The Politics of Fuel Subsidy Removal:an Assessment of Its Impact to the Nigerian Economy, a Case Study of Zaria Local Government Area of Kaduna State

ABSTRACTFuel subsidy removal has been a major political and economic issue in Nigeria for several decades. The Nigerian government has historically subsidized petroleum products to alleviate the burden of high fuel prices on its citizens. However, this policy has also come under criticism for draining public finances, promoting corruption, and benefiting only a few, primarily urban dwellers and elites. The International Monetary Fund (IMF) and World Bank have repeatedly urged Nigeria to end the subsidies to reduce fiscal deficits and reallocate funds toward more productive uses. The purpose of this study is to assess the economic consequences of fuel subsidy removal in Zaria, including its impact on inflation, consumer purchasing power, and overall economic growth, evaluate the sector-specific implications of fuel subsidy removal on key sectors in Zaria, such as transportation, agriculture, manufacturing, and small-scale businesses and examine stakeholder responses to past fuel subsidy removal initiatives in Nigeria to derive lessons for future policy decisions. The study explains the concept of subsidy and fuel subsidy, history of subsidy removal in Nigeria, politics of fuel subsidy removal in Nigeria among others. The study is anchored on rentier state theory as theoretical framework. The study adopted survey design and descriptive in nature, comprehensive questionnaire was prepared and administered to residents of zaria local government, members of civil society organization and government official. In view of this, 383 copies of questionnaire were administered while 282 copies were retrieved. Percentage use to analyse the demographic information of the respondents, mean and standard deviation used to analyse the data collected from questionnaire, and chi-square used to test the assumption. Thus, the study revealed that The removal of fuel subsidies has had substantial economic consequences across various dimensions. reduced purchasing power, and a decline in living standards. The increased fuel prices have had a direct negative impact on businesses, especially small-scale enterprises. Respondents overwhelmingly reported that their business operating costs have increased and profitability has been significantly reduced. Sectors such as transportation and agriculture are particularly vulnerable. The study further recommends that, the government should consider reintroducing targeted fuel subsidies for critical sectors such as transportation, agriculture, and small-scale businesses. These sectors are highly sensitive to fuel price fluctuations, and targeted subsidies could help alleviate rising operational and production costs. For instance, a fuel subsidy or tax relief for public transport operators and farmers could help stabilize prices and prevent inflation from spiraling further and Given the significant impact of fuel subsidy removal on small-scale businesses, the government should design a support program that provides financial assistance, low interest loans, and grants to help these businesses cope with higher operational costs. Special emphasis should be placed on reducing transportation and energy costs, which are major contributors to business challenges. This will enable small businesses to stay afloat and protect jobs.