Influence of Fuel Subsidy Removal on Economic Life of Low-Income Earners in Nigeria

Abstract

 This study assessed the influence of fuel subsidy removal on economic life of lowincome earners in Nigeria. The need to address the challenges of economic hardship
caused by abrupt removal of fuel subsidy particularly on low-income earners, and
determine government roles to improve the well-being of poor Nigerians at large led to
the study. Three research objectives and questions guided the study. Descriptive survey
research design was used. The population of the study was 133 million (63%) Nigerians
who are considered poor by the World Bank and Nigerian Living Standards Survey
(NLSS). This study adopted the Nigerian Living Standards Survey (NLSS) of 22,110
households as sample size. A close ended questionnaire was used and data collected were
analyzed using Statistical Package for Social Sciences (SPSS version 20). Decisions
were based on the results of statistic mean ratings and t-test was used for hypothesis
testing at 0.05 probability level of significance. The findings of the study revealed that
fuel subsidy removal has negative impacts on the economic purchasing power and
standard of living of low-income earners in Nigeria. The study recommended that
government should increase purchasing power of low-income earners by reducing the
pumping price of petrol to curb inflation and stabilise what real value of money can
afford to buy; refocusing economic reforms towards reduction in prices of goods and
services, transportation and cost of living; ensure that palliatives actually get to the poor,
redirect revenue from subsidy removal to implement infrastructures and facilitate full
operational efficiency of local refineries at affordable pumping price.