Effects of Fuel Subsidy Removal on Rural Household Transportation Costs in Soba and Kubau LGAs, Kaduna State

Abstract

The subsidy on Premium Motor Spirit (PMS) was stopped by the current democratically elected president of Nigeria. Such decision bears so many implications which includes economic, political and socio-cultural. The most glaring implication of such decision is the immediate economic implication which is the cost of transportation and by extension also has a sporadic reaction on other basic needs of livelihood. The main objective of this study is to examine the effects of fuel subsidy removal on household cost of living with special reference to cost of transportation of people, goods and services. The population of the study comprised of total population of people in Soba and Kubau Local Government Areas (LGAs) of Kaduna State which stands at 844,900. The sample size for the study is 384 which was determined by the Krejcie and Morgan (1970) table for the determination of sample size. The random sampling method was used to select respondents for the study in both Local Government under study. A total of 293 questionnaires were returned by the respondents. Inferential statistic tool was used to carryout analysis and test of regression at 0.5 level of significance. The SPSS 2022 version was adopted for the data analysis. The study revealed that the subsidy removal has significant effect on the livelihood of the rural household habitant particularly their ability to transport themselves to work, market place and also transportation of their goods and services to the market. The study also revealed that as a result of the increase in the cost of transportation, many businesses have lost both capital and profit which has rendered them jobless. The study recommends using savings from fuel subsidy removal to build modern refineries that enhance local production and distribution in Nigerian currency, thereby reducing fuel and transportation costs. It also urges government to provide subsidised transport for rural communities and extend financial grants to Medium and Small-Scale Enterprises to ease the economic impact of the subsidy removal.