Effect of oil subsidy removal on Nigeria's trade climate and national development prospects in Cross River State

Abstract

This study examines the effect of oil subsidy removal on Nigeria’s trade climate and national development prospects, with particular focus on Cross River State. Nigeria’s long-standing fuel subsidy regime was originally designed to stabilize domestic fuel prices, cushion vulnerable populations, and stimulate economic activities. However, the policy imposed significant fiscal burdens on the federal government, constrained public expenditure on infrastructure, and contributed to market distortions. The recent removal of the subsidy has generated wide-ranging economic consequences, especially in trade-related activities. This study adopts a correlational research method. 395 respondents were selected through stratified random and purposive sampling techniques across two Local Government Areas in Cross River State, and data were obtained using a questionnaire. Data were analysed using simple linear regression to test the hypothesis. Hypothetical analysis and results indicated a statistical connection between subsidy removal and increased transportation, production costs, rising prices of goods and services, and heightened pressure on small and medium-scale enterprises in Cross River State. Import and distribution chains have been adversely affected, weakening the competitiveness of local businesses. The study recommends that the ministry of humanitarian and poverty alleviation at federal and state government should strength social safety nets and targeted support through cash transfers, transport vouchers and food subsidies for vulnerable households to cushion immediate welfare losses. This protects living standards while market prices adjust. Also, the federal government should reduce trade barriers, streamline customs processes, and foster logistics infrastructure to boost intra-Nigerian and cross-border trade flows helping local producers benefit from broader market access.