In general, studies suggest that the removal of fuel subsidies has a complex impact on the Nigerian economy.

The impact of fuel subsidy removal, Forex liberation, and increased exchange rate on the Nigerian economy has been the subject of extensive research and analysis. Several studies have examined the consequences of these policy changes on various aspects of the economy, including carbon emissions, prices of goods and services, the welfare of the citizens, and overall economic performance.

One study by Adekunle & Oseni (2021) investigated the relationship between fuel subsidies and carbon emissions in Nigeria. The findings revealed that fuel subsidy removal can reduce carbon intensity in the short run and long-run. Removing fuel subsidies can have a positive impact on environmental sustainability. However, the study also highlighted the need for complementary policies to cushion the relative income loss to the citizenry.

Inegbedion et al. (2020) examined the effects of petroleum subsidy withdrawal and fuel price hikes on the Nigerian economy. The study employed an input-output model to determine the value added per sector. The results indicated that the removal of petroleum subsidies can stimulate increases in fuel prices and prices of products in other sectors of the economy. This suggests that fuel subsidy removal can have inflationary effects and impact the prices of goods and services.

Another study by Akanle et al. (2014) focused on the governance and social protest surrounding fuel subsidy removal in Nigeria. The paper argued that subsidy removal leading to high fuel prices may be unjustified given the wide income gap between workers in Nigeria and those in other oil-producing nations. This highlights the potential social implications of fuel subsidy removal and the need for equitable policies.

Furthermore, Amin et al. (2018) examined the impacts of fossil fuel subsidy removal on the economy of Bangladesh. The study revealed that the elimination of fuel subsidies can have adverse effects on the macroeconomic performance of the economy, leading to an increase in poverty rates. This suggests that removing fuel subsidies can have distributional consequences and impact the population's welfare.

Overall, the research indicates that the impact of fuel subsidy removal on the Nigerian economy is multifaceted. While removing fuel subsidies can positively affect carbon emissions and environmental sustainability, it can also lead to inflationary pressures and impact the prices of goods and services. Additionally, the social implications and distributional consequences of fuel subsidy removal should be carefully considered to ensure equitable outcomes for the population.

References:

Adekunle, I., Oseni, I. (2021). Fuel Subsidies and Carbon Emission: Evidence From Asymmetric Modelling. Environ Sci Pollut Res, 18(28), 22729-22741. https://doi.org/10.1007/s11356-021-12384-0

Akanle, O., Adebayo, K., Adetayo, O. (2014). Fuel Subsidy In Nigeria: Contexts Of Governance and Social Protest. International Journal of Sociology and Social Policy, 1/2(34), 88-106. https://doi.org/10.1108/ijssp-01-2013-0002

Amin, S., Marsiliani, L., Renstr?m, T. (2018). The Impacts Of Fossil Fuel Subsidy Removal On Bangladesh Economy. BDS, 2(XLI), 65-86. https://doi.org/10.57138/bdtt3149

Inegbedion, H., Inegbedion, E., Obadiaru, E., Asaleye, A. (2020). Petroleum Subsidy Withdrawal, Fuel Price Hikes and The Nigerian Economy. IJEEP, 4(10), 258-265. https://doi.org/10.32479/ijeep.8307