Fuel Subsidy Removal and Its Implications for Governance and Socio Economic Development in Nigeria

Abstract

The removal of the fuel subsidy by President Bola Ahmed Tinubu's administration on 29 May 2023 constitutes one of the most consequential and contested economic policy decisions in Nigeria's post-independence history. With petrol pump prices rising overnight from approximately ₦185 per liter to over ₦500 per liter, a shock of more than 167 percent, the policy triggered cascading effects across every sector of the Nigerian economy and social system. This study examines the governance, economic, and socio-developmental implications of fuel subsidy removal in Nigeria, drawing on contemporary empirical data, peer-reviewed scholarship, policy documents, and international development assessments published between 2020 and 2025. The study is organized around five specific research objectives: to examine governance and public accountability outcomes; to assess socio-economic consequences for Nigerian citizens; to evaluate the effectiveness of government palliative interventions, to determine the relationship between subsidy savings and national development; and to proffer evidence-based policy recommendations. Employing a qualitative research design anchored in five theoretical frameworks such as Public Choice Theory, Structural Functionalism, Political Economy Theory, Keynesian Economic Theory, and Governance Theory, the study synthesizes evidence from across the academic and policy literature. Findings indicate that while fuel subsidy removal generated significant savings for the federal government and created space for fiscal consolidation, the absence of adequate pre-removal preparation, targeted compensatory mechanisms, and transparent accountability structures severely undermined the development potential of the reform. Headline inflation rose from 22.41 per cent in May 2023 to a peak of 34.19 per cent in June 2024 (NBS, 2024). Poverty levels deepened, with the World Bank (2024) estimating that Nigeria's poverty rate rose from 44 per cent in 2021 to 46 per cent in 2023, placing over 104 million Nigerians in poverty. Government palliative measures, including conditional cash transfers of ₦25,000 per month to 15 million households and CNG bus deployment, fell significantly short of the scale required to cushion the shock. The study concludes with a comprehensive set of policy recommendations oriented toward making future fiscal reforms more equitable, transparent, and development-centered.