EFFECT OF REMOVAL OF FUEL SUBSIDY ON PRIVATE BUSINESSES (A CASE STUDY OF SELECTED SMES IN DELTA STATE)
Abstract
ABSTRACT
This research work titled “Removal of Fuel Subsidy on Private Business: A Study of Selected SMES in Delta State. The main objective of the study was to determine the effect of removal of fuel subsidy on private businesses, while the specific objective were to examine the effect of reduction in disposable income, rise in transportation cost, increase in production and inflationary pressure on private businesses. Research questions and hypothesis were formulated based on the specific objectives. Literature related to the topic under studied were reviewed. The research design adopted for the study was the survey design, the population of study was comprised of selected SMES in Delta State which had a population of 250 workers, a sample size of 154 was determined using Taro Yamane’s formula. The sampling technique that was adopted is the simple random sampling methods the research instrument was validated by using face and content validity and the test-re-test method was used for reliability of the instrument. Data was presented using descriptive statistic and chi-square was used in testing the hypothesis. The findings revealed that there is a negative relationship between removal of fuel subsidy and private businesses. The study concludes that removal of fuel subsidy affects private business negatively. All the specific independent variables correlated negatively with the dependent variable. Finally the study recommends that managers should respond to the reduction in disposable income due to the removal of fuel subsidies by adjusting product pricing and offering value-driven options to retain customers, also 150 be addressed is the rise in transportation cost due to removal of fuel subsidies by optimizing delivery routes, sourcing locally or reducing non-essential travel and managers should mitigate the increase in production cost due to the removal of fuel subsidies. By improving operational efficiency and investing in cost-saving technologies, managers should prepare for inflationary pressure due to removal of fuel subsidies by revising budgets, monitoring expenses and adjusting pricing strategies accordingly.
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