that the reforms had corrected structural distortions but imposed significant costs on businesses and households.
She noted that the removal of the petrol subsidy could save the government about $7.5 billion annually, which she urged be invested in infrastructure and human capital.
Almona also called for complementary policies, including improved access to credit and targeted support for SMEs, to ensure that macroeconomic gains reach the population.
World Bank economist Samer Matta highlighted the importance of expanding social protection programs and strengthening the National Social Register to ensure that assistance reaches vulnerable populations quickly.
He emphasized that sustained dialogue and effective safety nets would be critical to maintaining public support for Nigeria’s economic reforms and promoting inclusive growth.
The dialogue, organised by Agora Policy with support from the Nigeria Economic Stability and Transformation programme and the UK Foreign, Commonwealth and Development Office, aimed to foster evidence-based discussion on how to sustain and deepen Nigeria’s reform agenda while mitigating the social impact on vulnerable households.
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