Removing fuel subsidies without proper social safeguards leaves households vulnerable. Many nations are now scrambling to protect citizens from rising prices.
Fuel subsidy removals face new challenges
The elimination of fuel subsidies is considered good management only if a strong social protection system is in place beforehand. Without such a system, governments may find themselves forced to intervene hastily and at great cost when unexpected shocks occur.Nigeria returns to fuel price controls
Three years after removing broad fuel subsidies, Nigeria is once again trying to control pump prices. On October 8, its state-owned oil company announced it would temporarily stop taking its usual profit margin from fuel sales.South Africa considers financial aid
In South Africa, Parliament is considering a 10 billion rand fund to help consumers cope with rising fuel costs. While the mechanisms differ, the underlying issue is the same: governments are again stepping in to address rising prices.Rising prices affect all levels of society
When fuel prices rise, transportation costs increase, which in turn raises the cost of goods and daily life. Even those without cars are affected, making it clear that governments have a legitimate reason to protect consumers from these shocks.Subsidy removal is just the start
Many governments have treated the removal of fuel subsidies as a completed reform, rather than the beginning of a more complex challenge. They have often liberalized prices faster than they have implemented protections for vulnerable populations.Fuel subsidies drain resources
General fuel subsidies consume significant resources and often benefit those who use the most fuel. However, simply removing these subsidies is not a complete policy solution. Replacing them with reliable social transfers requires proper institutions, funding, and careful implementation.Nigeria’s social transfers fall short
A June 2026 report by the IMF noted that 9.2 million Nigerian households were registered in a World Bank-supported monetary transfer program. However, each household had received, at most, three payments of 25,000 naira (about 19 dollars) since 2023.Angola’s program also faces delays
In Angola, the reduction of fuel subsidies was paired with an expansion of the Kwenda transfer program, which covers over 1.4 million rural families. However, the IMF reported in 2026 that delays in distributing fuel cards and transport tickets were affecting urban users.Global impact of rising prices
A UNDP report from October 11 estimated that rising energy and food prices could push an additional 130 million people below the global poverty threshold of 6.85 dollars per day. At the same time, public finances are becoming tighter.Need for better policy coordination
Governments cannot afford to promise protections they will improvise after the next price surge. The answer is not to restore all subsidies or assume that financial transfers can fully replace basic needs like affordable transport or food. Policies must be adapted to actual needs, with clear beneficiaries, guaranteed budgets, and functional mechanisms in place before removing existing support.
