Assessment Of Fuel Subsidy Removal On The Development Of Nigeria's Economy

Abstract

The removal of fuel subsidies in Nigeria represents a critical policy shift with profound implications for the nation's economic trajectory. This paper provides a rigorous assessment of the impact of fuel subsidy removal on Nigeria's economic development, moving beyond descriptive accounts to offer analytical depth. Adopting a qualitative research design grounded in documentary analysis, the study systematically reviews and synthesizes existing literature, policy documents, and empirical reports from 2023 to 2025. Theoretically framed by Public Choice Theory, the analysis explores the political economy incentives that sustain or dismantle subsidy regimes. The paper finds that while subsidy removal generates immediate adverse effects including sharp increases in transportation and production costs, inflationary pressures, and heightened living expenses it also creates fiscal space for long-term developmental investments. Critically, low-income communities bear a disproportionate burden. The study concludes that the transformative potential of subsidy removal hinges on transparent reinvestment of savings into public infrastructure, social protection programs, and renewable energy. The paper contributes to knowledge by synthesizing recent empirical evidence and providing a Public Choice-based evaluation of Nigeria’s 2023–2025 subsidy reform outcomes, including a historical analysis of previous failed attempts.