IMPACT OF FUEL SUBSIDY REMOVAL ON GOVERNMENT REVENUE IN NIGERIA: A COMPARATIVE ANALYSIS
Abstract
ABSRACT
This study assessed the impact of fuel subsidy removal on government revenue in Nigeria; a comparative analysis using monthly data spanning from 2020-2024 with a focus on the revenue patterns before (2020–2022) and after (2023–2024) the subsidy removal. Specifically, the study investigated the impact of fuel subsidy removal on government revenue in Nigeria, also examined the causal relationship between fuel subsidy removal and government revenue in Nigeria using the Ordinary Least Squares (OLS) to estimate the data gathered through the secondary source of data (CBN Statistical bulletin/WDI data and Nigerian Extractive Industry Transparency Initiative). The findings of the study revealed a positive impact of fuel subsidy removal on government revenue in Nigeria. Granger causality test was employed and the result shows the existence of a unidirectional causality flowing from fuel subsidy removal to government revenue without a feedback. Based on the findings, recommendation was made that government should allocate the revenue generated from fuel subsidy removal specifically for capital investments in infrastructure, education, healthcare, and transportation. This action should be backed by a legal framework that prevents the diversion of funds to recurrent or non-developmental expenditures.
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