The impact of fuel subsidy removal on Socio economic development in Enugu State, Nigeria

¹Anikeze Nnaemeka Hillary, ¹Igbokwe Chukwuma Igbokwe and ¹Chinze Ifeoma

¹Department of Public Administration, Faculty of Management Science Enugu StateUuniversity of Science and Technology, Enugu State, Nigeria

Email: nnaemeka.anikeze@esut.edu.ng

ABSTRACT

This study critically examined the impact of fuel subsidy removal on Socio economic development in Enugu State, Nigeria, with specific focus on its effects on inflation rate, household income and purchasing power, and standard of living. The removal of fuel subsidy by the Federal Government of Nigeria in mid-2023 led to sharp increases in fuel prices, triggering significant economic adjustments across households, the informal sector, and small and medium enterprises (SMEs), across the country. The research adopted a descriptive survey design. The study population comprised 15,175 respondents, consisting of 4,040 households across income categories, 3,811 informal sector operators, and 7,324 SMEs dependent on fuel for operations in Enugu State, Nigeria. Using Taro Yamane’s sampling formula at a 5% margin of error, a sample size of 390 respondents was selected through stratified and simple random sampling techniques. Primary data were collected using structured questionnaires, and quantitative data were analyzed using simple percentages, while Chi-square tests were employed to test the research hypotheses at a 0.05 level of significance. The findings of the study revealed that subsidy removal significantly increased inflation in Enugu State, particularly through rising transportation and food costs. Household incomes and purchasing power declined markedly, while the general standard of living deteriorated, especially among low- and middle-income earners, informal sector workers, and SMEs. The study concluded that although subsidy removal may offer long-term fiscal benefits, it imposes substantial short-term welfare costs on residents. The study recommends the implementation of targeted social protection programs, support for SMEs and the informal sector, improvement of public transportation, wage adjustments to match inflation, price monitoring, and investment in alternative energy sources. These measures would help mitigate the adverse effects of subsidy removal while ensuring that its intended economic benefits are achieved sustainably.

Keywords: Subsidy, Development, Inflation Rate, Household Income, Purchasing Power, Standard of Living

CITE AS: Anikeze Nnaemeka Hillary, Igbokwe Chukwuma Igbokwe and Chinze Ifeoma (2025). The impact of fuel subsidy removal on Socio economic development in Enugu State, Nigeria. INOSR ARTS AND MANAGEMENT 11(2):1-10. https://doi.org/10.59298/INOSRAM/2025/112.110