Productivity vs. Policy: How Economic Reforms Are Shaping Business, Jobs and Young Lives

Across many developing economies today, policymakers are making tough choices in the hope of long-term stability. But for many citizens — especially businesses, workers and young people — the immediate reality feels like a tug-of-war between survival and aspiration.

In Nigeria, the removal of longstanding fuel subsidies has been one of the most hotly debated economic policies of recent years. Intended to cut an unsustainable burden on the public purse, the reform has triggered profound ripple effects across the economy.

When fuel subsidies were scrapped, petrol prices soared almost overnight. For small and medium-sized businesses — from logistics firms to market stalls — the cost of doing business spiked. Transport becomes more expensive, stock deliveries arrive late or not at all, and operating margins shrink. A 2024 academic study in Lagos found that the removal of fuel subsidies significantly raised operational and transport costs for entrepreneurial businesses, cutting into profitability and reducing sales.

The informal sector — which employs roughly 80% of Nigerians and makes up the lion’s share of economic activity — has felt the shock acutely. Higher transport costs translate into higher prices for basic goods and lower purchasing power for customers, deepening hardship for workers who were already struggling in a fragile post-pandemic economy.

As costs climb, businesses face difficult choices. Some scale back operations or delay expansion plans. Others may shed staff. An investigative report warned that if current policies remain unchanged, significant job losses could be imminent, particularly in sectors that are fuel-intensive or reliant on informal labour.

These pressures do not exist in isolation. Nigeria has also pursued currency unification and tighter monetary policy to satisfy international financial partners and normalise exchange markets — moves that can squeeze liquidity and credit access for businesses. While such steps may bring long-term stability, in the short-term they often mean more expensive imports, higher interest rates and lower investment flows.

For young Nigerians — who make up a significant share of the country’s population — the economic landscape feels doubly unforgiving. With formal jobs already scarce, many look to entrepreneurship, gig work or the informal economy as alternatives. Yet rising costs and tightening markets undermine these opportunities.

An Afrobarometer survey shows widespread public frustration: a clear majority disapprove of subsidy removal, largely because of its bearing on living costs, unemployment and general economic direction. Nine in ten respondents said the country was heading the wrong way economically, citing rising living costs and joblessness among their top concerns.

The government’s defenders argue that removing fuel subsidies was necessary. Subsidies had cost the national budget tens of billions of naira with little benefit for the poorest — a drain that crowded out spending on health, education and infrastructure. Reform advocates say letting market forces determine prices improves transparency and can, over time, attract real investment rather than distortions.

Yet the transition has exposed weaknesses in policy design and implementation. Without robust cushioning measures — such as targeted support for small businesses, transport subsidies, or youth employment programmes — the pain of reform has fallen disproportionately on those least able to bear it.

Looking Ahead, Policymakers face a stark challenge: how to balance the hard maths of economic reform with the social realities of everyday citizens.

For many entrepreneurs, workers and young people, the question is whether these policies will eventually unlock new opportunities — or squeeze productivity so tightly that dreams are deferred, and many are left behind.

As economists and analysts stress, the ultimate test of reform will not be in abstract fiscal figures, but in real-world outcomes: stable jobs, thriving businesses and a generation whose aspirations are not just talked about, but given room to grow.