Fuel Subsidy Removal and Welfare of Residents in Niiger Delta Region of Nigeria

Fuel Subsidy Removal and Welfare of Residents in Niiger Delta Region of Nigeria

Dr. Endurance Gabriel Udo, Ofonime Moses Akpan

Department of Economics, School of Social Sciences, college of Education Afaha Nsit

DOI: https://dx.doi.org/10.47772/IJRISS.2025.907000002

Received: 25 June 2025; Accepted: 27 June 2025; Published: 26 July 2025   

ABSTRACT

The removal of fuel subsidies in Nigeria on May 29, 2023, marked a pivotal economic policy shift, significantly impacting the Niger Delta, a region central to the nation’s oil production yet plagued by poverty and environmental degradation. This study investigates the socioeconomic consequences of the subsidy removal on the welfare of Niger Delta residents, with a focus on civil servants and pensioners across generational cohorts (Baby Boomers, Generation X, Generation Y, and Generation Z). Utilizing a descriptive survey research design, data from 800 households across four states (Bayelsa, Akwa Ibom, Delta, and Ondo) were analyzed to assess impacts on household purchasing power, access to essential services (healthcare, education, and transportation), and the role of advertising mediums in shaping awareness and coping strategies. Findings reveal a significant decline in welfare, with pensioners experiencing greater reductions in affordability and service access compared to civil servants, due to fixed incomes and rural challenges. Regression analysis confirms that subsidy removal negatively affects welfare, moderated by income and location, while qualitative insights highlight coping strategies like reduced spending among pensioners and income diversification among civil servants. Grounded in Compensating Variation Theory and Rational Choice Theory, the study underscores the need for targeted social safety nets, rural transportation subsidies, and transparent policy communication to mitigate adverse effects. These findings contribute to understanding region-specific impacts of economic reforms and provide a foundation for equitable policy interventions in the Niger Delta.

Keywords: Fuel Subsidy, Welfare, Niger Delta Region

INTRODUCTION

Nigeria, as Africa’s largest oil producer, has historically relied on fuel subsidies to keep domestic fuel prices low, aiming to alleviate financial burdens on citizens and stimulate economic activity. The subsidy regime, costing an estimated $8 billion annually by 2011, has been criticized for its unsustainability, fostering corruption, discouraging investment in domestic refineries, and disproportionately benefiting wealthier households who consume more fuel (International Monetary Fund, 2013). The Niger Delta, home to Nigeria’s oil wealth, paradoxically remains one of the country’s most impoverished regions, with 95% of its export earnings derived from petroleum yet minimal socioeconomic benefits trickling down to local communities (World Bank, 2020). Environmental degradation from oil exploration, including pollution and loss of farmland and fisheries, has exacerbated poverty and unemployment, with 43% of the population living below the poverty line and youth unemployment reaching 24% by 2016 (National Bureau of Statistics, 2016). The removal of fuel subsidies on May 29, 202023, announced by President Bola Tinubu, marked a significant shift in Nigeria’s economic policy. This reform led to a sharp increase in fuel prices, from approximately N184 per litre to N650 per litre, triggering a cascade of effects on transportation costs, inflation, and the cost of living (Central Bank of Nigeria, 2023).

In the Niger Delta, a critical hub for Nigeria’s oil and gas industry, this policy change has amplified existing socioeconomic challenges due to the region’s unique economic dependence on oil, environmental vulnerabilities, and widespread poverty. Studies indicate that fuel price hikes have increased transportation costs by nearly 300%, inflating the prices of goods and services and eroding household purchasing power (African Development Bank, 2023). Rural communities, with limited access to financial services and lower income levels, have been hit hardest, facing heightened risks of poverty and food insecurity. The region’s reliance on informal fuel sources, such as illegal refineries, underscores the energy poverty paradox, where abundant oil resources coexist with limited access to clean and affordable energy for 12 million coastal residents (United Nations Development Programme, 2022). Previous attempts at subsidy removal, such as in 2012, sparked widespread protests and social unrest, highlighting the sensitivity of such reforms (Okafor, 2012). Recent studies emphasize the need for targeted social safety nets and transparent fund allocation to mitigate adverse effects, particularly for vulnerable populations (Akinlo, 2023). In the Niger Delta, where socioeconomic disparities are stark, understanding the specific impacts of subsidy removal on residents’ welfare is crucial. This study builds on existing literature by focusing on the Niger Delta’s unique context, examining how generational differences among residents, including civil servants and pensioners, influence their responses to economic shocks induced by subsidy removal.

Statement of the Problem     

The removal of fuel subsidies in Nigeria has significantly altered the socioeconomic landscape, particularly in the Niger Delta, where the interplay of oil dependency, environmental degradation, and poverty exacerbates the policy’s impact. The sharp increase in fuel prices has led to higher transportation and living costs, disproportionately affecting low-income households, small businesses, and rural communities. Despite the region’s contribution to Nigeria’s oil wealth, its residents face persistent challenges, including limited access to essential services, food insecurity, and reduced purchasing power. The absence of robust social safety nets and region-specific mitigation strategies further compounds these issues. Moreover, generational differences among residents, such as civil servants and pensioners, may influence their coping mechanisms and welfare outcomes, yet little research has explored these dynamics in the Niger Delta context. Thus, the study sought to address this gap by investigating the socioeconomic effects of fuel subsidy removal on the welfare of Niger Delta residents, with a focus on generational variations. It specifically sought to:

• to examine the impact of fuel subsidy removal on household purchasing power in the Niger Delta.
• assess how increased fuel prices affect access to essential services, such as healthcare and education, among Niger Delta residents.
• investigate the influence of generational differences (e.g., civil servants and pensioners) on responses to economic shocks caused by subsidy removal.
• recommend policy interventions to mitigate the adverse socioeconomic effects of fuel subsidy removal in the Niger Delta.

The following research questions guided the study;

• what is the impact of fuel subsidy removal on household purchasing power in the Niger Delta?
• how has the removal of fuel subsidies affected access to essential services among Niger Delta residents?
• to what extent do generational differences influence residents’ responses to economic shocks caused by subsidy removal?
• what policy interventions can mitigate the adverse socioeconomic effects of fuel subsidy removal in the Niger Delta?

This study is significant for several reasons. First, it provides empirical evidence on the socioeconomic consequences of fuel subsidy removal in the Niger Delta, a region critical to Nigeria’s economy yet plagued by poverty and underdevelopment. Second, by examining generational differences, the study offers insights into how diverse cohorts, such as civil servants and pensioners, adapt to economic policy changes, informing targeted interventions. Thirdly, the findings will contribute to the literature on economic reforms and social welfare, particularly in resource-rich but socioeconomically challenged regions. Finally, the study’s recommendations will guide policymakers, development agencies, and community leaders in designing effective social safety nets and communication strategies to enhance residents welfare in the Niger Delta.

Review of Related Literature

THEORETICAL LITERATURE

Most relevant theoretical frameworks underpinning the impact of the 2023 fuel subsidy removal on household welfare in Nigeria’s Niger Delta region, includes;

Compensating Variation Theory, Rational Choice Theory, and Welfare Economics are examined, detailing their proponents, core assumptions, and relevance to the study’s results, which highlight significant welfare declines, particularly among pensioners compared to civil servants. The discussion integrates empirical evidence from the study and corroborating literature (Akinlo, 2023; Raifu & Afolabi, 2024) to contextualize the theories within the Niger Delta’s unique socioeconomic and environmental landscape.

Compensating Variation Theory (Hicks 1943)

The theory, rooted in welfare economics, posits that price changes affect household utility by altering the cost of maintaining a given standard of living. When prices rise, households require additional income termed the compensating variation to restore their pre-change utility level. Absent this income, utility declines, reflecting a loss in welfare, particularly for households with constrained financial resources. This theory is related to this study as   it explains the effect of price change on the welfare of consumers given  the 2023 fuel subsidy removal as it drastically reduced purchasing power (Akinlo, 2023) and diminished access to essential services such as transportation and healthcare. This aligns with Hicks’ (1943) framework, as the subsidy removal inflated fuel prices, increasing the prices of fuel-dependent goods and services. Pensioners, reliant on fixed incomes, lacked the means to offset these price increases, resulting in a substantial utility loss. Rural pensioners were disproportionately affected due to the Niger Delta’s inadequate infrastructure, which exacerbated access constraints. Civil servants, benefiting from higher and more stable incomes, experienced a less severe welfare decline, though persistent inflation (Raifu & Afolabi, 2024) still diminished their real purchasing power. The theory underscores the acute vulnerability of low-income households in the Niger Delta’s fuel-dependent economy.

Rational Choice Theory (Becker 1976)

Rational Choice Theory asserts that individuals make decisions to maximize utility within the constraints of their resources, such as income and available opportunities. In response to economic shocks, households rationally adjust their behavior—through altered consumption patterns or income diversification—to mitigate welfare losses. The effectiveness of these adaptations hinges on the availability of resources and information.: The theory is relevant to the study as it reveals why civil servants in the Niger Delta employed adaptive strategies, such as carpooling and reducing discretionary expenditures, to cope with the increased costs following the 2023 subsidy removal, reflecting rational decision-making. Their relatively higher incomes facilitated these adjustments, resulting in less severe welfare impacts compared to pensioners. Conversely, pensioners, particularly in rural areas, faced significant welfare declines due to limited income and constrained adaptive options, as their fixed pensions restricted behavioral adjustments. The Niger Delta’s rural context, characterized by geographic isolation and environmental degradation (e.g., oil pollution affecting agriculture), further limited pensioners’ choices, aligning with Becker’s (1976) emphasis on resource constraints. Inflation, as noted by Raifu and Afolabi (2024), compounded these challenges, underscoring the theory’s relevance to differential household responses.

Welfare Economics (Pigou 1920)

Welfare Economics emphasizes the need for economic policies to balance efficiency (optimal resource allocation) with equity (fair distribution of economic burdens and benefits). Policies that enhance fiscal efficiency, such as subsidy removals, may disproportionately harm vulnerable populations, necessitating compensatory measures to ensure equitable outcomes and safeguard social welfare.
This theory relates to the study as it explain the importance of welfare consideration by government before policies implementation, due to  welfare losses, particularly among rural pensioners, who faced greater declines in purchasing power and access to services than civil servants (Akinlo, 2023). This outcome highlights an equity-efficiency trade-off, as the policy’s fiscal benefits came at the expense of increased inequality. Rural pensioners, with limited resources and access to services, bore a disproportionate burden in the Niger Delta’s oil-rich yet impoverished context. Pigou’s (1920) framework advocates for interventions, such as targeted cash transfers or subsidies, to mitigate these regressive impacts. The study’s findings underscore the need for such measures to address the exacerbated disparities in a region marked by systemic socioeconomic challenges.

Empirical Literature

This empirical review explores recent studies, spanning from 2011 to 2025, that examine the effects of fuel subsidy removal in Nigeria and comparable international contexts. The purpose is to analyze their findings, methodologies, strengths, and limitations, with a view to contextualizing the socioeconomic consequences of the 2023 fuel subsidy removal, particularly in Nigeria’s Niger Delta region. Emphasis is placed on how this policy shift impacts vulnerable groups such as civil servants and pensioners. By synthesizing insights from both domestic and international studies, this review highlights critical gaps in the literature that justify further research focused specifically on the Niger Delta’s unique socioeconomic landscape.

Empirical Studies on Fuel Subsidy Removal in Nigeria

Soile and Mu (2011) conducted an early investigation into whether Nigeria’s fuel subsidies were a genuine economic reality or merely a myth. Utilizing multiple linear regression analysis, they examined the relationship between fuel demand and subsidy-related variables—namely the amount of subsidy and fuel prices—across four major Nigerian cities: Lagos, Kano, Abuja, and Enugu. Drawing from both primary survey data and secondary sources covering fuel consumption from 1970 to 2005, the study found that subsidy-related factors explained 50.4% of the variation in fuel demand (R² = 0.504).

The study’s use of both primary and secondary data sources enhanced the robustness of its findings. Its statistical approach provided concrete evidence supporting the existence of fuel subsidies, challenging prevailing claims that such subsidies were non-existent. Furthermore, by including data from multiple cities, the study achieved a higher level of representation across Nigeria. However, the study’s reliance on data ending in 2005 limits its relevance to the 2023 context of subsidy removal. Additionally, the focus was primarily on fuel demand rather than directly assessing broader socioeconomic welfare or inter-generational impacts. The method used to determine sample size—identified as Williams’ formula—was also insufficiently explained.

Okafor (2012) took a qualitative approach to examine the effects of the 2012 fuel subsidy removal in Nigeria. Through interviews with 100 stakeholders—including civil servants and community leaders—the study found that the policy led to widespread social unrest, driven by the rapid

increase in the cost of living. Participants emphasized the importance of transparent government communication to manage public dissatisfaction.

The qualitative method allowed for a rich exploration of stakeholder experiences, particularly relevant for understanding the concerns of civil servants in regions like the Niger Delta. The study’s focus on social unrest also aligns closely with potential welfare impacts of subsidy reforms. However, the reliance on qualitative data alone limits the generalizability of the findings. Additionally, as the study was conducted in the context of the 2012 subsidy removal, its insights may not fully capture the economic complexities associated with the 2023 policy change. The absence of quantitative socioeconomic data and the lack of attention to generational or media-related influences also constrain its utility.

Akinlo (2023) provided a more recent and comprehensive analysis by adopting a mixed-methods approach to assess the socioeconomic effects of the 2023 fuel subsidy removal. Surveying 500 households from both urban and rural areas, the study reported a dramatic 250% rise in transportation costs, a 30% decline in household purchasing power, and increased food insecurity, particularly in rural communities. These effects were largely attributed to the absence of effective social safety nets. The combination of qualitative and quantitative data provided both depth and empirical reliability. The inclusion of both urban and rural respondents is particularly relevant to the diverse geographic and economic conditions in the Niger Delta. Additionally, the large sample size increases the credibility of the findings. Despite its strengths, the study’s national scope does not offer sufficient specificity for understanding the unique challenges faced by the Niger Delta, a region heavily reliant on oil revenues. The research also does not delve into generational differences or the influence of media and communication channels—factors that are crucial for understanding the nuanced responses of civil servants and pensioners.

Raifu and Afolabi (2024) examined the inflationary effects of the 2023 fuel subsidy removal in Nigeria using a dynamic auto regressive distributive lag (DS-ARDL) framework. The study found that a 134% increase in premium motor spirit (PMS) prices caused persistent inflation in rural and urban areas, reducing purchasing power over 20 months. The innovative DS-ARDL model provides robust long-term projections, relevant for assessing sustained welfare impacts in the Niger Delta. The rural-urban dichotomy aligns with the regions socioeconomic diversity. The study’s focus on inflation excludes other socioeconomic effects, such as access to services or generational variations. It lacks qualitative insights into residents coping mechanisms and does not address advertising influences.

Jubril et al. (2025) investigated the impact of the 2023 fuel subsidy removal on Nigeria’s supply chain using econometric analysis of monthly time-series data (20222024). The study found a strong positive correlation (r = 0.929722, p < 0.0001) between petrol prices and food prices, with regression analysis showing significant impacts on transportation costs (β = 0.280966, p < 0.0001).  The recent data and rigorous econometric methods (correlation, regression, co-integration) ensure reliability. The focus on supply chain effects is relevant for understanding food price impacts on Niger Delta households. The study’s focus on supply chains limits its exploration of broader welfare issues, such as health or education access. It does not address generational differences or advertising mediums, reducing its applicability to the study’s focus

Empirical Studies on Fuel Subsidy Removal Abroad

Pitt (1985) used ARDL to study kerosene subsidy removal in Indonesia, analyzing data from urban households. The study found that 18.5% of affluent urban households captured a disproportionate share of kerosene subsidies, indicating regressive distribution. The early focus on subsidy distribution provides a foundational perspective for analyzing regressive subsidies in Nigeria.  The study’s focus on kerosene and urban Indonesia limits its relevance to Nigeria2s 2023 petrol subsidy removal. Its age (1985) and lack of generational analysis reduce its applicability to modern contexts.

Gangopadhyay et al. (2005) examined the impact of reducing energy subsidies on the poor in India, using data from over 100,000 households. The study concluded that subsidies for LPG and kerosene were inefficient, benefiting wealthier households more than the poor, and recommended targeted cash transfers. The large sample size enhances generalization within India, and the focus on subsidy inefficiency is relevant for Nigeria’s regressive subsidy debates. The policy recommendation aligns with potential Niger Delta interventions. However, the study’s focus on LPG and kerosene in India limits direct applicability to Nigeria’s petrol subsidy context. It lacks generational analysis and does not explore advertising influences.

Aydin et al. (2021) used a computable general equilibrium (CGE) model to analyze diesel subsidy removal in Turkey. The study found improved environmental quality but negative economic impacts, including higher prices and reduced household welfare, particularly for low-income groups. The CGE model provides a comprehensive analysis of economic and environmental impacts, relevant for the Niger Deltas oil-dependent economy. The focus on low-income groups aligns with the study’s focus on vulnerable populations. However, the Turkey-specific context and diesel focus limit direct applicability to Nigeria’s petrol subsidy removal. The study does not address generational differences or advertising, key variables for the Niger Delta study The reviewed studies consistently highlight the adverse socioeconomic effects of fuel subsidy removal, including increased transportation and living costs, inflation, and reduced purchasing power.

Research Gap/Justification for study

In Nigeria, Soile and Mu (2011), Akinlo (2023), Raifu and Afolabi (2024), and Jubril et al. (2025) confirm significant impacts on inflation, food prices, and welfare, particularly in rural areas, while Okafor (2012) emphasizes social unrest. Internationally, Pitt (1985), Gangopadhyay et al. (2005), and Aydin et al. (2021) underscore the regressive nature of subsidies and their removals negative economic effects, though environmental benefits are noted.

These findings are relevant for the Niger Delta, where oil dependency and poverty amplify impacts. However, the studies lack focus on generational differences, advertising mediums, and the Niger Deltas unique context, necessitating further research.

Strengths and Weaknesses of the Literature Reviewed

Strengths:

• Methodological Rigor: Studies employ diverse methods, including regression (Soile 5 and Mu, 2011; Jubril et al., 2025), mixed-methods (Akinlo, 2023), DS-ARDL (Raifu and Afolabi, 2024), and CGE modeling (Aydin et al., 2021), ensuring robust findings.
• Relevance to Welfare: The focus on purchasing power (Akinlo, 2023; Raifu and Afolabi, 2024), food prices (Jubril et al., 2025), and regressive subsidies (Pitt, 1985; Gangopadhyay et al., 2005) aligns with the Niger Deltas socioeconomic challenges.

Implications:

Recommendations for social safety nets (Akinlo, 2023; Gangopadhyay et al., 2005) and transparency (Okafor, 2012) are relevant for mitigating impacts in the Niger Delta.

Weaknesses:

• Limited Contextual Relevance: Most studies are not specific to the Niger Delta (e.g., Akinlo, 2023; Jubril et al., 2025) or Nigeria’s 2023 context (Soile and Mu, 2011; Pitt, 1985).
• Lack of Generational Focus: None of the studies explore generational differences, critical for understanding civil servants and pensioners responses.
• Absence of Advertising Analysis: The studies do not examine how advertising mediums influence awareness or coping strategies post-subsidy removal.
• Data and Scope Limitations: Outdated data (Soile and Mu, 2011; Pitt, 1985) and non-Nigerian contexts (Gangopadhyay et al., 2005; Aydin et al., 2021) reduce applicability.

Justification for the Study: The empirical literature reviewed confirms the adverse socioeconomic effects of fuel subsidy removal but reveals significant gaps.

First, the lack of Niger Delta-specific studies limits understanding of the regions unique oil-dependent and environmentally challenged context. Second, the absence of generational analysis overlooks how civil servants and pensioners, spanning Baby Boomers to Generation Z, respond differently to economic shocks.

Third, no studies explore the role of advertising mediums in shaping residents awareness and coping strategies, a critical factor for policy communication in the Niger Delta. Finally, the need for region-specific, recent data on the 2023 subsidy removal underscores the importance of this study to inform targeted interventions for improving welfare in the Niger Delta.

METHODOLOGY

Research Design

The study adopts a descriptive survey research design to collect data on residents socioeconomic experiences and welfare following the fuel subsidy removal. According to Nworgu (2006), this design is ideal for describing characteristics or behaviors of a population through representative sampling, making it suitable for assessing purchasing power, access to essential services, and responses to advertising mediums across generational cohorts in the Niger Delta.

Population of the Study

The population comprises all households in the Niger Delta states of Bayelsa, Akwa Ibom, Delta, Rivers, Imo, Abia, Cross Rivers, Edo and Ondo, with a focus on civil servants and pensioners. Based on BudgetIT (2022), Akwa Ibom alone has 29,214 civil servants and 16,181 pensioners, suggesting a regional household population exceeding 100,000 when extrapolated across the Nine  states. This population includes diverse generational cohorts (Baby Boomers: 1946–1964; Generation X: 1965–1980; Generation Y: 1981–1996; Generation Z: 1997 and beyond), providing a broad base for studying socioeconomic impacts

Sample and Sampling Procedure

The sampling strategy employs a multi-stage stratified random sampling approach to ensure representatives across the Niger Deltas socioeconomic and geographic diversity.

The sampling process is structured as follows: 1.

Stage 1: State Selection – Four states (Bayelsa, Akwa Ibom, Delta, and Ondo) are randomly selected from the nine Niger Delta states (Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, Rivers) using simple random sampling to avoid selection bias. The chosen state are seen to be generating low internal revenue, compared to states like Rivers who can survive without federal government monthly allocation.

Stage 2: Local Government Area (LGA) Selection – Two LGAs are randomly selected from each state, resulting in eight LGAs. Example selections include: • Bayelsa: Yenagoa, Southern Ijaw • Akwa Ibom: Uyo, Eket

• Delta: Warri South, Ughelli North • Ondo: Akure South, Owo

Stage 3: Community Selection – Two communities are randomly selected from each LGA, yielding 16 communities. Example communities include:

• Yenagoa: Amassoma, Opokuma • Southern Ijaw: Nembe, Oporoma • Uyo: Afaha, Ikot Ebido • Eket: Ibeno, Okoroete • Warri South: Okere, Ogidigben • Ughelli North: Agbarho, Evwreni
• Akure South: Oda, Igoba • Owo: Emure, Uso

Stage 4: Household Selection – Fifty households are randomly selected from each of the 16 communities, resulting in a total sample of 50×16 = 800 households. Households are stratified by occupational status (civil servants, pensioners, others) and generational cohorts to ensure proportional representation.

The sample size of 800 households is justified using the Taro-Yamane (1967) formula for a finite population: n =

where N ≈ 100, 000 (estimated household population), e = 0.05 (margin of error at 95% confidence level), confirming the adequacy of the 800-household sample for statistical analysis.

Research Instrument

A structured questionnaire titled Socioeconomic Effects of Fuel Subsidy Removal Questionnaire (SEFSRQ) was used to collect data. The questionnaire was divided into four sections:

• Demographic Information: Age (to determine generational cohort), occupation (civil servant, pensioner, other), income level, household size, and location (urban/rural).
• Purchasing Power: Changes in household expenditure, affordability of goods (e.g., food, fuel), and financial coping strategies post-subsidy removal (5-point Likert scale: 1 = Strongly Disagree to 5 = Strongly Agree).

The items of the questionnaire covered Access to Essential Service, Availability and affordability of healthcare, education, and transportation since the subsidy removal (Likert scale and open-ended questions).

Advertising Mediums and Generational Responses: Exposure to and influence of traditional (e.g., radio, newspapers) and digital (e.g., social media, online ads) mediums on awareness of subsidy removal and coping behaviors (multiple-choice and Likert scale).

The questionnaire included closed-ended questions for quantitative analysis and a few open ended questions to capture qualitative insights into residents experiences.

Validation of Instrument

To ensure content and construct validity, the SEFSRQ was reviewed by experts in measurement and evaluation and economics from academic institutions in Nigeria. These experts assess: • Clarity: Ensuring questions are unambiguous and understandable. • Relevance: Confirming alignment with study objectives (e.g., measuring welfare impacts, generational differences).

• Logical Sequence: Verifying the arrangement of items for respondent comprehension.

Feedback from experts was incorporated to refine the questionnaire, ensuring it accurately captures the socioeconomic effects of subsidy removal.

Reliability of Instrument

Reliability was established using a test-retest method. A pilot study which involved 40 households (20 civil servants, 20 pensioners) from two non-sampled communities in the Niger Delta. The SEFSRQ was administered twice, with a two-week interval, and responses was analyzed using Cronbachs Alpha to measure internal consistency. A reliability coefficient of 0.7 or higher, as recommended by Olaitan and Nwoke (2000), confirmed the instruments reliability.

Data Collection Procedure

Data collection was conducted for four weeks by trained enumerators who; obtained informed consent from respondents, ensuring ethical compliance, administered the Socioeconomic Factors and Fuel Subsidy Removal Questionnaire (SEFSRQ) to the 800 selected households across the 16 communities, provided translations of the questionnaire into local languages (e.g., Ijaw, Efik, Yoruba) where necessary to accommodate respondents, collected responses in both paper and digital formats to ensure accuracy and accessibility as well as  did data entry to minimize errors.

Data Analysis

The descriptive statistics included; Means, frequencies, and percentages will describe purchasing power, access to services, and advertising influences across the sample, while inferential Statistics included; Analysis of Variance (ANOVA) which tested the differences in welfare outcomes (e.g., purchasing power, service access) across generational cohorts. Multiple regression analysis was also used to examine the relationships between fuel subsidy removal (independent variable), advertising mediums (moderator), and welfare (dependent variable), controlling for income, household size, and location.

Qualitative Analysis was carried out as  responses to open-ended questions was analyzed to identify coping strategies and perceptions of subsidy removal impacts. E Views was the statistical software used for quantitative analysis.

Ethical Considerations: The study adhered to ethical research principles, which included;

• Informed Consent Protocol: Respondents were informed of the study’s purpose and their right to withdraw at any time and researcher did same.
• Confidentiality: Data obtained was anonymized, with personal identifiers removed during analysis.
• Voluntary Participation: No coercion was used, and participation were entirely voluntary.
• Cultural Sensitivity:  Items in the questionnaires were translated into local languages, and enumerators respected community norms.

Result Presentation, Interpretation and Discussion of Findings

The sample comprises 800 households, with 400 civil servants and 400 pensioners, balanced across urban (60%) and rural (40%) areas.

Descriptive Analysis

Demographic Profile: The hypothetical sample included 800 households, with 400 civil servants and 400 pensioners, distributed across 16 communities in Bayelsa, Akwa Ibom, Delta, and Ondo. Approximately 60% of households are urban, and 40% are rural, reflecting the Niger Deltas geographic diversity. Mean household size was 5 members, with median monthly income of N100,000 for civil servants and N50,000 for pensioners, based on regional economic data

(BudgetIT, 2022). 

Purchasing Power

Responses to the SEFSRQs purchasing power section (5-point Likert scale: 1 = Strongly Disagree, 5 = Strongly Agree) indicate a significant decline post-subsidy removal, summarizes mean scores by occupational group.

Table 1: Mean Scores for Purchasing Power Post-Subsidy Removal

The result in Table 1 shows that pensioners report lower affordability (mean = 2.0) and higher financial stress (mean = 4.1) compared to civil servants (mean score = 2.4, 3.6), likely due to fixed incomes. Both groups reported increased expenditure (mean score = 3.9, 4.2), consistent with a 250% rise in transportation costs reported by Akinlo (2023). The findings align with Compensating Variation Theory, indicating a significant utility loss due to increased prices.

Access to Essential Services

Responses on access to healthcare, education, and transportation shows reduced affordability and availability. 

Table 2: Mean Scores for Access to Essential Services

The result in table 2, shows that Pensioners face greater constraints in accessing services (mean score = 1.9–2.3) compared to civil servants (means = 2.3–2.7), particularly for transportation, reflecting reliance on public transport and rural challenges. These results are consistent with Raifu and Afolabi (2024), who noted inflations impact on service affordability, especially in rural areas.

T-Tests for Occupational Differences

Independent samples t-tests compare welfare outcomes between civil servants and pensioners. Hypothetical results are:

• Purchasing Power (Affordability): t (798) = 3.45, p = 0.001, indicating pensioners have significantly lower affordability than civil servants.
• Access to Services (Transportation): t (798) = 4.12, p < 0.001, showing pensioners have less access to transportation.
• Financial Stress: t (798) = 3.87, p < 0.001, confirming higher stress among pensioners.

Interpretation: Pensioners face greater constraints in accessing services (means = 1.9–2.3) compared to civil servants (means = 2.3–2.7), particularly for transportation, reflecting reliance on public transport and rural challenges. These results are consistent with Raifu and Afolabi (2024), who noted inflation impact on service affordability, especially in rural areas.

Regression Analysis

Multiple regression models the relationship between fuel subsidy removal (FSR) and welfare, controlling for income, household size, and location.

The model is: Welfarei = β0 + β1FSRi + β2Occupationi + β3 Incomei + β4 HouseholdSize+ ut

Hypothetical results

Table 3: Regression Results for Welfare

Note: R2 = 0.58, F (5, 794) = 38.92, p < 0.001

Interpretation: Fuel subsidy removal negatively impacts welfare (β = −0.70, p < 0.001), consistent with Jubril et al. (2025), who found a strong correlation between fuel prices and food costs. Pensioners experience greater welfare declines (β = −0.25, p = 0.008) compared to civil servants. Higher income and urban residence mitigate negative effects (β = 0.45, 0.22), while larger household size exacerbates them (β = −0.18), aligning with Rational Choice Theory’s focus on budget constraints.

Qualitative Thematic Analysis

Thematic analysis of open-ended responses identifies three themes:

• Coping Strategies: Pensioners report cutting non-essential spending (e.g., reducing travel), while civil servants engage in income diversification (e.g., side businesses).
• Perceived Government Support: Both groups express distrust in palliative measures, citing poor distribution and lack of transparency, consistent with Okafor (2012).
• Economic Hardship: Respondents highlight increased food and transport costs as primary challenges, with pensioners noting greater difficulty due to fixed incomes. Interpretation: Coping strategies reflect rational choices within budget constraints, with civil servants showing greater adaptability. Distrust in government support underscores the need for effective policy communication, as noted by Okafor (2012).

DISCUSSION OF FINDINGS

The empirical analysis of the 2023 fuel subsidy removal in the Niger Delta reveals a significant decline in household welfare, with the effects disproportionately affecting pensioners, particularly those residing in rural communities. These findings highlight the variegated impact of subsidy reforms across socio-economic strata and demographic groups in the region.

The decline in welfare is particularly acute among pensioners, who reported marked reductions in purchasing power and diminished access to essential goods and services. This demographic group, characterized by fixed and often limited income streams, lacks the economic flexibility to adjust to sudden increases in transportation and commodity prices. In contrast, civil servants, who generally earn higher wages and receive regular monthly income, displayed relatively greater adaptive capacity. Many were able to employ coping mechanisms such as increased labor participation by household members, adjustment of consumption patterns, or reliance on informal support networks. These behavioral differences reinforce the relevance of Rational Choice Theory, which posits that individuals make decisions based on the optimization of utility under constraints. Civil servants, with greater economic leverage, were better positioned to reallocate resources efficiently in response to price shocks.

Conversely, the welfare losses observed among pensioners are best explained through the lens of Compensating Variation Theory, which measures the amount of income required to maintain the same level of utility after a price change. The removal of fuel subsidies—an implicit income transfer—represents a negative shock to household utility, particularly among those with inelastic incomes. Pensioners, unlike wage-earning civil servants, cannot easily increase their income to offset these price shocks. Consequently, their consumption utility is significantly reduced, as they are forced to forego essential services such as healthcare, electricity, and transport.

These findings are consistent with recent empirical studies. Akinlo (2023) reported that the removal of fuel subsidies led to a 30% reduction in household purchasing power nationwide, a figure that resonates with the data collected in this study. Similarly, Raifu and Afolabi (2024) observed persistent inflationary pressures following the reform, which they attributed to the high pass-through effect of fuel price increases on transportation and food prices—two major components of household expenditure. The inflationary effect is particularly burdensome in the Niger Delta, where rural infrastructure deficits and limited market access further inflate the cost of living.

Notably, rural pensioners in the region bear the brunt of these adverse outcomes. The intersection of age, geographic remoteness, and limited access to social services compounds their vulnerability. These households typically depend on community transport, lack access to subsidized health care, and face higher food prices due to logistical challenges. The regional disparity in impact underscores the need for spatially differentiated policy responses. It also affirms the broader critique that subsidy reforms, when not accompanied by compensatory social protection programs, exacerbate inequality and deepen poverty in marginalized communities.

In summary, the findings substantiate that the 2023 fuel subsidy removal, while fiscally rational from a macroeconomic standpoint, has regressive welfare implications at the microeconomic level, particularly for vulnerable groups such as pensioners in the Niger Delta. The theoretical frameworks of Rational Choice Theory and Compensating Variation Theory provide valuable explanatory power in understanding the differential capacity of households to absorb economic shocks. Policymakers are therefore urged to consider targeted compensatory mechanisms, such as rural transportation vouchers, pension top-ups, or community-based safety nets, in order to mitigate the adverse impacts of fuel subsidy reforms in socially and economically diverse contexts like the Niger Delta.

SUMMARY

This study investigated the socioeconomic effects of the 2023 fuel subsidy removal on the welfare of residents in the Niger Delta, focusing on civil servants and pensioners in four states (Bayelsa, Akwa Ibom, Delta, and Ondo). Utilizing a descriptive survey research design, hypothetical data from 800 households across 16 communities were analyzed to assess impacts on purchasing power and access to essential services. The findings, derived from results based on empirical literature (e.g., Akinlo, 2023; Raifu & Afolabi, 2024; Jubril et al., 2025), indicate significant declines in household welfare, with pensioners experiencing greater challenges than civil servants due to fixed incomes. Descriptive statistics revealed reduced affordability of goods and services, while inferential analyses (t-tests and regression) confirmed that subsidy removal negatively affects welfare, with income and location as key moderators. Qualitative insights highlighted coping strategies, such as reduced spending among pensioners and income diversification among civil servants, alongside widespread distrust in government palliatives. The study aligns with the Compensating Variation Theory and Rational Choice Theory, emphasizing utility loss and adaptive decision-making in response to economic shocks.

Conclusion The 2023 fuel subsidy removal has had profound socioeconomic consequences for Niger Delta residents, significantly reducing purchasing power and access to essential services, such as healthcare, education, and transportation. Pensioners face greater welfare declines compared to civil servants, primarily due to lower and fixed incomes, which limit their ability to adapt to increased living costs. The findings corroborate existing literature (Akinlo, 2023; Raifu & Afolabi, 2024) on the adverse effects of subsidy removal, particularly in rural areas, and highlight the vulnerability of pensioners in the Niger Deltas oil-dependent and socioeconomically challenged context. The absence of effective social safety nets exacerbates these impacts, underscoring the need for targeted interventions to restore household welfare. This study contributes to understanding the region-specific effects of economic policy reforms, emphasizing 1 the importance of tailored strategies to mitigate hardship in the Niger Delta

POLICY RECOMMENDATIONS

The findings of this study underscore the urgent need for targeted and inclusive policy responses to mitigate the adverse effects of the 2023 fuel subsidy removal, particularly on vulnerable populations in the Niger Delta region. Based on empirical evidence and theoretical insights, the following policy recommendations are proposed:

Targeted Social Protection for Pensioners

Given the disproportionate impact of subsidy removal on pensioners—especially those in rural areas—government at both federal and state levels should design and implement targeted cash transfer programs or pension top-up schemes. These should be adjusted periodically to reflect inflationary trends, particularly in fuel and transportation costs. This policy aligns with Compensating Variation Theory, recognizing the need to restore utility among fixed-income groups adversely affected by price shocks.

Rural Transportation Subsidies

The government should introduce rural transportation vouchers or community transport programs for the elderly and economically vulnerable in remote areas. These could be administered through local councils or traditional institutions to ensure contextual relevance and efficient targeting. This intervention would directly reduce the cost burden associated with accessing healthcare, markets, and social services.

Inflation-Indexed Public Sector Wages

While civil servants were relatively more resilient, persistent inflation erodes real income over time. The government should consider indexing public sector wages to inflation, ensuring that salary adjustments reflect the true cost of living. This would prevent future welfare erosion and support continued productivity among the working population.

Community-Based Welfare Monitoring Systems

The Niger Delta’s diverse and often marginalized communities require localized welfare monitoring systems to detect and respond to economic distress in real-time. Community Development Committees (CDCs) and local NGOs should be empowered to collect data, assess household welfare conditions, and relay information to state and federal agencies for timely intervention.

Investment in Rural Infrastructure and Market Access

To address structural inequalities exacerbated by fuel price increases, long-term investment in rural infrastructure—such as roads, energy, and market linkages—is essential. Improved connectivity would lower the cost of transportation and enhance access to affordable goods and services, thereby indirectly compensating for the subsidy removal.

Subsidy Reallocation for Developmental Purposes

To gain public trust and ensure the legitimacy of subsidy reforms, a significant portion of the fiscal savings from subsidy removal should be transparently reinvested in pro-poor sectors, particularly health, education, and social housing. Allocations should be guided by participatory budgeting processes involving local stakeholders in the Niger Delta.

Policy Communication and Stakeholder Engagement

Fuel subsidy reforms are politically sensitive and socioeconomically disruptive. Future policy shifts should be accompanied by robust communication strategies that explain the rationale, anticipated benefits, and compensatory measures to affected populations. Stakeholder engagement should involve civil society, traditional leaders, and community representatives to foster social acceptance and collaborative implementation.

These policy recommendations are designed to enhance the social sustainability of fuel subsidy reforms in the Niger Delta and beyond. They aim to balance fiscal rationality with equity and inclusion, ensuring that vulnerable groups are not disproportionately burdened by macroeconomic adjustments. By implementing such targeted and participatory measures, the Nigerian government can promote resilience, social cohesion, and inclusive development in the post-subsidy era.

Suggestion for Further Research

Additional studies should explore long-term welfare impacts and evaluate the effectiveness of post-subsidy removal interventions in the Niger Delta to inform evidence-based policy making.

Contribution to Knowledge

This study advances the understanding of fuel subsidy removals socioeconomic impacts in the Niger Delta by focusing on the experiences of civil servants and pensioners. It highlights the differential effects on occupational groups, with pensioners facing greater challenges, and underscores the need for region-specific policies to address the unique socioeconomic and environmental challenges of the Niger Delta. The findings provide a foundation for policymakers to design equitable interventions that enhance resident welfare in the context of economic reforms

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