The transition from oil revenue windfalls to shortfalls in Nigeria meant an inevitable end to general subsidy programmes that successive governments had pursued for decades. While all income groups will suffer welfare losses from subsidy withdrawals, the poor are likely to suffer larger than average relative welfare losses. There is a need to identify those who are likely to be hurt the most and estimate the magnitudes of the losses they will suffer. This study presents new empirical evidence on the sizes of the distributional effects of downward adjustment in the exchange rate of the Naira for the different income groups in the country, across rural and urban areas, and across the six geopolitical zones. In all cases, we found that downward adjustment in the exchange rate will make the poor poorer. A case is made for introducing intervention programmes to protect the poor from adverse welfare effects of economic policy shocks. We discuss motives and methods for doing so, drawing lessons from similar measures in Nigeria and other countries.
Please click on the link for the policy paper 161213 Policy Paper on Social Impact Assessment of Flexible Exchange Rate on Segments of Nigerian Population (Final)