Fuel subsidy and implications for social spending in Nigeria: A research note

Abstract

The issue of reforming critical sectors of the Nigerian economy, especially the petroleum
industry, has grown in prominence recently. It has triggered debate among policy analysts
from different parlance arguing in favour or against reforms. Policy analysts and key
stakeholders have re-echoed the need for fuel subsidy reform, given its socio-economic cum
political implications. Fuel subsidy can exact a fiscal burden on the government, crowding out
investment in social factors like education and health. This paper is a research note exploring
the implications of fuel subsidy removal on social spending in Nigeria. Some suggestions are
proffered for consideration by the government, which will help offset the accompanying socioeconomic pressures of fuel subsidy reforms.