The end of the fuel subsidy was expected, says Adedayo Ademuwagun, an analyst at Songhai Advisory, an investment consultancy. When the government ended its massive fuel subsidy in May, fuel prices quickly shot up. Manny Jefferson for NPR Beautician Kehinde Adebajo pours fuel into the generator in front of his salon. The World Bank says an additional 7 million people in Nigeria could be plunged into poverty by the end of the year - driven by a combination of a painful cash crisis earlier this year, high inflation and the fuel subsidy. The impact of the subsidy has been profound in a large but challenging economy with 70% of people living in poverty. Fuel prices are expected to rise even further to account for the depreciation in Nigeria's currency since May. Fuel prices almost tripled overnight, from roughly 180 naira (23 cents) per liter in May, to roughly 500 naira (70 cents). It had become too expensive - rising to $9.7 billion last year, a quarter of Nigeria's budget- all while government revenues were stretched thin. The trigger was the removal of a fuel subsidy that dates to the 1970s and kept fuel prices artificially lower than the market rate and lower than in neighboring countries.īut in his inaugural speech on May 29, new president Bola Ahmed Tinubu declared an end to the subsidy. The cost of food and transport have soared since the end of May. The rising cost of fuel has made it harder to do business - and for customers to afford services and goods, let alone public transportation. Manny Jefferson for NPR Thousands of vendors do business at Balogun Market in Lagos.
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