FUEL SUBSIDY REMOVAL: PROSPECTS AND CHALLENGES ON THE NIGERIAN ECONOMY (EVIDENCE FROM AKURE, ONDO STATE METROPOLIS) (original) (raw)
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PROSPECTS AND CHALLENGES OF FUEL SUBSIDY REMOVAL ON THE NIGERIAN ECONOMY
For some years now, one of the most taunting and complex socio-economic policy issues in Nigeria remains the issue of Fuel subsidy removal. The decision by the government to out rightly remove the subsidy on fuel ignited series of arguments and protests nation-wide. Despite the global reduction in the price of oil, Nigeria experiences high price of oil. This study examines the prospects and the challenges of fuel subsidy removal on the Nigerian economy. The methodology employed is the Anova statistics which was applied to test the hypotheses stated in the study at 0.05 significant level. The results obtained showed that fuel subsidy removal affects the cost of living, reduces the consumption pattern, savings and investment level of the people and that it is a plague to the Nigerian economy and her people. As a result, it is recommended in this study that the widespread of corruption embedded in the system should be eradicated and be dealt with it, appropriately through transparent fiscal operation. To diversify the economy by embracing agricultural production of our food stables instead of importing them likewise, Nigeria to build more refineries and the major refineries should work in full capacity. These programme are growth prospects that will brighten the Nigerian economy and her people in the nearest future.
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.
International Journal of Economics, Commerce and Management
This study investigates the impact of the fuel subsidy removal on the socioeconomic development in Nigeria. Using a price pass-through model, the study employed the error correction model to investigate both the short and long run impact of fuel subsidy removal on socioeconomic development in Nigeria using data from 1980 to 2012. The test for trend variability (unit root) to determine the stability of data was done using the Augmented Dickey Fuller and Phillip-Perron test. The study therefore discovered that the fuel subsidy removal does not have short run impact on the social well-being of Nigerians. However, the long run impacts of this policy tells a sterling story, as it was revealed that the deregulation of the downstream sector will ultimately leads to future economic development of the country. This result is therefore consistent with theoretical and some empirical findings that removal of distortions and market efficiency results in economic growth. It is however recommended that there should deliberate and sincere attempt by the government to effectively and efficiently utilize the subsidy funds into strategic developmental projects so as to fulfil the potentials of subsidy removal.
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...
The Impact of Fuel Subsidy Removal on Socio-Economic Development in Nigeria
2014
This study investigates the impact of the fuel subsidy removal on the socio-economic development in Nigeria. Using a price pass-through model, the study employed the error correction model to investigate both the short and long run impact of fuel subsidy removal on socio-economic development in Nigeria using data from 1980 to 2012. The test for trend variability (unit root) to determine the stability of data was done using the Augmented Dickey Fuller and Phillip-Perron test. The study therefore discovered that the fuel subsidy removal does not have short run impact on the social well-being of Nigerians. However, the long run impacts of this policy tells a sterling story, as it was revealed that the deregulation of the downstream sector will ultimately leads to future economic development of the country. This result is therefore consistent with theoretical and some empirical findings that removal of distortions and market efficiency results in economic growth. It is however recommend...
Fuel subsidy removal and economic welfare of Nigerians
International Journal of Applied Research , 2024
The study investigated the effects of the fuel subsidy removal on the economic welfare of Nigerians within the period 1990 to 2022. Using a price pass-through model, the study employed the use of unit root test, cointegration, Pairwise Granger Causality Tests, and VECM. The study examines both the short and long run effect of fuel subsidy removal on the economic welfare of Nigerian. The test for trend variability (unit root) to determine the stability of data was done using the Augmented Dickey Fuller and Phillip-Perron test. The result revealed that the Price of Petroleum Motor Spirit, Inflation rate, Unemployment, Population increase will lead to decline on economic welfare of most Nigerians due to the negative impact of this variables on economic welfare. While Per Capita Income will improve the economic welfare in Nigeria. The study recommend the followings: fuel subsidy removal should not be a prompt decision without addressing the issue of mass unemployment in Nigeria; The government should set aside funds to take care of the welfare of the masses for fuel subsidy removal to thrive, as is obtainable in other countries of the world; The government should tackle the issue of sore inflation in Nigeria. The government should promote the adoption of renewable energy sources such as solar, wind, and hydropower Keywords: Fuel subsidy removal, per capita consumption, economic welfare, price pass-through
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.
The Impact of Fuel Subsidy on the Nigerian Economy in the Fourth Republic: An Analysis
INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH
Fuel Subsidy means that a fraction of the price that consumers are supposed to pay to enjoy the use of petroleum products is paid by government so as to ease the price burden. Ever since President Goodluck Jonathan mooted the removal of fuel subsidy in 2012, the debate has been whether or not to remove the fuel subsidy. The history of fuel subsidies dates back to the '70s, when they were first introduced in Nigeria in response to the oil price shock in 1973. However, different regimes have been subsidizing fuel imports with Huge budgetary provisions but the actual amounts expended on Fuel subsidy and paid to Independent Oil Marketers had remained a myth. Besides, the actual impact of fuel subsidy on the Nigerian economy had become a subject of theoretical debate. This study is a bold attempt to determine and estimate the annual levels of fuel subsidy since 1981 and to empirically evaluate its impact on the Nigeria economy on the one hand as well as measure the shifts and changes...
Implications of fuel subsidy removal on the Nigerian economy
Public Policy’s Role in Achieving Sustainable Development Goals, 2023
Using the discourse analysis methodology, we offer some insight into the macroeconomic and microeconomic implications of the 2023 fuel subsidy removal in Nigeria. The positive implications are that fuel subsidy removal would free up financial resources for other sectors of the economy, incentivize domestic refineries to produce more petroleum products, reduce Nigeria's dependence on imported fuel, increase employment, channel funds for the development of critical public infrastructure, reduce the budget deficit and generate a budget surplus in the near future, reduce government borrowing, curb corruption associated with fuel subsidy payments, increase competition, reinvigorate domestic refineries and reduce pressure on the exchange rate. The negative implications are that fuel subsidy removal may decrease economic growth in the short term, increase inflation, increase poverty, increase fuel smuggling, increase crime, increase the prices of petroleum products and loss of jobs in the informal sector. It is recommended that the government should carefully evaluate the impact of fuel subsidy removal on individuals and businesses and provide palliatives and other economic relief programs to cushion the adverse effect on individuals and firms.
Impact of Fuel Subsidy Removal on Gross Domestic Product and Transportation Cost in Nigeria
European Journal of Theoretical and Applied Sciences
This study identified economic problem arising from transportation cost due to removal of fuel subsidy in Nigeria. We therefore decided to collect secondary data from Statista, World Bank web link and prices of Premium Motor Spirit (PMS) from 2011-2023. Data on the three variables i.e GDP, the price of PMS and inflation rate were correlated to determine their level of relationships. Pearson Product Moment Correlation Coefficient was used to analyse the secondary data with the aid of SPSS software. The result from the analysis indicated that, inflation increased by 64% with increased fuel price decreasing GDP by 42.5%. Inflation is witnessed to have increased and GDP decreases. It can be seen that fuel is very critical to the development of Nigeria. It has a direct effect on GDP and surprisingly price inflation has impact on Nigerians. Solving one problem perhaps of fuel has a significant effect on economy. There are two things that should be done as alternatives to subsidy removal; ...