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ABSTRACT
This study delves into the ramifications of the fuel subsidy removal in Nigeria, a policy executed in 2020 aimed at alleviating the nation's fiscal challenges. The elimination of the subsidy resulted in a dramatic surge in fuel prices, triggering extensive protests and considerable economic turmoil. Following this policy change, there was a notable spike in inflation, a significant erosion of purchasing power, and a downturn in economic growth. The research indicates that the policy disproportionately impacted vulnerable segments of the population, intensifying issues of poverty and inequality. Despite the government's assertion that the removal would curb corruption and reduce fuel smuggling, the anticipated benefits have been slow to manifest. The study underscores that the abrupt removal of the subsidy has had far-reaching adverse effects, especially on the lower-income groups who are most reliant on subsidized fuel. This abrupt policy shift has led to an increase in the cost of living, further straining the financial resources of many households. Furthermore, the economic instability caused by the subsidy removal has deterred investment and slowed down economic activities, compounding the economic woes of the country. The research advocates for a more measured and inclusive strategy in implementing fuel subsidy reforms. It suggests that a gradual phasing out of the subsidy, coupled with targeted support measures for the most affected populations, could mitigate the negative impacts and foster a smoother transition. Additionally, the study emphasizes the importance of transparent and accountable governance in ensuring that the savings from subsidy removal are effectively utilized for developmental projects that benefit the broader population. This comprehensive approach could help balance the fiscal objectives of the government with the socio-economic well-being of Nigeria's citizens.
