The World Bank has cautioned that sustained low oil prices could jeopardize Nigeria’s social safety net programs, critical for supporting 43% of its population living below the $2.15-a-day poverty line, according to a report released on April 15, 2025.
With global oil prices hovering at $70 per barrel in Q1 2025, down from $85 in 2024 due to weak demand and increased non-OPEC supply, Nigeria’s oil-dependent budget faces a projected $10 billion revenue shortfall in 2025, per the International Monetary Fund.
The World Bank’s Nigeria Development Update highlights that the Federal Government’s safety nets, such as the N500 billion Conditional Cash Transfer (CCT) program reaching 15 million households, rely heavily on oil revenues, which fund 60% of the national budget. A 10% drop in oil prices could reduce CCT funding by 25%, affecting 3 million beneficiaries, mostly in rural northern states, where poverty rates exceed 70%. The report also flags risks to the N100 billion National Social Investment Programme, which provides microloans and school feeding for 10 million children, as budget cuts loom.
Nigeria’s fiscal challenges are compounded by a 34% inflation rate and a 2025 budget deficit of N9.3 trillion, per the Ministry of Finance. The World Bank recommends diversifying revenue through tax reforms, noting that Nigeria’s tax-to-GDP ratio of 6% is among Africa’s lowest. It praised the government’s expansion of digital transfers, which reduced leakages by 40% in 2024, but urged stronger targeting to prioritize vulnerable groups like women and youth. The report cites Kebbi State’s cash transfer program, which boosted school enrollment by 15%, as a model for scaling up.
Finance Minister Wale Edun acknowledged the risks, announcing plans to borrow $2 billion from the African Development Bank to shore up social programs. However, the World Bank warns that rising debt servicing, consuming 50% of revenues in 2024, limits fiscal space. Structural issues, like fuel subsidies costing $7 billion annually, further strain resources. The report calls for subsidy removal and investment in agriculture to create jobs, noting that 80% of Nigeria’s poor are rural farmers. As oil prices remain volatile, Nigeria faces a critical test to protect its most vulnerable while pursuing long-term economic stability.