Oil Subsidy and Nigeria’s Economic Growth: A Blessing or a Burden?

Gbolahan Solomon Osho

International Journal of Economics and Finance, 2025, vol. 17, issue 10, 55

Abstract: This comprehensive analysis focuses on the complex relationship between oil subsidies and the Nigerian economy. Nigeria is characterized by substantial crude oil production, and the implications of its intricate subsidy regime are far-reaching. This study examines the multifaceted impact of oil subsidies on Nigeria’s economy, shedding light on fiscal and social dimensions. However, the rising costs of these subsidies have become a critical concern, contributing to a widening budget deficit and potentially straining debt sustainability. The analysis also unveils the complex dynamics surrounding the removal of subsidies. Influential stakeholders with a vested interest in subsidy continuation and public concerns over potential hardships contribute to the policy’s persistence. The research aligns with international recommendations, notably from the International Monetary Fund, advocating for the phased removal of untargeted fuel subsidies. Such a step is anticipated to create fiscal room, enhance debt sustainability, and encourage transparent allocation of saved funds toward strategic social and economic programs. In summary, this analysis emphasizes the complexity of the oil subsidy and its repercussions on Nigeria’s economy. Finally, as Nigeria charts its course ahead, the study underscores the necessity for informed policy decisions grounded in a comprehensive understanding of the intricate interactions between oil subsidies and the nation’s economic and social landscape.

Date: 2025
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