By Adebayo Ahmed | Prior to the transition in government in 2023, Nigeria's economic conditions were deteriorating significantly. Inflation increased from approximately 10% at the beginning of 2012 to over 21% by the end of 2022^[1], accompanied by considerable volatility throughout the period. Concurrently, real median incomes were in decline. The World Bank estimates that GDP per capita in 2023, adjusted for purchasing power parity, was lower than it was a decade earlier in 2013^[2], as shown in Figure 1 below. These indicators were compounded by recurrent fuel shortages, foreign exchange rationing, and additional economic shocks. According to the Food and Agriculture Organisation, the proportion of the population experiencing moderate or severe food insecurity increased from 34.7% in 2015 to 73.9% in 2022. Collectively, these factors placed substantial pressure on the average Nigerian household. Public sentiment surveys corroborate this assessment. Afrobarometer data, as shown in Figure 2, indicated that 88.7% of Nigerians believed the economy was moving in the wrong direction in 2022, a figure that increased to 92.8% by 2024.

Fig 1: GDP per Capita (Purchasing Power Parity) in Constant 2021 USD. Source: World Bank

Fig 2: Percent who believe economy moving in the wrong direction. Source: Afrobarometer

The severity of economic conditions, particularly regarding petrol subsidies and exchange rate management, generated broad consensus among all the major presidential candidates on the necessity of reform. The President Bola Tinubu administration proceeded with implementing several of these recommended reforms. While implementation details remain subject to retrospective evaluation, there is near-unanimous agreement that reforms concerning the exchange rate and petrol subsidies have been largely successful. The Nigerian macroeconomy currently demonstrates greater stability. Petrol subsidies, which previously constituted a significant drain on public finances, have been substantially eliminated, and following initial volatility, the exchange rate has stabilised. Certain segments of the population have benefited from the reforms as well, but these have mostly been the big business and the institutional investors—the mostly wealthier part of the population.

Fig 3: Percent of Population living in Poverty. Source: National Bureau of Statistics - National Living Standards Survey, World Bank Estimates.

However, these reforms imposed considerable costs on ordinary citizens, the majority of whom have not yet fully recovered or realised tangible benefits. The prevailing reality remains that most Nigerians are economically worse off than prior to the reforms, and living standards have not improved meaningfully for the majority. According to the National Bureau of Statistics (NBS), the number of individuals living in poverty increased from 40 million to 56 million between 2019 and 2023, with further increases likely following the implementation of economic reforms. Inflation reached 34.8% in 2024 and, while moderating, remains elevated relative to pre-pandemic levels in 2019. Although the macroeconomy has been stabilised, the welfare of ordinary Nigerians remains at historically poor levels.

The central policy question is therefore: what measures should be pursued next? Given that additional reforms are necessary to generate meaningful improvements in living standards, how can policymakers ensure that hard-won macroeconomic gains are preserved while simultaneously delivering tangible benefits to Nigerians?

Addressing this question is critical, as public tolerance for the status quo cannot be assumed indefinitely. As evidenced by security challenges across multiple regions, diminished public confidence has contributed to instability threatening national cohesion. Furthermore, as demonstrated during the post-COVID-19 recovery period, deterioration can occur rapidly. Importantly, with another election cycle approaching, various political actors may advocate for a return to pre-reform arrangements, specifically fuel subsidies and foreign exchange rationing, under the pretext of protecting vulnerable populations.

Strategic Policy Responses

The ideal policy response towards ensuring the general population continues the support for the reforms can be structured around two strategic dimensions: (1) immediate measures to alleviate suffering, particularly among the most vulnerable, and (2) medium-to-long-term structural interventions.

Immediate Action 1: Social Transfer Programmes

Direct financial transfers to Nigerians represent a priority intervention. This component was intended to form part of the 2023 reform package, with the rationale that eliminating fuel subsidies and liberalising foreign exchange markets would generate fiscal space for redistribution to vulnerable populations. While fuel subsidies were removed and foreign exchange markets liberalised, the social transfer component of the reforms has been ineffective. As of February 2026, the Federal Government reported that nine million households received some form of social transfer, though implementation details remain unavailable. One-time transfers of ₦25,000 are unlikely to constitute meaningful support.

What is required is a systematic, institutionally-funded social transfer programme. A viable approach would involve allocating a percentage of resource revenue inflows directly to citizens. Instituting a first-line charge on a specified percentage of federation inflows from crude oil and other natural resources, distributed as direct social transfers, would accomplish multiple objectives: (1) providing immediate benefits from reforms to the population, (2) creating public stakeholder interest in reform sustainability, and (3) establishing an automatic buffer against fluctuations in Nigeria's resource export prices, as currently observed with crude oil price increases driven by geopolitical tensions involving the United States, Israel, and Iran.

Immediate Action 2: Cost Reduction Measures

Citizen welfare depends not only on disposable income but also on the overall cost of living. The government has taken positive steps to reduce food prices through trade liberalisation and credible monetary policy, evidenced by food inflation declining from approximately 40% annually in 2024 to roughly 12% currently. Additional efforts beyond trade and monetary policy are warranted, particularly regarding food and transport, the two categories comprising the majority of Nigerian household expenditure.

Fig 4: Percent difference between maximum and minimum food price – January 2026. Source: National Bureau of Statistics

One potential immediate option is to focus on the internal logistical challenges which significantly constrain the free movement of goods, resulting in substantial price variations across states. For instance, according to the NBS, in January 2026, yam prices in Delta State exceeded those in Niger State by more than 100%. Frozen chicken prices in Enugu State were nearly 100% higher than in Taraba State. Canned evaporated milk prices in Gombe State were approximately 50% higher than in Kano State. These disparities indicate serious internal logistics deficiencies with direct implications for cost of living. Addressing the logistical barriers generating such intra-national price variation constitutes an immediate priority for reducing living costs.

Medium-to-Long-Term Strategic Planning

Immediate interventions to increase household income and reduce living costs will provide direct relief and enhance short-term reform sustainability. However, medium-to-long-term reform sustainability depends on the government's capacity to articulate a credible pathway to improved living standards that convinces citizens to endure interim hardships.

Currently, no comprehensive national development strategy exists. Vague aspirations of achieving a $1 trillion economy by 2030 lack credibility and relevance for most citizens. Nigeria's nominal GDP was approximately $250 billion in 2024, a statistic with limited meaning for the 60% of Nigerians living in poverty. Similarly, achieving a $1 trillion economy while 70% of the population remains in poverty would not constitute an agenda capable of generating public support.

A more appropriate objective would be an agenda for elevating the average Nigerian to middle-income status by 2050. This would require median annual income growth of approximately 4%, increasing from the estimated $1,663 in 2023 to approximately $5,000. This target is both achievable and credible. Importantly, focusing on median income provides a more meaningful and relatable metric than an arbitrary aggregate GDP target.

What reforms would be needed to attain this median income status of $5,000 a year? It is useful to think about what an economy with a $5,000 a year median income would need to look like. This economy would likely need people to be reasonably educated with relevant skills. You would therefore need a measurable and actionable plan for education. This economy would need people to be healthy and have access to healthcare as that is one of the primary reasons why incomes get decimated. You would therefore need a similar plan for healthcare. You can estimate that half the population in 2050 are likely to be women. If you want the median Nigerian income to be at middle income status, then you would need to at least have the median income for women to also get to middle income status. You would therefore need a plan for issues relating to women targeting the things that limit their income growth, such as the costs of unpaid care work or social norms around participation in the labour market.

It is also clear that the most sustainable path to increasing median incomes is to have sustainable decent job growth that is large enough for the size of Nigeria’s population and for the number of people entering the labour market each year including those who are unemployed or underemployed. Pre-pandemic data from the NBS estimated that about four to five million individuals entered the labour market annually. Thus, a plan for sustainable job growth at the scale that is required would be needed. It is also known that historically, labour-intensive manufacturing sectors that focus on exporting to global markets have been a sustainable engine of job growth in many countries. A plan to engineer growth in labour-intensive manufacturing sectors would therefore be needed.

Supporting this labour-intensive manufacturing growth of the scale that is required would need good infrastructure and access to stable and reliable electricity. A plan for infrastructure and stable and reliable electricity would be needed. All this of course would need to be done within the context of keeping costs low. There are likely many other dimensions of planning that would be required but the rationale in each is the same.

Conclusion

Without articulating a feasible, measurable objective that resonates with Nigerians, the reform agenda faces significant risk of stalling. Nigerians may be inclined to prioritise immediate benefits even when these undermine longer-term potential. Convincing Nigerians to defer gratification and sustain commitment to the reform path requires a credible, measurable development framework that demonstrates clear, tangible, and believable pathways to improved living standards for the average person. 

[1] Source: National Bureau of Statistics – Consumer Price Index.

[2] World Bank: International Comparison Program (ICP) - https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2024&locations=NG&start=2011