Nigeria’s Reform Transmission Gap: Why Stabilisation Has Not Yet Reached the Kitchen Table

Nigeria’s economic reforms are addressing distortions that predate the current administration, including an unsustainable fuel subsidy, fragmented foreign exchange markets, weak productive capacity and prolonged fiscal pressure. However, the origins of Nigeria’s poverty crisis do not resolve the immediate policy challenge created by the distribution and timing of reform costs. Macroeconomic stabilisation will remain socially and politically fragile where its benefits reach households more slowly than inflation, transportation costs and declining purchasing power.

In this OpEd, Collins Nweke identifies the resulting “reform transmission gap” between policy adjustment, economic stabilisation, investment, productive expansion and improved household welfare. Drawing measured lessons from Belgium’s locally embedded social protection system and China’s targeted poverty alleviation framework, he proposes a Protection-to-Production Poverty Compact built around identifying vulnerable households, providing temporary protection, removing barriers to participation, expanding production, supporting graduation from assistance and measuring outcomes.

For investors, the argument carries material implications. Reform durability depends on more than improvements in reserves, foreign exchange functioning, fiscal balances and headline growth. It also requires credible social protection, effective delivery institutions and a visible pathway through which stabilisation supports employment, consumption, productivity and household resilience. Persistent hardship can weaken public support, raise implementation risk and reduce the predictability needed for long-term capital allocation. Nigeria’s next reform phase must therefore connect macroeconomic repair to measurable welfare outcomes while accelerating the productive investments required to make poverty reduction sustainable.

Dr Tanimu Yakubu, Director-General of Nigeria’s Budget Office of the Federation, has made an important intervention in Nigeria’s increasingly polarised debate over poverty and economic reform. In his paper, Poverty, Reform and the Problem of Causation: What the Evidence Says About Hardship, Recovery and the Road Ahead, he asks us to separate three things that public debate too often collapses into one: the existence of hardship, the causes of that hardship, and whether reversing the present reforms would leave Nigerians better off.

It is a distinction worth taking seriously. There is much in Dr Yakubu’s argument with which I agree. Nigeria did not become poor in May 2023. The country entered the current reform period after years of weak per-capita growth, foreign-exchange distortions, inadequate electricity supply, insecurity, low agricultural productivity, expensive transportation, insufficient formal employment, and deeply entrenched vulnerability. To attribute Nigeria’s entire poverty crisis to policies introduced over the last three years would therefore be historically inaccurate and analytically weak.

Dr Yakubu is equally right to caution against careless use of the widely reported figure that 79 per cent of Nigerians are poor or vulnerable. Poverty and vulnerability are related, but they are not identical. Someone living just above a poverty threshold is not statistically in the same category as someone below it. Yet that distinction should hardly comfort us. Indeed, it may tell us something even more disturbing: an extraordinary proportion of Nigerian households live within one illness, one failed harvest, one job loss, or another round of food inflation, falling into deeper deprivation. To his credit, Dr Yakubu does not deny this reality. Nor does he pretend that reform has been painless. He acknowledges that exchange-rate adjustment and fuel-subsidy removal imposed immediate costs on households with very limited capacity to absorb them: transportation became more expensive, imported inputs cost more, while inflation eroded wages and savings.

This intellectual honesty provides fertile ground for a more consequential conversation, because once we agree that Nigerian poverty predates the reforms, another question immediately follows:

What have the reforms themselves done to the depth, incidence and experience of poverty among households that were already vulnerable?

That, for me, is the question beyond causation.

Inherited Poverty and Reform-Induced Pain Can Coexist

Two propositions can be true simultaneously. The present administration did not create Nigeria’s structural poverty. And the manner, sequencing and speed with which necessary reforms were implemented may nevertheless have intensified hardship among millions of Nigerians. The first proposition should prevent us from rewriting history. The second should prevent history from becoming an alibi.

The appropriate analytical distinction is therefore not simply between inherited poverty and reform-created poverty. It is between the origins of poverty and the amplification of vulnerability. If a household was already spending most of its disposable income on food and transport before subsidy removal, a dramatic increase in transportation costs matters differently to that household than to a middle-class family with savings. If another household was already barely above the poverty line before inflation accelerated, the erosion of its purchasing power can push it below that line even though government did not create its original vulnerability.

The question is, consequently, not whether reform caused all of Nigeria’s poverty. Clearly it did not. The relevant question is whether the costs associated with reform were imposed faster than the mechanisms designed to protect vulnerable households could respond. This brings us to what I consider one of the most important missing concepts in Nigeria’s reform conversation: household absorptive capacity.

Reform Has a Human Absorptive Limit

 Economic reform does not occur on spreadsheets. It occurs in households. Nigeria undertook far-reaching economic adjustments in a society where millions already had almost no financial shock absorbers. That condition should have influenced not only what reforms were undertaken but also their sequencing, accompanying protections and speed of implementation. The IMF’s 2026 assessment illustrates the dilemma. It acknowledges important improvements in macroeconomic stability, including stronger growth and improved external buffers. But it simultaneously reports increased poverty and food insecurity. It estimates poverty at about 63 per cent using the national poverty line and records 27 million Nigerians facing food insecurity in late 2025.

These realities do not invalidate reform. But neither should macroeconomic improvement invalidate the evidence of deteriorating household welfare. Perhaps the most revealing illustration is social protection. The IMF reported that 9.2 million households had been enrolled in the cash-transfer system, against a target of 15 million, but that these households had received at most three transfers of ₦25,000 since 2023. That raises an uncomfortable but necessary question:

Was Nigeria’s social-protection response remotely proportionate to the scale and speed of the economic adjustment imposed upon vulnerable households?

This is not an argument for returning to an opaque fuel-subsidy regime or restoring foreign-exchange distortions. Dr Yakubu is persuasive in arguing that the alternative to difficult reform was never painless continuity. The old arrangements imposed their own costs through subsidy bills, arbitrage, scarcity, parallel-market premiums and lost opportunities for productive public expenditure. The choice should therefore not be framed as reform versus no reform. It is between reform that leaves social consequences largely to eventual economic transmission and reform that deliberately engineers protection into the adjustment process.

History offers useful lessons.

Belgium: Protect People While the  Economy Adjusts

Belgium, where I have spent much of my public life, holding social policy portfolio and serving social welfare mandates, offers one model, not for transplantation, but for adaptation. Belgium’s modern social-protection architecture emerged from a recognition that economic productivity and social security need not be adversaries. Over decades, social insurance, unemployment protection, healthcare, pensions, family support and minimum-income provisions developed alongside a market economy.

Nigeria obviously cannot reproduce the Belgian welfare state. Our fiscal capacity, demographic structure, labour-market informality and administrative institutions are fundamentally different. But certain principles are transferable.

The first is that social protection should respond to changes in the cost of living. Belgium’s indexation mechanisms have historically helped protect wages and social benefits against severe erosion in purchasing power. Nigeria need not introduce wholesale Belgian-style automatic wage indexation; under our inflationary and fiscal conditions, that could generate significant unintended consequences. But why should assistance intended to protect Nigeria’s poorest households remain nominally static while the cost of food and transport rises dramatically?

A carefully designed Nigerian system could periodically adjust targeted social assistance against a transparent basket of essential household costs. The objective would not be to compensate everyone for inflation. It would be to prevent temporary economic adjustment from pushing already vulnerable households into irreversible deprivation.

Belgium offers another lesson through its municipal Public Centres for Social Welfare, the OCMW/CPAS system. Poverty intervention is locally embedded. Assistance can therefore respond to the circumstances of actual households rather than treating poverty purely as an aggregate national statistic. Nigeria does not need Belgian institutions bearing Belgian names. It needs their functional equivalent.

Imagine a framework in which the Federal Government establishes financing, minimum standards and accountability; states coordinate implementation; and properly governed Local Government poverty-delivery units identify vulnerable households and connect them not merely to cash but to healthcare, nutrition, school support, agricultural inputs, skills programmes, public works and employment opportunities. That would begin the transition from episodic palliatives to permanent poverty-response infrastructure. 

China: Do Not Merely Count the Poor, Find Them

If Belgium teaches us something about protection, China offers important lessons about targeted economic mobility. China’s achievement in reducing extreme poverty over four decades is historically significant. A joint World Bank-China study estimates that close to 800 million people escaped extreme poverty during that transformation. The Chinese experience should not be romanticised. Its national poverty threshold has been contested as a complete measure of deprivation; relative poverty remains, and aspects of its highly centralised governance model are neither desirable nor transferable to Nigeria’s democratic federation.

But one idea deserves serious attention from Nigerians: Targeted Poverty Alleviation. Its underlying logic was deceptively simple. Do not merely determine how many people are poor. Determine who is poor, where they are and why they are poor. That distinction is enormously important for Nigeria because there is no single Nigerian poverty. A farmer, impoverished because banditry prevents access to farmland, faces a different kind of poverty from that of an urban worker whose real wage has collapsed under inflation. A subsistence farmer lacking irrigation, storage, improved seedlings and access to markets requires different intervention from an unemployed graduate. A widow supporting school-age children may need a combination of income protection, healthcare and educational support. A small entrepreneur crippled by unreliable electricity does not necessarily require a government handout. She may need affordable power, credit and access to markets.

Uniform palliatives cannot adequately respond to heterogeneous poverty. China therefore offers Nigeria a lesson that is both administrative and philosophical: poverty policy should diagnose before it prescribes, much as good doctors do. 

Where Dr Yakubu’s Supply Argument Becomes Important

Here I return to an important strength in Dr Yakubu’s paper. He argues that sustainable relief must ultimately come from producing more things and moving them more cheaply. He points to fertiliser availability, functioning rice mills, improved security for farmers, railway infrastructure and gas supply as components of the productive response. On this, he is substantially right. Nigeria cannot transfer its way into prosperity. The nation must produce.

Farms must become more productive. Farmers must safely return to their fields. Rice mills must operate closer to capacity. Electricity and gas must support industrial production. Goods must move more cheaply. Infrastructure must connect production to markets. Private enterprise must create sustainable employment. China’s experience actually reinforces this argument. Its historic reduction in extreme poverty was inseparable from agricultural productivity, industrialisation, infrastructure, urbanisation, employment creation and integration into increasingly sophisticated markets.

But China also demonstrates something else: Production policy and poverty policy need not be alternatives. Growth builds the ladder. Targeted poverty intervention helps vulnerable people get onto the ladder.

This is where I believe Nigeria can draw useful lessons from two countries that could scarcely be more different politically or economically. Belgium essentially teaches: protect people from falling. China teaches: create pathways for people to climb. Nigeria needs both.

A Protection-to-Production Poverty Compact

I would therefore propose that the next phase of Nigeria’s reform programme incorporate what might be called a Protection-to-Production Poverty Compact. Its architecture could follow six stages: Identify → Protect → Enable → Produce → Graduate → Measure.

Identify. Nigeria needs a credible, continuously updated social registry that identifies vulnerable households, their locations and, critically, the causes of their vulnerability. Federal  data should be complemented by state and Local Government verification, subject to rigorous safeguards against political capture.

Protect. The genuinely vulnerable require predictable and sufficiently meaningful temporary protection. Support should respond to changes in essential living costs, particularly food and transportation, rather than remain static as inflation erodes its real value.

Enable. Cash alone is insufficient. Households should be connected to whatever removes the specific barrier that keeps them poor: healthcare, education, agricultural inputs, irrigation, childcare, vocational training, apprenticeships, microenterprise support, or employment services.

Produce. This is where Dr Yakubu’s argument deserves strong support. The government must accelerate agricultural production, food security, fertiliser supply, energy, transportation, industrial utilisation, and logistics. Social protection without expanding production eventually becomes fiscally unsustainable.

Graduate. Poverty programmes should contain pathways out of dependency. Success is not measured by how many Nigerians remain permanently registered for assistance. It is measured by how many households develop sufficient productive income and resilience that they no longer need it.

Measure. Finally, Nigeria must change what it celebrates. Money disbursed is not impact. Bags of fertiliser announced are not impact. Kilometres of railway completed are not, by themselves, impact. Even GDP growth is an incomplete measure of household progress.

We should measure real household income, nutrition, employment, school attendance, agricultural productivity, healthcare-induced impoverishment, transportation costs and resilience to economic shocks. The reform must ultimately reach the kitchen table.

The Reform Transmission Gap

Dr Yakubu writes, memorably, that “Nigerians do not eat reserves.” Precisely! But there is a temporal problem embedded within his own otherwise compelling supply-side argument. The pain of reform is present. Much of the promised relief is future. Rail infrastructure will deliver benefits when completed and effectively utilised. Fertiliser supply should translate into greater harvests and eventually lower food prices. Gas infrastructure should reduce industrial costs when gas reaches businesses. Improved security should increase cultivation when farmers confidently return to their land.

All are plausible transmission mechanisms. But households have been absorbing the adjustment since 2023. Nigeria therefore faces what I would call a reform transmission gap: Macroeconomic Reform → Stabilisation →  Investment and Supply Response → Employment and Productivity → Household Welfare.

There is evidence that Nigeria has begun moving through the first two stages. The challenge is that millions of Nigerians are waiting at the last. Closing that gap should now become the central political-economy objective of the reform programme.

Beyond Who Caused Poverty

The most productive response to Nigeria’s current condition is therefore neither to declare the reforms a failure because poverty persists nor to minimise present deprivation because poverty existed before the reforms. Both positions are inadequate. Dr Tanimu Yakubu is right to insist on causation. Serious policymaking requires intellectual discipline about how problems originate. But causation cannot be where the conversation ends.

Government cannot reasonably be blamed for every structural weakness it inherited. Equally, a government that rightly claims credit for improvements in reserves, fiscal stability, foreign-exchange functioning and GDP growth must accept responsibility for ensuring that the costs associated with achieving those gains are not disproportionately borne by citizens least able to absorb them. The deeper lesson from Belgium and China is not ideological. One is a European social-market democracy; the other emerged from a socialist system with powerful state direction. Their histories, institutions and political systems are profoundly different.

Yet both demonstrate something important. “Successful states do not leave the distributional consequences of economic transformation entirely to chance.” That should move Nigeria beyond the increasingly sterile argument over whether one supports or opposes reform. I support reform. But reform is not an end in itself. The relevant question is whether reform expands the capacity of ordinary citizens to live productive, secure and dignified lives.

Dr Yakubu ends his paper by asking whether Nigeria is producing more, whether factories are operating longer, whether farmers are returning to their fields, whether goods are moving more cheaply, and whether families are beginning to experience lower prices and expanding opportunities. Those are exactly the right questions. I would add one more: What deliberate transmission mechanism will ensure that today’s macroeconomic repair translates into tomorrow’s reduction in poverty, and what will protect vulnerable Nigerians while they wait for that transmission to occur?

Nigeria’s poverty crisis did not begin with these reforms. But neither should poverty reduction be postponed until the reforms have finished. The task before government is to make protection part of production, and household welfare part of stabilisation. That is the question beyond causation. And it is the question Nigeria’s reform debate must still answer.

About the AUTHOR

Collins NWEKE is an International Trade Consultant &  Economic Diplomacy researcher. He was a former Green Councillor at Ostend City Council, Belgium, where he served three consecutive terms until December 2024. A first-generation migrant who transitioned from civil society activism into elected office, he writes frequently on democracy, governance, and Africa–Europe relations. He is the author of the book ‘Economic Diplomacy of the Diaspora’. He is also a Distinguished Fellow of the International Association of Research Scholars and Administrators, serving on its Governing Council. A columnist for The Brussels Times, Proshare, and Global Affairs Analyst with a host of media houses, Collins writes from Brussels, Belgium. X: @collinsnweke E: admin@collinsnweke.eu W: www.collinsnweke.eu