Economist Backs IMF’s Call On Federal Govt To Scale Up Food Support For Nigerians

An economist has backed the International Monetary Fund’s (IMF) call on the Federal Government to scale up targeted food and income support for vulnerable Nigerians, stressing that such interventions must be temporary, transparent and protected against diversion.

In a policy brief on temporary fuel price relief, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said Nigeria needed a credible social protection framework for exceptional economic shocks rather than a return to what he described as the fiscally destructive petrol subsidy regime.

“Nigeria needs a credible framework for temporary, targeted and transparent social protection during exceptional shocks, not a return to the fiscally destructive subsidy regime,” Yusuf said.

He also stressed the need to protect petroleum market reforms by sustaining market-based pricing, fair competition, transparent regulation and trade policies that support domestic refining investment.

IMF’s Position

The IMF made the recommendation in its October 2026 World Economic Outlook, with the title, Resilience Under Strain, Urgent Choices, released at the IMF and World Bank Annual Meetings in Bangkok, Thailand.

The Fund raised Nigeria’s 2026 growth forecast by 0.1 percentage point to 4.2 per cent, while retaining its 2027 projection at 4.3 per cent.

It attributed the improved outlook to greater macroeconomic stability and favourable terms of trade but warned that rising prices of essential goods could worsen poverty and food insecurity.

The IMF Research Department’s Division Chief, Deniz Igan, said policymakers should balance immediate household needs with medium-term fiscal stability, particularly as food and energy prices continued to rise.

“What we are advocating for is cash transfers and targeted, temporary income support for the most vulnerable households in Nigeria. That can alleviate high poverty and help ensure food security,” Igan said.

She said the support should be funded through more efficient government spending and stronger revenue collection rather than measures that undermine long-term economic stability.

Yusuf welcomed the Federal Government’s petrol price relief initiative through the Nigerian National Petroleum Company Limited (NNPCL) but warned that its limited coverage would restrict its overall impact on household welfare.

He attributed the latest surge in petrol prices to developments in the global energy market, particularly geopolitical tensions that had pushed crude oil prices above $100 per barrel, requiring exceptional but targeted interventions.

He said the initiative did not represent a reversal of subsidy removal, noting that it covered about 70 million litres monthly, compared with the former subsidy regime’s daily coverage of 50 million to 90 million litres and its substantial fiscal burden.

According to the CPPE, the government should pursue broader interventions to address the main channels through which higher energy prices affect households and businesses.

Yusuf identified affordable mass transit as a priority, noting that transportation was one of the most immediate ways rising energy prices affected household expenditure and business costs.

He urged federal and state governments to prioritise high-capacity buses powered by compressed natural gas (CNG), electricity and other economically viable alternatives.

“Targeted investment in heavily subsidised public transportation would deliver broader economic and social benefits than limited petrol price discounts. By reducing commuting costs for millions of citizens, particularly low-income workers, students and small business operators, such interventions would provide more inclusive relief,” he said.

He added that affordable public transport would improve labour mobility, reduce small businesses’ operating costs and stimulate economic activity.

Yusuf also noted that rising energy costs increased expenditure on land preparation, irrigation, mechanisation, transportation, storage and distribution.

He called for targeted support to improve agricultural productivity and food supply, including access to fertilisers, agrochemicals, machinery and other inputs that could reduce production costs.

The CPPE said the burden of providing relief should not rest solely on the Federal Government, as states also had significant responsibilities for public transportation, education, healthcare and local economic welfare.

“States could consider designated discounted fuel outlets, subsidised public transport and targeted support for vulnerable households. Such programmes must have clear eligibility rules, a time frame, transparent funding and safeguards against diversion,” Yusuf said.

He reiterated that petroleum market reforms must be protected through market-based pricing, fair competition, transparent regulation and trade policies that support domestic refining investment.

Government’s Response

The federal government has also acknowledged the need for social support to cushion the impact of economic reforms, saying vulnerable Nigerians must survive the current hardship to benefit from the promised gains.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said at a panel on Africa’s Golden Future during the Annual Meetings that support was essential because many Nigerians lived in poverty.

“You should have the end in mind, and if you start your reforms and you do it halfway, you deliver the pain, and the gains are not guaranteed,” Oyedele said.

He explained that the sequencing of reforms was critical, noting that petrol subsidy removal preceded foreign exchange liberalisation because foreign exchange accounted for the largest component of the subsidy.

He said petrol prices rose following subsidy removal and increased further after the foreign exchange reform, prompting the government to retain some subsidy for several months.

Oyedele said tax reform was intended to provide relief but had faced controversy and low public trust.

He added that sustainable reforms required a sound legal and institutional framework, policy consistency and clear communication with citizens.

“People can easily tell that because of the reform, life is harder. But you need to show them without the reform, it will be hardest,” he said.

He defended social support measures, saying citizens needed to survive to experience the benefits promised by the reforms.

According to him, cash transfers had reached more than 10 million households, while an education fund had supported over 1.5 million students.

Growth Amid Hardship

The IMF’s outlook comes as Nigeria continues to implement economic reforms introduced over the past three years. Although the reforms have been praised for their boldness, critics say they have worsened poverty and weakened purchasing power.

Globally, the IMF projected growth to slow to 3.1 per cent in 2026 before recovering to 3.4 per cent in 2027.

It also forecast global headline inflation at 4.7 per cent in 2026 before easing to 4.1 per cent in 2027, citing war-related increases in energy and commodity prices, alongside pressures from artificial intelligence-driven investment.

The World Bank last week raised Nigeria’s 2026 growth forecast to 4.3 per cent, from 4.0 per cent in 2025, and projected growth of 4.4 per cent in both 2027 and 2028.

It attributed the stronger outlook to improving macroeconomic stability, increased investor confidence and a gradual recovery in private investment.

The National Bureau of Statistics reported that Nigeria’s real gross domestic product grew by 4.43 per cent year-on-year in the second quarter of 2026, compared with 4.23 per cent in the corresponding period of 2025.

Meanwhile, the Tinubu administration announced a 30-day petrol discount window at NNPCL outlets, prioritising public transport operators nationwide.

Oyedele denied that the initiative represented a partial return to subsidies, saying it would be funded entirely from the retailer’s margins rather than the Federal Government’s budget or the Federation Account.

Critics, however, argued that the administration had yielded to opposition pressure by reintroducing subsidies.

Regional Trade Agenda

Oyedele also said Nigeria was working to align its economic policies and remove barriers preventing businesses from benefiting from the African Continental Free Trade Area (AfCFTA).

He said the agreement offered an opportunity to turn Africa’s 54 countries into a single market, but its benefits would depend on removing tariff and non-tariff barriers.

“For example, if you need to do a bit of protection using tariff, it has to be strategic. For how long? How do you phase it out so that you are not imposing taxes on your own citizens to pay for inefficiency that you could have prevented?” he said.

He identified the National Single Window initiative as one measure to streamline cross-border trade, alongside investments in energy, logistics infrastructure, agro-processing, storage, coastal and superhighways, and ports.

Oyedele said Africa needed to become more competitive internally, adding that it should be easier for businesses and consumers in African countries to trade with one another than to source goods from China.

The President of the African Development Bank, Sidi Ould Tah, said the bank devoted more than 60 per cent of its financing to infrastructure and was working with African countries and regional institutions to implement AfCFTA.

He said the bank’s regional financing arrangement could enable eligible countries to contribute 10 per cent of the cost of qualifying regional projects, with the remaining 90 per cent financed through the regional envelope, provided the projects involved more than two African countries.