Oil subsidy removal and corruption: Unveiling the link between politics and governance in Nigeria

Abstract

The main objective of this study is to critically examine the dynamics of fuel subsidy removal in Nigeria, with particular emphasis on its link to corruption, politics, and governance, as well as its implications for the socio-economic development of the people. The study is anchored on the Elite Theory, which posits that public policies are often shaped by a small ruling class whose interests may take precedence over the welfare of the general population. In other words, the design and implementation of fuel subsidy policies are influenced by political calculations, power dynamics, and the pursuit of personal or group gain, rather than the broader socio-economic development of citizens. The empirical analysis indicates that subsidy mismanagement, diversion of funds, and lack of transparency have disproportionately affected low- and middle-income Nigerians, while elite actors benefit from policy decisions. The study adopts a descriptive research design and relies primarily on secondary data from government reports, policy documents, academic literature, and credible research publications. The study concludes that fuel subsidy removal is not merely an economic adjustment but a political process intricately linked to corruption and governance challenges. It recommends that the government should design and implement targeted social safety net programs to cushion the impact of fuel subsidy removal on the most vulnerable groups, ensuring that the poor and marginalized are protected from sudden price shocks. Overall, efforts should be intensified to rehabilitate existing refineries and establish new ones, thereby reducing Nigeria’s dependence on imported fuel and minimizing the economic distortions and governance challenges associated with subsidy management.