Fuel subsidy removal and welfare of the working class in Nigeria: Policy options for the state (original) (raw)
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The Politics Of Fuel Subsidy, Populist Resistance And Its Socio-Economic Implications For Nigeria
Global Journal of Human Social Science Research, 2012
The study examines the politics of fuel subsidy removal in Nigeria. The descriptive nature of the study has necessitated the extensive use of desk research. The paper argues strongly that the policy derives its instrumentality from the theory of development racism, which only benefits the rulers of the country and multinational companies and not the citizen. This explains the massive protests by the Nigerian Labour Congress, Civil Liberty Organisations and the masses of Nigerian that usually accompanied fuel subsidy removal. We have recommended that for the smooth operation of the petroleum sub-sector, government must always engage the people in policies that will affect them. We also recommended for the building of more refineries in order to make the product more available to the people and at an affordable pump price. This could be done through private/public partnership.
FUEL SUBSIDY REMOVAL AND POVERTY IN NIGERIA: A LITERATURE REVIEW
Fuel subsidies in Nigeria have been a contentious issue for decades. However, the recent removal of fuel subsidy by President Bola Ahmed Tinubu led administration has resulted in a looming fuel shortage crisis and left millions of Nigerians terrified about the knock-on effects on their daily lives. Meanwhile, the removal of the fuel subsidy has led to increased prices for transportation and commodities, adding to economic hardships, businesses struggle as they are forced to spend more money on fuel consumption. Hence, this paper examined fuel subsidy removal and poverty in Nigeria. By utilizing the theory of price elasticity of demand, the paper aimed to examine the rationale behind the fuel subsidy removal, the socioeconomic implications of fuel subsidy removal and suggested palliative measures to cushion the effects of fuel subsidy removal in Nigeria. By utilizing content analysis method, the paper reveals factors such as private sector participation in the importation of petroleum products, availability of petrol at all times for all Nigerians and permanently banishing queues from petrol stations across the nation and free the country from the endless pains and sufferings that come with fuel scarcity, revenue generation, stimulating economic development among others as rationales behind fuel subsidy removal. The paper equally pointed at high cost of living, high rate of crime, and increase in poverty level as people and businesses struggle for survival among other socioeconomic implications of fuel subsidy removal in Nigeria. The paper concluded by recommending rural electrification, increase in the minimum wage and food importation/distribution among other feasible palliatives as suggested measures to cushion the effects of fuel subsidy removal in Nigeria.
FUEL SUBSIDY REMOVAL AND THE NIGERIAN ECONOMY
Despite the huge amount of money Nigerian government spends on fuel subsidy, the situation in the oil sector has not been promising and Nigerians still experience scarcity of premium motor spirit. There have been dearth of infrastructural investments in the oil sector due to the enormous funds sunk into fuel subsidization, and as it is now, the government is yet to fix her refineries. As a result, there has been little or no significant improvement in the quality of life for the majority of Nigerians, 54 percent of who still lives below the national poverty line. Hence, the main objective of this study was to assess the contributions of the fuel subsidy in the Nigerian economy, that is, the study examined the problems, the prospects and a way forward for the sustainable economic growth in Nigeria. The study used Rosenstein-Rodan's Thesis or Theory of the " Big Push " to drive home the message. The major sources of data used in the study were primary and secondary data. The primary data were collected through the use of questionnaire and the secondary data were also collected. Descriptive statistics was used to analyze the data. The study found that fuel subsidy has not resulted in a significant improvement in the quality of the life for the majority of Nigerians. The study therefore recommended that government should invest heavily on infrastructures and human capital instead of focusing on just removing fuel subsidy.
Nigeria’s Petroleum Subsidy: In Whose Interest is it?
Academic Journal of Economic Studies, 2016
Subsidy has been defined as any government intervention, in cash or kind, to private sector producers or consumers for which the government receives no equivalent compensation in return. Fuel subsidy has been a growing liability to Nigeria’s budgets, in a systematic fashion for almost four decades, hence creating vested interest. The exponential growth of cost of fuel subsidy is due to the rising cost of crude oil in the international market, exchange rate volatility and the population growth of Nigeria which resulted in increased petroleum consumption; the combination of these three variables therefore made the cost of the fuel subsidy unsustainable. Understanding the current fuel subsidies magnitude is critical for advancing reform because it underscores the potential socio-economic benefits to be realized. In addition to the burden that fuel subsidy is placing on the national budget, keeping petroleum below the market value has discouraged additional investment in Nigeria’s oil s...
International Journal of Applied Research in Social Sciences
The removal of fuel subsidy has emerged as a persistent issue in the second quarter of Nigeria's Fourth Republic. Despite the long-term benefits of the policy, Nigerians have consistently resisted attempts by the regime to revert to it. However, this government policy has received negative feedbacks from the public, public institutions, professional associations, and labour unions. The recent pronouncement by the newly inaugurated administration of Senator Bola Ahmed Tinubu as President elect of the Federal Republic has resulted to high prices of petrol and transportation fares all over the nation, even if it has not been fully implemented. It is based on this development that this study examined the benefits and challenges of fuel subsidy relapse on national economy. Descriptive analysis was adopted, and qualitative method of data collection was utilised to collect data for the study. Secondary sources of data, notably, books, journals, dailies, periodicals, and internet materi...
Political Economy of Phasing out Fuel Subsidy in Nigeria
2013
One of the contentious issues in Nigeria is the removal of fuel subsidy on Petroleu m Motor Spirit (PM S). The purpose of this paper is to evaluate the argument for and against subsidy removal. An emp irical investigation of the impact of fuel subsidy removal on fuel consumption was conducted using Least Square method. The result o f the t wenty six years under review shows that subsidy removal will reduce fuel consumption which will lead to efficient fuel demand and reduction in carbon emission. The money saved can be used for transforming the economy by building infrastructure, establishing new refineries and maintaining the old ones through imp roved technology management among others. However, the study also shows that there are weak and non-transparent institutional frameworks wh ich cause lack o f credibility and trusts of the government by the citizens. This study therefore reco mmends that that fuel subsidy should be removed gradually instead of one-off and that government s...
The socio-economics of the 2023 fuel subsidy removal in Nigeria
BizEcons Quarterly, 2023
The removal of fuel subsidy in Nigeria in 2023 has triggered a profound shift with far-reaching implications across economic, social, and environmental spheres. This study probes into the complex web of consequences arising from this drastic policy transformation, examining both the direct and indirect effects on the Nigerian society and economy. While the reallocation of resources from subsidies to vital sectors like healthcare, transport and education holds positive transformative potentials, ensuring effective utilization and equitable distribution of these funds warrants meticulous consideration. Achieving tangible improvements in essential services without unintentional negative consequences emerges as a central challenge. Drawing from historical precedents of subsidy removal attempts in Nigeria, the study underscores the importance of managing public sentiment and stakeholder reactions. The complexity arising from the interplay of economic, political, environmental, and societal factors necessitates a holistic approach. The study highlights the significance of informed decision-making to mitigate negative short-term impacts, harness long-term gains, and safeguard the vulnerable segments of the population. Policymakers must adopt a holistic approach that balances economic efficiency, social welfare, environmental sustainability, and inclusive growth. By addressing these multidimensional implications and drawing insights from both domestic and international experiences, Nigeria can navigate the complexities of subsidy removal effectively and work towards a prosperous and egalitarian society.
An Assessment of the Direct Welfare Impact of Fuel Subsidy Reform in Nigeria
Using the Household Expenditure Survey of 2010, th is paper measures the direct welfare impact of higher fuel prices on different socioeconomic groups in Nigeria. The analysis is carried out by segregating households into 3 different income groups and the welfare impact due to subsidy cut is measured. The results show that the reduction in welfare due to higher price is larger for the middle 40% co mpared to the top and the bottom 20%. Th is is due to the fact that the middle income group has a larger budget share on fuel. Fuel subsidies are found to be costly in protecting poor households due to substantial leakage of benefits to higher inco me group but the welfare loss for the lower income group due to subsidy cut is somewhat higher due to the s maller size of their inco me. Thus, wh ile subsidy reform is undeniably necessary, our findings suggest that it must be carried out cautiously. Contrary to co mmon ly held views, our study suggests that the reform must be accompanied with strategies and programs to mitigate the welfare loss, not only for the lower income but also the middle income group.
Nigerian government and oil subsidy regime: a horn of dilemma
International Journal of Development and Management Review, 2015
Virtually all modern independent States have, as their fundamental goals, the pursuit of the welfare and well-being of their citizens. To achieve these goals, the Nigerian State is required to harness its huge human and material resources for the development of the country. The paper examines the nature and politics of oil subsidy in Nigeria with the aim of identifying the forces behind subsidy removal. To scientifically analyze the issues raised, the study utilized political economy and public choice theories, an eclectic approach. The paper argued that the removal of fuel subsidy by the Federal Government in 2012 violates the fiduciary responsibility of the State as exposed in the preamble to the 1999 constitution. It showcases the insensitivity of the government to the social concerns of the citizenry and attempt by the oil cabal to privatize Nigeria. Given the catalogue of challenges facing fuel subsidy, it recommends among others, that institutions and institutional rules should be strengthened, be accountable and made autonomous of cabals and individuals who might want to manipulate them for group or personal interests. It concludes that unless the government predicates its legitimacy on the peoples' support and obedience derived from better socioeconomic performance, the country might experience another democratic reversal.
Developing Country Studies, 2016
Nigeria has struggled with several developmental policies since independence in 1960. These policies seem to have failed to address numerous challenges that prompted their adoptions, mainly because of the character of Nigerian state, alien nature of the policies, poor implementation and class preferences. This paper examined the gap between class consensus and public choice in Nigeria’s policy process with a specific focus on subsidy removal. It argued that lack of synergy between rentier class preferences and the pressing needs of Nigerians as well as leadership distrust seemed to have remained the greatest dilemma confronting subsidy policy in Nigeria. It concluded that this seemingly disconnect between the rulers and the ruled coupled with unrepentant pseudo and pretences of government have characteristically plunged subsidy removal policy in the morgue where political brigands audaciously plunder the gains accruable from it. The study adopted qualitative descriptive analytical m...