By Johnson Agu
Nigeria’s controversial economic reforms are facing renewed scrutiny after a new study revealed that nearly two-thirds of the country’s population slipped below the poverty line following the removal of petrol subsidies, intensifying concerns that ordinary citizens are bearing the cost of policies whose benefits remain elusive.
The research, presented at a policy dialogue in Abuja organised by Agora Policy, found that the national poverty rate surged from 49.8 percent to about 63 percent after the government scrapped the decades-long fuel subsidy.
The policy was announced by President Bola Ahmed Tinubu during his inauguration speech on May 29, 2023, as part of sweeping economic reforms intended to stabilize public finances and boost government revenue.
But the findings suggest the immediate impact on households has been severe.
“After the subsidy removal, poverty increased from a baseline of about 50 percent to 63 percent,” said Mohammed Shuaibu, a senior lecturer at the University of Abuja who presented the study.
Although government social protection programmes, such as cash transfers, helped moderate the crisis, poverty only declined slightly to about 56.2 percent, still far above pre-reform levels.
Rising Pain, Lingering Questions
The findings are likely to intensify debate over Nigeria’s economic reform agenda, particularly as millions of citizens continue to grapple with soaring fuel prices, higher transport costs, and surging electricity tariffs.
For critics, the most troubling question is not whether the reforms boosted government revenue, but how that revenue has been used.
Prominent human rights lawyer Femi Falana said the reforms had indeed increased government income but raised serious concerns about transparency and priorities in public spending.
“The cardinal objective of the reform was to boost government revenue. It did,” Falana said.
“But the question is how the government has spent that revenue.”
He added that many Nigerians remain sceptical about whether the proceeds from subsidy removal are being channelled into meaningful social programmes.
“The real issue for me,” Falana said, “is whether citizens can trust government spending and priorities compared to social interventions that directly support households.”
Unequal Impact Across Society
According to the research, the economic shock triggered by subsidy removal was far fromevenly distributed.
High-income households were largely shielded from the worst effects of the policy, while low-income families experienced the sharpest decline in living standards.
The study found that the poverty gap, an indicator of the depth of deprivation, widened dramatically, rising from 31.6 percent to more than 45 percent after the policy change.
In practical terms, this means not only that more Nigerians fell into poverty, but that the poor became even poorer.
Household consumption also declined sharply across the country.
“Across the board, household consumption declined following both subsidy removal and electricity tariff adjustments,” Shuaibu said.
Rural households and urban low-income families were particularly affected as rising fuel and transport costs rapidly eroded purchasing power.
Survival, Not Recovery
Focus group discussions conducted across Nigeria’s six geopolitical zones revealed a stark reality: many families are coping with the reforms not through recovery but through sacrifice.
Households reported cutting food consumption, reducing travel, rationing electricity, and borrowing money just to meet basic needs.
“Households adjusted to the shocks not through recovery but through sacrifice,” Shuaibu said.
Many participants also reported receiving little or no support from government intervention programmes designed to cushion the impact of the reforms.
Businesses told a similar story.
Rising fuel and electricity costs have significantly increased operating expenses, forcing some companies to raise prices, lay off workers, or shut down entirely.
Others have turned to alternative energy sources to stay afloat, but many said promised government support programmes had either failed to reach them or were too small to make a difference.
Government’s Defence of the Reforms
Officials insist that the painful reforms were unavoidable.
Speaking at the dialogue, Muhammad Abdullahi, Deputy Governor for Economic Policy at the Central Bank of Nigeria, said the country inherited severe economic distortions that made policy changes inevitable.
“Nigeria faced severe macroeconomic imbalances, economic distortions and collapsing revenues before the reforms,” he said.
He noted that oil revenue had collapsed dramatically over the past decade, falling from about $92 billion in 2012 to less than $2 billion in 2023, placing enormous pressure on public finances.
The CBN official also revealed that the country’s foreign exchange reserves were far weaker than they appeared.
Although official reserves were listed at about $32 billion, much of the funds consisted of borrowed resources, leaving net reserves of only about $800 million at one point.
Macro Gains, Micro Pain
Some economists argue that the reforms are beginning to produce positive macroeconomic signals.
According to Abdullahi, inflation has been declining steadily and Nigeria is gradually moving toward single-digit inflation.
Non-oil exports have also increased, reaching about $6 billion last year.
But critics say those gains remain largely invisible to ordinary citizens.
“The economy may be improving at the macro level,” said Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry.
“But that improvement has not trickled down to the common man.”
She noted that subsidy removal alone could save the government roughly $7.5 billion annually, funds that should be invested in infrastructure and human capital development.
“For the private sector, what we want to see is that the savings from subsidy removal are actually being used to build infrastructure,” she said.
Reform Fatigue and Public Distrust
For many Nigerians, however, the debate is increasingly defined by a familiar frustration: reforms that promise long-term gains but deliver immediate hardship.
With widespread reports of corruption, wasteful spending, and the re-looting of public resources, public trust in government assurances remains fragile.
As policymakers push ahead with economic restructuring, the central question facing Nigeria’s reform agenda is becoming harder to ignore:
Will the painful sacrifices demanded of citizens translate into real improvements, or simply deepen the cycle of austerity, inequality, and broken promises?
