Fuel Subsidy Removal and the Standard of Living of Nigerians: A Study of Tinubu-Led Administration

Abstract

Until recently, fuel subsidy has been an integral part of Nigeria economic policy for quite a long period of time. This is in view of it anticipated benefits of enhancing welfarism among the masses as well as ensuring sustainable economic development. Paradoxically, the benefits of fuel subsidy were monopolized by key political actors and oil merchant through their insidious tentacles of corruption. This prevailing economic crisis led to the removal of fuel subsidy by Tinubu-Led-Administration in 2023. While some scholars argued that fuel subsidy removal is an austerity measure that is imperative for sustainable economic development considering the prevailing corrupt practices that had previously enveloped the oil sector in the country, others argue that it has only led to the exacerbation of hardship in the country. Arising from this existing debate in the scholarship, this article was geared towards examining the effect of fuel subsidy removal on the cost of petroleum/transportation and standard of living in Nigeria. Extant literatures were consulted and reviewed while the theory of Rentier State by Hazem El Beblawi and Giacomo Luciani (1987) was used to explain the controversy involved in fuel subsidy removal policy in the country. Using the descriptive research design, the study reveals that fuel subsidy removal has led to high cost of petroleum as well as standard of living in Nigeria. Based on this, the study recommends that proactive measures such as social welfare programmes and price control should be strategically initiated and implemented in the country.