Title: Fuel Subsidy Removal and Economic Degradation in Nigeria.
Authors: . Gamboro Bitrus Adi, . Tanko Abdulmumini & . Joseph Manga
Volume: 10
Issue: 7
Pages: 71-76
Publication Date: 2026/07/28
Abstract:
Fuel subsidy is the government intervention to subsidized fuel for domestic consumption to reduce the price. The immediate effects of fuel subsidy removal in Nigeria included sharp increases in petrol prices, transportation costs, inflation, food prices, and production costs across sectors of the economy. Household purchasing power declined significantly, leading to worsening poverty and reduced living standards. The primary Objective of the study is to examine the effect of fuel subsidy removal on economic degradation in Nigeria. The study adopted Welfare Economics Theory as its theoretical framework. Ex-post Facto research design was used for the research where only secondary sources of data were utilised. The study found out that removal of fuel subsidy in Nigeria significantly increase inflation particularly higher transportation costs and increase production expenses due to increase in price of petrol. Also, that fuel subsidy removal significantly increase poverty in Nigeria through higher inflation and declining household welfare leading to abject poverty, it also led to increase in production and operations cost for business, particularly manufacturing firms and small enterprise. It equally affected business turnover and employment opportunities in urban Nigeria. The study further recommended implementation of subsidy reforms and fiscal interventions to reduce inflationary pressures, invest subsidy savings in infrastructures and introduce a transparent social and empowerment programmes and inject the surplus money realize as a result of subsidy removal into the economy to bring about rapid economic growth of Nigeria.