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To be read in conjunction with the Asian Development Bank report Poverty: Is it an Issue in the Pacific? The intent of the papers is to foster broadly based consultation among the Asian Development Bank, governments, and civil society for the purpose of developing a supportive and appropriate approach to ensuring equitable growth and poverty reduction. The views expressed in this paper are those of the authors and do not necessarily reflect the views or policies of the Asian Development Bank or the governments of Pacific developing member countries.

This study uses household expenditure data from Nigeria to understand energy consumption patterns with respect to income levels, different energy goods, urban and rural livelihoods, and geographical distribution. Using the empirical subsidy simulation model by Araar & Verme (2012), this paper simulates 50% and 100% reductions of subsidies on petrol, electricity and kerosene. It presents the estimated effects of such reforms on consumption, poverty, and government revenue. This analysis also determines the minimum level of universal cash transfer that is required to achieve "poverty neutrality" of subsidy removal; i.e. the threshold at which direct cash compensation offsets increasing energy prices, such that the national poverty headcount rate is unchanged after the subsidy removal. By disaggregating this analysis to the state level, it is shown that poverty effects (and thus the required poverty neutral cash compensation) can vary significantly across states. Understanding these differences in vulnerability, and designing adequate compensation and social protection policies is critical for ensuring public and political support for subsidy reforms.

AbstractThe main objective of this essay is to point out the missing links between neoliberalism on the one hand, and a comprehensive analysis of poverty and effective policies to tackle it, on the other. After identifying the main channels through which neoliberalism affects poverty, I will draw attention to the inadequacy of the neoliberal approach in coming to terms with the main reasons behind poverty, as well as in developing a comprehensive and effective mechanism for its alleviation. I emphasize the role of international institutions in determining the dominant development discourse and changes in the importance given to the issue of poverty over time. The essay links the ineffectiveness of existing poverty alleviation policies to distributional imbalances at both the global and domestic levels. Against the background of the main constraints and opportunities for effective poverty alleviation policies in individual countries, it emphasizes the need for a poverty alleviation strategy as an integral part of a broader development strategy and identifies its main premises. It calls for action on the academic, domestic and international fronts and stresses the central role of the state, a more balanced reliance on domestic and international markets, emphasis on productive employment creation, the development of effective redistribution mechanisms, and the creation of effective domestic and international constituencies as the main components of such a strategy.