A new study has revealed that Nigeria’s poverty rate jumped to 63% in the wake of the federal government’s petrol subsidy removal and electricity tariff adjustments.
The report, presented at a stakeholders’ dialogue organized by Agora Policy in Abuja, highlights the deepening cost-of-living crisis despite the administration’s efforts to stabilize the macroeconomy.
The Poverty Surge and Palliative Cushion
Presenting the findings, Dr. Mohammed Shuaibu of the University of Abuja noted that the immediate aftermath of the reforms saw the national poverty headcount climb from a baseline of approximately 50% to a staggering 63%.
However, the report indicates that the introduction of social protection measures, such as the direct cash transfer program, helped moderate these figures. Following the deployment of these “safety nets,” the poverty rate reportedly eased to 56.2%.
“While social transfers helped cushion the impact, especially for low-income households, the initial shock triggered a sharp erosion of purchasing power across the board,” Shuaibu stated.
Consumption Slump and Household Sacrifice
The analysis paints a grim picture of household welfare, showing a significant decline in consumption levels.
The study found that high-income households remained largely insulated from the reforms, while low-income families bore the brunt of inflationary pressures.
Qualitative data from focus group discussions across Nigeria’s six geopolitical zones revealed that many families have resorted to drastic coping strategies.
These include:
- Reducing food consumption and rationing essential supplies.
- Walking long distances to avoid surging public transport fares.
- Borrowing to survive, leading to increased household debt.
Fiscal Gains vs. Social Cost
Despite the social hardship, the report acknowledged the fiscal necessity of the reforms. Data provided by the Central Bank of Nigeria (CBN) during the dialogue estimated that the previous fuel subsidy regime and foreign exchange distortions cost the Nigerian economy roughly 6% of its Gross Domestic Product (GDP).
Dr. Muhammad Abdullahi, deputy governor of the CBN for Economic Policy, emphasized that the situation had become unsustainable prior to the current administration’s intervention.
Business and Industry Impact
For the private sector, the report noted that the removal of the petrol subsidy had a contractionary effect on firm investments.
Business owners reported significant increases in operational and logistics costs, forcing many small and medium-sized enterprises (SMEs) to downsize or shut down operations entirely.
Stakeholders at the dialogue urged the government to expand and accelerate the implementation of social safety nets to prevent a further slide into poverty, particularly as the World Bank and PwC project that the absolute number of Nigerians living in poverty could remain elevated through 2026 without more targeted interventions.
As Nigeria pivots toward a market-driven energy sector, the resulting inflationary pressure continues to squeeze disposable income.
For the digital economy, this trend suggests a potential slowdown in consumer tech spending, even as the government seeks to reinvest subsidy savings into critical infrastructure and digital transformation initiatives.
