The World Bank has cautioned the Nigerian government against relying solely on national averages when formulating social protection measures following fuel subsidy removal in the country.
It gave the recommendation in its June 2023 report titled “Detox Development: Repurposing Environmentally Harmful Subsidies.”
The World Bank report recaled that in 2012, public protests were concentrated in urban regions such as Abuja and Lagos, where low-income households were mainly dependent on fuel, with little consideration for other parts of the country and their realities.
It, therefore, said policymakers should structure subsidy removal palliatives in line with what some industry stakeholders have said in the past, which including involving state and local governments in the distribution of the palliatives as they are closest to the people.
The report noted that it is crucial to consider the impact of fossil fuel subsidy reforms on various income groups and regions and emphasized the need to customise reforms and social protection initiatives to address the specific requirements of different population segments.
The World Bank said it was imperative for policymakers to move away from national averages and adopt a targeted and inclusive approach to address the impact of fuel subsidy removal, an approach that aims to ensure that the effects are adequately addressed across various socio-economic levels and geographical regions.
“If policymakers focus only on national averages and use income level as the sole indicator of vulnerability, they may underestimate the vulnerability of certain groups and provide inadequate social protection for the poor.
“For example, blanket compensation that uniformly covers a large share of the population may provide adequate compensation, on average, but is likely to fail to protect particularly vulnerable households. Commonly, the vulnerability of population groups is determined based on their income status.
“However, other determinants of social marginalization can be even more important for instance, the exclusion of women or ethnic minorities makes livelihoods particularly vulnerable to shocks,” the report read in part.
The World Bank report further observed that while in most states the poorest households consume very little kerosene, in several southern states, kerosene consumption by the poorest is significantly above the average for their income group.
It said these regional differences may reflect issues such as differences in the type of employment, access to energy, and availability and affordability of alternative fuels.
