Impact of Fuel Subsidy Removal on Economic Growth in Nigeria (2003-2023)

Abstract

This study examined the effects of the fuel subsidy removal on Nigerian economic growth. The decision to outrightly remove fuel subsidy on May 29, 2023, increased petrol price from N184 per litre to N1,200 per litre, and ignited a series of debates among Nigerians nationwide. Methodology employed in the study is a descriptive design. Time series data were used for the period of 21 years (2003-2023). Gross Domestic Product was a proxy as an independent variable for measuring economic growth, while unemployment rate (UNEMPR, interest rate (INTR), and investment rate (INVR) were the dependent variables. Three hypotheses were used to analysis this work and its findings are that there is significant and negative impact of unemployment rate on economic growth with R² = -1.020667, p-value 0.0003, Interest rate has significant and negative impact on economic growth of R² = -1.750105, p-value = 0.0024 and Investment rate also has significant and negative impact on economic growthofR² = -0.001687, p-value 0.1839. It was concluded that fuel subsidy removal has a negative and significant impact on economic growth in Nigeria and recommended that funds saved from subsidy removal should be channeled into vital sectors that will create more employment opportunities to the teeming youth to reduce unemployment. Government should make interest free loan available or reduce interest rate on loan to encourage investor to borrow and invest into agricultural and other viable sector to reduce the high cost on food prices and over dependency on importation and also government should provide interest free loan for small businesses in the informal sector to boost their businesses, and empower them to fight poverty and create more jobs for unemployed Nigerians