Assessment of the Socioeconomic Impact of Fuel Subsidy Removal on Transportation in Ile-Ife, Osun State, Nigeria

Abstract

Fuel subsidies in Nigeria were originally designed to safeguard energy affordability; their removal has consistently generated fiscal relief at the expense of significant socioeconomic disruption. This study examines the impact of subsidy removal on transportation and household welfare in Ile-Ife, Nigeria. Utilizing a descriptive survey research design, primary data were collected from 370 respondents—including civil servants, traders, and commercial drivers—selected through a multistage sampling technique. The study employed descriptive statistics and a multiple regression model to analyze the relationships between transportation costs (TC), socioeconomic characteristics, and socioeconomic welfare (SW). Findings reveal that average daily transportation fares in Ile-Ife surged by 160% (from ₦250 to ₦650) following the policy change, while daily travel frequency contracted by 33.3% (from 4.2 to 2.8 trips), signaling constrained mobility. Regression analysis confirmed that transportation costs have a significant negative effect on welfare (𝛽 = -0.642, t = -7.55). Furthermore, family size (𝛽 = -0.210) and the number of dependents (𝛽 = -0.305) were identified as significant predictors of increased vulnerability. Conversely, higher monthly income and educational attainment positively influenced coping capacity. Consequently, all three null hypotheses were rejected. The study concludes that fuel subsidy removal disproportionately burdens low-income urban residents through inflationary transport costs and reduced disposable income, highlighting the urgent need for targeted social safety nets and transport policy interventions.