Study Shows Petrol Subsidy Removal Raised Poverty To 63% Before Social Relief Measures
A new study has shown that the removal of the petrol subsidy significantly increased the cost of living and pushed Nigeria’s poverty rate to around 63 percent before any government support measures were provided.
The findings were presented at a Stakeholders’ Dialogue organised by Agora Policy in Abuja, under the theme Sustaining and Deepening Economic Reforms in Nigeria.
Dr. Mohammed Shuaibu of the University of Abuja led the research, which examined the social and economic effects of key federal government reforms, including the fuel subsidy removal and electricity tariff adjustments.
Shuaibu noted that ending the petrol subsidy caused a sharp rise in prices across the economy, reducing household purchasing power and worsening poverty indicators.
“After the subsidy removal, poverty increased from a baseline of about 50 percent to 63 percent. When social protection programmes like cash transfers were introduced, the poverty rate eased to around 56.2 percent,” he said.
The study pointed out that the relief from social programmes was limited due to delays in implementation and the relatively small scale of support. While the reforms aimed to correct long-standing economic distortions, their immediate impact was severe for vulnerable households.
The research highlighted that higher-income households were largely insulated from the short-term effects, while lower-income families faced rising prices and reduced consumption. “Household consumption declined across the board following both the subsidy removal and electricity tariff adjustments. Social transfers helped cushion the impact, especially for low-income households,” Shuaibu added.
The study also assessed the electricity tariff reform, which initially raised consumer prices by about 0.26 percent, increasing to 0.52 percent after factoring in social protection measures. The reform produced a modest positive effect on economic growth, with real GDP rising by roughly 0.42 percent under the reform scenario before moderating to 0.21 percent.
