NIGERIAN POLITICAL ECONOMY AND THE FUEL SUBSIDY REMOVAL: A MARRIAGE OF INCONSEQUENTIAL PHENOMENA

Abstract

The removal of fuel subsidies has been a contentious issue which often brings up arguments on its economic and social implications on the citizenry. This paper delves into the multifaceted aspects of removing the fuel subsidy, considering the effects on the society. Economically, the removal of fuel subsidies can lead to increased government revenue reduced fiscal burden and improved resource allocation. However, it may also result in short-term inflationary pressures and heightened transportation cost. Subsidy exists where citizens are assisted by the government to pay less than the market price of a given commodity. In respect of subsidy, it means that citizens would pay below the market price per liter of petroleum product. In addition, the proceeds from the removal have never been translated into the development of basic infrastructure and could ordinarily add value to the lives of Nigerians. This situation notwithstanding, some stakeholders were not comfortable with the continuity syndrome of payment of fuel subsidy in Nigeria. It is against this backdrop that this paper seeks to examine the issue of fuel subsidy and find out the extent to which it has impacted on the lives of the citizens in Nigeria. Hence, policy makers must adopt a comprehensive approach, integrating targeted social assistance programs and structural reforms to mitigate the negative effects of subsidy removal, ensure social inclusivity and promote sustainable economic growth.