Nigeria's Poverty Rate Soared to 63% After Fuel Subsidy Removal, New Study Reveals

Nearly three years after President Bola Tinubu ended decades of fuel subsidies in a dramatic first-day-in-office decision, a University of Abuja study presented at a policy dialogue in the capital has put a stark number on the human cost: 63% of Nigerians now live below the poverty line, up from roughly 50% before the reforms took effect [1][2].

The findings, presented by economist Mohammed Shuaibu at an Agora Policy stakeholders' dialogue on March 13, have reignited a fierce national debate over whether the pain of economic "shock therapy" is producing — or will ever produce — the promised gains for Africa's most populous nation.

The Study: What the Numbers Show

Shuaibu's research, which drew on both quantitative modeling and focus group discussions across all six of Nigeria's geopolitical zones, found that the national poverty headcount rose sharply from a baseline of approximately 49.8% to roughly 63% following the May 2023 subsidy removal [1][3]. The mechanism was straightforward: petrol prices surged from roughly ₦238 per litre to ₦557 virtually overnight — and eventually climbed as high as ₦650 — sending cascading price increases through transportation, food, and every other sector of the economy [4][5].

When social protection measures such as government cash transfers were factored in, the poverty rate moderated to around 56.2% — still representing a significant increase from the pre-reform baseline, and reflecting what Shuaibu described as "limited" relief due to delays and small-scale implementation [1][3].

The study's focus groups painted a vivid picture of household survival strategies: families cut food consumption, walked instead of taking public transport, rationed electricity, and borrowed money to meet basic needs. Women, children, retirees, and rural residents were disproportionately affected, while high-income households remained largely insulated from the shocks [3][6].

A Reform Born of Fiscal Crisis

The fuel subsidy had been a fixture of Nigerian economic life for decades — a politically untouchable program that kept petrol artificially cheap for consumers while draining the federal budget. By 2022, Nigeria was spending an estimated ₦4.4 trillion ($10.4 billion) annually on fuel subsidies, more than it spent on health and education combined [7].

On his inauguration day in May 2023, Tinubu declared that "the fuel subsidy is gone," a move applauded by the International Monetary Fund, the World Bank, and many economists who had long argued the program was fiscally ruinous, disproportionately benefited the wealthy, and encouraged massive corruption through opaque petroleum import contracts [7][8].

The subsidy removal was paired with a second major reform: the unification of Nigeria's multiple foreign exchange rate windows into a single market-determined rate, which caused the naira to lose more than half its value against the dollar. Together, the two policies constituted the most aggressive economic restructuring in Nigeria's modern history.

Source: World Bank

Data as of Feb 24, 2026CSV

The Inflation Spiral

The consequences were immediate and severe. Nigeria's consumer price inflation, already elevated at 24.7% in 2023, surged to 33.2% in 2024 according to World Bank data, peaking at 34.19% by mid-2024 — the highest level in nearly two decades [8][9]. Food prices, which constitute the largest share of spending for poor Nigerians, rose by over 150% for staples including rice, beans, yam, and maize [5].

The Central Bank of Nigeria responded with aggressive monetary tightening, raising interest rates to record levels. By early 2026, inflation had declined significantly to around 15.1% — more than halved from its peak — which the government has cited as evidence that the reforms are working [10].

But for millions of households already pushed below the poverty line, the damage was done. As the ADC opposition party noted, "the removal of petrol subsidy may have freed up government revenues, but three years on, none of the sectors that were supposed to benefit — health, education, infrastructure — appear to be any better funded" [4].

Source: World Bank

Data as of Feb 24, 2026CSV

The Political Firestorm

The Agora Policy study dropped into an already charged political environment. Former presidential candidate Peter Obi, who finished third in the 2023 election, seized on the findings in a March 16 post on X, blaming "Tinubu's economic reforms" for the surge in poverty [11]. The African Democratic Congress (ADC) called the 63% poverty rate "a damning verdict" on the administration's policies [4].

The government has pushed back forcefully. A senior aide to President Tinubu rebuked Obi, noting that during his own 2023 presidential campaign, Obi had publicly supported removing the fuel subsidy — albeit through a more gradual approach [12]. The federal government has pointed to Nigeria being named Africa's most attractive destination for oil and gas investment for two consecutive years, and to the IMF's projection of 3.9% GDP growth in 2025 and 4.2% in 2026 as evidence that the macroeconomic fundamentals are improving [10][13].

Central Bank of Nigeria Deputy Governor Muhammad Sani Abdullahi, speaking at the same Agora Policy event, emphasized that the pre-reform status quo was unsustainable, arguing that foreign exchange distortions alone were costing Nigeria approximately 6% of GDP annually [3].

The Disconnect: Growth Without Prosperity

The core tension in Nigeria's reform story is a familiar one in development economics: macroeconomic indicators are improving even as lived conditions for ordinary citizens deteriorate.

GDP growth has indeed accelerated, from 3.3% in 2023 to 4.1% in 2024, with the World Bank projecting 4.4% for 2026 [13]. Inflation is falling. Foreign reserves are stabilizing. But none of this has translated into relief for the roughly 130 million Nigerians — in a country of approximately 220 million — who the study suggests are now living in poverty.

The World Bank itself has acknowledged this paradox. Its October 2025 Nigeria Development Update projected that 139 million Nigerians would be living in poverty by the end of that year — a nearly 60% increase from the 87 million counted in 2023 [8]. Yet the institution has continued to urge Nigeria to "stay the course" on reforms, arguing that the long-term benefits of fiscal sustainability and market-determined prices will eventually outweigh the short-term costs.

Public opinion, however, suggests patience is running thin. An Afrobarometer survey found that 85% of Nigerians disapprove of the subsidy removal, 93% believe the country is headed in the wrong direction, and 88% describe the economy as "bad" [5][14].

The Social Protection Gap

Perhaps the most damning element of Shuaibu's research is what it reveals about the inadequacy of Nigeria's social safety net response. The study found that cash transfers and other social protection measures reduced the poverty rate from 63% to 56.2% — a meaningful but insufficient impact given the scale of the crisis [1][3].

World Bank economist Samer Matta, also speaking at the Agora Policy dialogue, urged the government to expand safety nets and strengthen social registers to better target the most vulnerable populations [3]. CARE International representatives at the event highlighted that women and children bear a disproportionate burden and called for enhanced social protection [3].

The government's flagship palliative programs have been plagued by implementation challenges: targeting difficulties in a country where most of the population operates in the informal economy, distribution bottlenecks, and allegations of political capture. The ₦8,000 monthly cash transfer to vulnerable households — roughly $5 at current exchange rates — has been widely criticized as inadequate to offset price increases that have doubled or tripled the cost of basic goods.

What Comes Next

Three years into what amounts to the most significant economic restructuring in Nigeria's history, the country faces a fundamental question: can the macroeconomic gains from subsidy removal and exchange rate reform eventually translate into poverty reduction, or has the cure proven worse than the disease for the majority of citizens?

The answer likely depends on whether the government can accelerate investment in infrastructure, education, and healthcare using the fiscal space freed up by ending subsidies — promises that remain largely unfulfilled. It also depends on whether social protection mechanisms can be scaled up fast enough to prevent the entrenchment of poverty for an entire generation.

Nigeria's experience carries implications far beyond its borders. Countries across sub-Saharan Africa and the developing world face similar decisions about whether and how to remove costly fuel subsidies. The 63% poverty figure is a sobering data point for policymakers everywhere: the economics of subsidy removal may be sound in theory, but without adequate social protection and rapid reinvestment, the human cost can be devastating.