FUEL SUBSIDY REMOVAL AND SMALL & MEDIUM ENTERPRISES (SMEs): COST OF RUNNING BUSINESS AND BUSINESS PERFORMANCE IN DELTA STATE, NIGERIA

Abstract

Fuel subsidy removal has become a major economic reform in Nigeria with far-reaching implications for various sectors, particularly Small and Medium Enterprises (SMEs). This study examines the impact of subsidy removal on the cost of running businesses and the overall performance of SMEs in Delta State. The research explores how the rising cost of fuel translates into increased production, transportation, and operational expenses, thereby affecting profitability, sustainability, and competitiveness. Resource Dependency Theory was used to explain how fuel subsidy removal have affected the cost of running business and business performance of Small and Medium Enterprises (SMEs) in Delta State. Simple percentage and chi- square was used to test the hypotheses while 523 sampled respondents completed a structured questionnaire that was used to collect data from respondents. The study finds that fuel subsidy removal have led to increase in the cost of running business in Delta State and this increase in cost translate to increase in prices of commodities which have affected the purchasing power of consumers thereby leading to low business patronage and hence, low business performance. The study recommend amongst others, the need to develop serviced light-industrial parks in Warri, Asaba, and Ughelli with reliable power, water, and security; link clusters to public procurement quotas and large-firm off-take agreements; and institutionalize quarterly SME cost/performance dashboards to inform rapid policy tweaks as fuel-price conditions change.