THE IMPACT OF FUEL SUBSIDY REMOVAL ON SOCIO-ECONOMIC DEVELOPMENT OF NIGERIA

Abstract

The study examines the impact of the fuel subvention removal on Nigeria’s economic growth and development. The study employed a price pass-through model and an error improvement model to investigate the short- and long-run impacts of fuel support removal On “Socio-economic development,” using data spanning from 1980 to 2022. The test for drift variability to ascertain the solidity of data was done applying the Augmented Dickey-Fuller and Phillip-Perron tests.  From the results, fuel aid elimination has no short-term effect on the welfare of the Nigerian people but has long-run positive impacts on the people if funds from subsidy removal are properly channeled. The outcome is in consonance with most scholars’ view that subsidy removal distorts market efficiency and hence negatively affects economic growth.  Based on our findings, we make the following recommendations: the government should thoughtfully and sincerely turn the subsidy resources into tactical developmental ventures so as to justify the gains of fuel subsidy. Again, efforts should be made towards rejuvenating and revamping the nation’s plants; this will help enhance our infant industry production and ultimately reduce the price of fuel while encouraging the nation’s economic growth.