WASHINGTON — The World Bank has said Nigeria can protect vulnerable households from the impact of rising petrol prices without returning to a broad-based fuel subsidy regime.
The bank made the recommendation in its Africa Economic Update October 2026, released in Washington on Tuesday, while reviewing how countries across Sub-Saharan Africa are responding to higher energy costs linked to the ongoing conflict in the Middle East.
According to the World Bank, governments across the region have adopted different measures to protect households and businesses from rising energy prices, depending on their exposure to the shock and available fiscal space.
Nigeria, however, has largely maintained market-based fuel pricing, limiting the fiscal and monetary costs associated with subsidising domestic consumption.
Bank Backs Targeted Assistance
The World Bank said maintaining market-based pricing remains important but argued that governments can introduce targeted measures for vulnerable households.
“Targeted support for vulnerable households may be warranted to mitigate adverse welfare effects without reinstating broad-based subsidies,” the bank said.
It explained that countries had used different combinations of temporary subsidies, tax reductions, price controls, monetary measures and administrative interventions to manage the effects of higher energy costs.
The bank said limited fiscal space had prevented many Sub-Saharan African countries from relying heavily on broad fuel subsidies.
It noted that governments were increasingly seeking measures that could cushion vulnerable citizens while preserving fiscal stability and encouraging more efficient energy use.
Nigeria Maintains Market Pricing
Nigeria’s petrol pricing policy changed significantly after President Bola Tinubu declared at his inauguration on May 29, 2023, that the petrol subsidy was gone.
The policy led to a sharp increase in petrol prices, with pump prices rising from around ₦180 per litre to approximately ₦500 at the time.
Prices subsequently climbed further, reaching between ₦800 and ₦1,000 per litre before later settling around ₦950 in some periods.
The report said petrol prices had risen further amid the latest energy shock, with Nigerian pump prices reportedly ranging between ₦1,350 and ₦1,500 per litre.
The higher cost of petrol has increased transportation and production expenses, while exchange-rate pressures have added to the cost of imported goods and services.
Bank Warns Of Future Energy Shocks
The World Bank said the different approaches adopted by African countries had contributed to significant differences in retail fuel prices across the region.
It warned that these price differences could increase incentives for cross-border fuel arbitrage and create market distortions.
The bank also called for structural reforms aimed at improving energy efficiency, diversifying energy sources and strengthening long-term resilience.
It cited Mauritius as an example of a country that responded to an energy shock by emphasising conservation and energy-transition measures rather than relying mainly on broad-based fuel subsidies.
According to the bank, such reforms could help African economies reduce their vulnerability to future commodity-price shocks.
Middle East Conflict Raises Risks
The World Bank said the impact of the Middle East conflict on inflation differed across African countries.
It attributed the differences to factors including countries’ commodity balances, fiscal capacity and exchange-rate conditions.
The bank said fuel and food importers were particularly exposed to disruptions along trade routes affected by the conflict.
For oil-producing countries such as Nigeria and Angola, it said higher commodity revenues could partly offset the impact of rising energy prices, although inflationary pressures could still reduce household welfare.
The bank warned that a further escalation of geopolitical tensions could push energy and food prices higher while increasing exchange-rate risks, particularly in countries with weak currencies, limited foreign-exchange reserves and high import dependence.
Nigeria Among Top Eurobond Borrowers
The World Bank also highlighted Nigeria’s significant exposure to international debt markets.
According to the report, six countries accounted for more than 80 per cent of Sub-Saharan Africa’s sovereign Eurobond issuance between 2015 and 2026.
South Africa led with $23.7 billion across 15 transactions, followed by Nigeria with $20 billion across 18 transactions.
Angola recorded $15.8 billion, Côte d’Ivoire $15 billion, Ghana $12.6 billion and Kenya $12.2 billion.
The bank said about $43.6 billion in sovereign Eurobond principal was scheduled to mature between 2024 and 2030 across 13 Sub-Saharan African countries, after accounting for buybacks and liability-management operations completed through August 2026.
Nigeria’s maturities during the period were estimated at $6.4 billion, placing it behind South Africa and Ghana among the countries facing the largest repayment obligations.
Nigeria Has Region’s Second-Highest Rate
The report also highlighted Nigeria’s relatively high benchmark interest rate.
It noted that the Central Bank of Nigeria had reduced its Monetary Policy Rate from 26.5 per cent to 23 per cent.
Despite the reduction, Nigeria’s benchmark rate remained among the highest in Sub-Saharan Africa, behind Malawi’s 24 per cent discount rate in the comparison cited by the World Bank.
Ethiopia’s rate stood at 16 per cent, Angola’s at 14.75 per cent, while Ghana and The Gambia recorded 14 per cent each. Zambia’s stood at 13.25 per cent and Madagascar’s at 12.5 per cent.
The bank said the high rates reflected the difficult policy choices facing governments and central banks as they attempt to control inflation, support economic activity and maintain financial stability.
Overall, the World Bank’s assessment points to a policy balance between protecting vulnerable households from higher energy costs and maintaining reforms designed to reduce fiscal pressures and strengthen Nigeria’s long-term economic resilience.
