THE IMPACT OF FUEL SUBSIDY REMOVAL ON SOCIO-ECONOMIC DEVELOPMENT IN NIGERIA AN ECONOMETRIC INVESTIGATION

This study investigates the impact of the fuel subsidy removal on the socio-economic development in Nigeria. Using a price pass-through model, the study employed the error correction model to investigate both the short and long run impact of fuel subsidy removal on socio-economic development in Nigeria using data from 1980 to 2012. The test for trend variability (unit root) to determine the stability of data was done using the Augmented Dickey Fuller and Phillip-Perron test. The study therefore discovered that the fuel subsidy removal does not have short run impact on the social well-being of Nigerians. However, the long run impacts of this policy tells a sterling story, as it was revealed that the deregulation of the downstream sector will ultimately leads to future economic development of the country. This result is therefore consistent with theoretical and some empirical findings that removal of distortions and market efficiency results in economic growth. It is however recommended that there should deliberate and sincere attempt by the government to effectively and efficiently utilize the subsidy funds into strategic developmental projects so as to fulfil the potentials of subsidy removal