Fuel subsidy removal and performance of SMEs in Anambra State Nigeria

https://doi.org/10.35912/ijfam.v6i4.2655
Published: Apr 14, 2025

Abstract:

Purpose: The decision by the government to rightly remove the subsidy on fuel has caused conflict and controversies. This study examines the effect of fuel subsidy removal and the performance of SMEs in Awka, Anambra State.

Method: The study adopted a survey research design, and data was collected with the aid of a questionnaire. The population of the study consists of 357 respondents randomly selected from four Small and Medium Enterprises in the Awka south local Government Area. The hypotheses were tested using simple linear regression.

Results: The findings revealed that Fuel Subsidy removal significantly affects the cost of living and transport fare in the Awka South Local Government Area.

Conclusions: It was concluded that the removal of fuel subsidies has led to a significant increase in transport fares and cost of living, particularly in local government areas of Nigeria and recommended that government should invest in vehicles that do not depend on fuel.

Limitations: The study encountered drawbacks and limitations due to the uncooperative attitude of the respondents, who refused to fill out the questionnaire and some returned it without filling it. The problem was mitigated by revisiting and convincing them of the need to assist in completing the questionnaire.

Contribution: The findings of this study will offer valuable insights that advance our understanding by employing rigorous statistical analysis. Research has quantified the short-term and long-term effects of subsidy removal on inflation, highlighting how fuel price hikes influence transportation, food prices, and household expenses.

Keywords:
1. fuel subsidy
2. subsidy removal
3. average cost of living
4. transportation sector
5. SMEs performance
Authors:
1 . Eruka Cosmas Ikechukwu
Tansian University, Umunya, Nigeria
2 . Stella Chinelo Nwagbala
Nnamdi Azikiwe University, Awka, Anambra State, Nigeria
https://orcid.org/0009-0000-7014-7305
3 . Francisca Nkiruka Ezeanokwasa
Tansian University, Umunya, Nigeria
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How to Cite
Ikechukwu, E. C., Nwagbala, S. C., & Ezeanokwasa, F. N. (2025). Fuel subsidy removal and performance of SMEs in Anambra State Nigeria. International Journal of Financial, Accounting, and Management, 6(4), 585–599. https://doi.org/10.35912/ijfam.v6i4.2655
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Issue & Section
Vol. 6 No. 4 (2025): March
Articles
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References

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    Edokobi, T., Nwagbala, S.C, & Okpala,N.E. (2020). Impact of Exchange Rate on the Performance of Small a Enterprises. International Journal of Trend in Scientific Research and Development, 2(4),1553-1559. doi:http://doi.org/10.31142/ijtsrd14449

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    Ozili, P. K., & Arun, T. (2023). Spillover of COVID-19: impact on the Global Economy Managing inflation and supply chain disruptions in the global economy (pp. 41-61): IGI Global.

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    Sweeney, S. (2020). Weaponizing the Numbers: The hidden agenda behind fossil-fuel subsidy reform. Paper presented at the New Labor Forum.

    Ude, C. (2023). June, the Foolish Man's Refinery, Fuel Subsidy and Everything In-Between. SSRN Electronic Journal. doi:http://dx.doi.org/10.2139/ssrn.4475410

    Umeji, G., & Eleanya, E. (2021). Assessing the impact of fuel subsidy removal in Nigeria on the Poor in the COVID-19 Era. SERBD-International Journal of Multidisciplinary Sciences.

  1. Adekoya, F. (2020). Economic necessity the dilemma of fuel subsidy removal.
  2. Aminu, S. (2018). Effect of Pump Price on Petrol Consumption in the Transport Sector of Lagos State. 6, 48-61.
  3. Anwanakak, E. (2023). The Impact of Fuel Subsidy Removal on Small and Medium Enterprises in Nigeria. Retrieved from https://www.linkedin.com/pulse/impact-fuel-subsidy-removal-small-medium-enterprises-edet-anwanakak
  4. Bashir, D. (2016). The economic implication of fuel subsidy removal in Nigeria. International Journal of Business and Administrative Studies, 2(4), 103. doi:http://doi.org/10.20469/ijbas.2.10003-4
  5. Ebimobowei, A. (2022). Oil revenue and economic growth of Nigeria: 1990–2019. African Journal of Economics and Sustainable Development, 5(1), 17-46. doi:http://doi.org/10.52589/AJESD-JWZXIFNW
  6. Edokobi, T., Nwagbala, S.C, & Okpala,N.E. (2020). Impact of Exchange Rate on the Performance of Small a Enterprises. International Journal of Trend in Scientific Research and Development, 2(4),1553-1559. doi:http://doi.org/10.31142/ijtsrd14449
  7. Ejoh, E. (2016). Fuel price hike: How Nigeria wasted N10trn on subsidy. Retrieved from https://www.vanguardngr.com/2016/05/fuel-price-hike-nigeria-wasted-n10trn-subsidy/
  8. Ezeanokwasa, F. N., Nwagbala, S. C., Nwachukwu, R., Oranusi, I. N., & Ani, A. E. (2023). Challenges And Opportunities: Unravelling The Dynamics Of Entrepreneurship Disruptions In Nigeria. Development Policy and Management Review (DPMR), 165-176. doi:https://doi.org/10.61731/dpmr.v3i2.31921
  9. Hayes, A. (2024). Revenue Definition, Formula, Calculation, and Examples. Retrieved from https://www.investopedia.com/terms/r/revenue.asp
  10. Hussaini, H. (2023). EXPLAINER: Benefits of fuel subsidy removal. Retrieved from https://dailytrust.com/explainer-benefits-of-fuel-subsidy-removal/
  11. Ikenga, A. F., & Oluka, N. L. (2023). An examination of the benefits and challenges of the fuel subsidy removal on the Nigerian economy in the fourth republic. International Journal of Applied Research in Social Sciences, 5(6), 128-142. doi:https://doi.org/10.51594/ijarss.v5i6.522
  12. Ilodigwe, A. O. (2023). Fuel subsidy removal and its negative impact on small and medium scale enterprises. Journal of Education, Humanities, Management and Social Sciences (JEHMSS), 1(4).
  13. IMF. (2013). Energy Subsidy Reform - Lessons and Implications. Retrieved from https://www.imf.org/en/Publications/Policy-Papers/Issues/2016/12/31/Energy-Subsidy-Reform-Lessons-and-Implications-PP4741
  14. Keypoint. (n.d.). Meaning of fuel subsidy removal. Retrieved from https://keypoint.ng/meaning-of-fuel-subsidy-removal/
  15. Manjo, Y. (2024). Effects of Fuel Subsidy Removal on Economy And Citizen's Welfare in Nigeria. 9(1), 203-220.
  16. Nwagbala, C., Kekeocha, E. M., & Edibo, M. D. (2024). Analysing the Impact of Minimum Wage Laws on Low-Income Workers in Selected Government Ministries, Agencies, Departments and Parastatals in Benue State. Scholars Journal of Economics, Business and Management, 11(11), 344-353. doi:http://doi.org/10.36347/sjebm.2024.v11i11.002
  17. Nwagbala, S. C., Ezeanokwasa, F. N., & Johnson, O. J. (2023). Naira devaluation and its effects on the performance of small and medium enterprises in awka-south, anambra state, Nigeria. International Journal of Capacity Building in Education and Management, 6(1), 1-10.
  18. Ocheni, S. I. (2015). Impact of fuel price increase on the Nigerian economy. Mediterranean Journal of Social Sciences, 6(1). doi:http://doi.org/10.5901/mjss.2015.v6n1s1p560
  19. Odinkalu, C. A. (2023). Three myths about subsidy removal. Retrieved from https://guardian.ng/opinion/three-myths-about-subsidy-removal/
  20. Olisah, C. (2020). FG gives reasons for fuel subsidy removal, discloses alternative to kerosene. Retrieved from https://nairametrics.com/2020/04/09/fg-gives-reasons-for-fuel-subsidy-removal-discloses-alternative-to-kerosene/
  21. Oyasipe, S. A., & Olukoya, F. I. (2024). The Effect of Fuel Subsidy Removal on The Profitability of En-Trepreneurial Businesses in Lagos State, Nigeria. FULafia International Journal of Business and Allied Studies, 2(1), 107-118.
  22. Ozili, P. (2022). COVID-19 in Africa: socio-economic impact, policy response and opportunities. International Journal of Sociology and Social Policy, 42(3/4), 177-200. doi:https://doi.org/10.1108/IJSSP-05-2020-0171
  23. Ozili, P. K., & Arun, T. (2023). Spillover of COVID-19: impact on the Global Economy Managing inflation and supply chain disruptions in the global economy (pp. 41-61): IGI Global.
  24. Roncaglia, A. (2019). The Founder of Neo-liberalism: Friedrich von Hayek The Age of Fragmentation: A History of Contemporary Economic Thought (pp. 59-87). Cambridge: Cambridge University Press.
  25. Sweeney, S. (2020). Weaponizing the Numbers: The hidden agenda behind fossil-fuel subsidy reform. Paper presented at the New Labor Forum.
  26. Ude, C. (2023). June, the Foolish Man's Refinery, Fuel Subsidy and Everything In-Between. SSRN Electronic Journal. doi:http://dx.doi.org/10.2139/ssrn.4475410
  27. Umeji, G., & Eleanya, E. (2021). Assessing the impact of fuel subsidy removal in Nigeria on the Poor in the COVID-19 Era. SERBD-International Journal of Multidisciplinary Sciences.