FUEL SUBSIDY REMOVAL AND NIGERIA’S ECONOMIC RESILIENCE: IMPLICATIONS FOR GROWTH, INFLATION, AND CONSUMER WELFARE IN A POST-SUBSIDY ERA

Abstract

This study examines the relationship between fuel subsidy removal and Nigeria’s economy, with a focus on its implications for economic growth, inflation, and consumer purchasing power. Specifically, the study analyzes the effects of policy changes resulting from fuel subsidy removal on Nigeria’s economic growth rate and evaluates how the reallocation of government expenditure influences inflation and consumers' ability to purchase essential goods and services. Adopting a descriptive survey research design, primary data were collected from 300 respondents, including officials from economic institutions, fuel marketers, and civil society representatives, selected through stratified random sampling. A structured questionnaire designed with a 5-point Likert scale was employed to capture relevant economic perceptions and experiences. Validity was through expert review, while reliability was confirmed via a pilot study, yielding a Cronbach’s Alpha coefficient of 0.83. Data were analyzed using descriptive statistics and multiple regression analysis via SPSS version 26. Findings revealed that while fuel subsidy removal contributes positively to fiscal stability and macroeconomic restructuring, it also introduces short-term inflationary pressures that reduce consumer purchasing power. The study concludes that subsidy reform policies must be accompanied by strategic reinvestment in infrastructure and social protection programs to mitigate socioeconomic hardships. It recommends transparent reallocation of savings to critical sectors and diversification of the economy to enhance resilience and inclusive growth.