THE EFFECT OF SUBSIDY REMOVAL ON ECONOMIC DEVELOPMENT IN BAUCHI METROPOLIS

ABSTRACT This study examines the effect of subsidy removal on economic development in Bauchi Metropolis, focusing on its implications for cost of living, business sustainability, employment, and overall socio-economic growth. The removal of fuel subsidies, implemented as part of Nigeria’s fiscal reform policies, has generated significant debate regarding its short-term socio-economic shocks and potential long-term benefits. Using a descriptive survey research design, primary data were collected from a sample of residents, business owners, and policy stakeholders within Bauchi Metropolis through structured questionnaires. The study employed descriptive and inferential statistical analyses to evaluate the relationship between subsidy removal and key indicators of economic development, such as income levels, purchasing power, investment climate, and infrastructure growth. Findings revealed that subsidy removal has led to a substantial increase in transportation and commodity prices, thereby exerting pressure on household incomes and limiting consumer purchasing capacity. Small and medium-scale enterprises reported increased operational costs, leading to reduced profitability and, in some cases, downsizing of staff. However, some respondents acknowledged the potential for long-term economic benefits if the funds saved from subsidy payments are effectively redirected into productive sectors such as education, healthcare, and infrastructure. The study concludes that while subsidy removal presents opportunities for fiscal reallocation and sustainable growth, its immediate socio-economic disruptions require robust policy interventions. It recommends targeted social safety nets, investment in public transportation, and transparent reinvestment of subsidy savings into development projects to mitigate adverse effects and enhance public trust. Keywords: Economic development, fiscal policy, fuel prices, inflation and subsidy removal