Effect of Fuel Subsidy Removal on Households’ Consumption Expenditure in Kaduna State, Nigeria

Abstract

Petrol and other crude oil products are the major contributory factors to the growth and development of Nigerian economy as major sources of revenue and employment opportunities to the teeming population in the country. The removal of fuel subsidy in Nigeria has affected every micro and macro-economic variables such as demand and supply, consumption and investment expenditures, stock prices, inflation rate, and exchange rate, oil revenue and so on. The aim of the paper is to empirically analyze the effect of fuel subsidy removal on households’ consumption expenditure in Kaduna state, Nigeria. The population of the study includes households residing in both Urban and Rural areas (Zaria, Sabon Gari, Kaduna North, Kaduna Sauth, Kajuru, and Kachia) with diverse socio-economic background that rely on fuel as means of transportation and other essential activities in the study area. The made use of primary source for data collection which involves conducting Key Informant Interview (KII) and administering structured questionnaires to the households. A multi-stage sampling procedure will be used for the study; where at least: a total sample size of 300 households will be randomly selected using Multi-stage Nonfinite Population (MNP). From the chi-square results analysis revealed that fuel subsidy removal has affected household’s consumption expenditure especially on food and services where most household felt their prices cannot longer solve their immediate needs like before, their demand for food, services, housing rent, and other utilities were affected. It is however recommended Kaduna State Government and Federal Government of Nigeria should embark on policies and programmes that will mitigate this policy of fuel subsidy removal through making domestic goods especially food production and services more efficient so as cushion the effect of fuel subsidy removal.