Designing Appropriate Compensation Mechanisms for Subsidy Removal in Nigeria: The Role of Fiscal Policy
Abstract
The removal of subsidies has been a contentious economic policy in many countries, often sparking debates on its implications for various sectors of the economy. This study employs the Structural Equation Model (SEM) to assess the consequences, considering latent variables such as agricultural support program, social safety nets, and infrastructural development. Data from diverse regions of Nigeria are collected through purposive sampling and structured online questionnaires, allowing the study to model and analyze relationships among variables. The research evaluates convergent validity, factor loadings, and normality of measurements, using established benchmarks for goodness-of-fit indices. Results highlight the effectiveness of strategies to mitigate subsidy removal's effects. The agricultural support program stands out with a significant negative coefficient, while social safety nets and infrastructural development exhibit notable yet non-significant relationships. In light of these findings, the study recommends the prioritization of the agricultural support program as a comprehensive strategy for alleviating the consequences of subsidy removal in Nigeria. Additionally, it proposes a series of actionable policy recommendations, including the implementation of an E-wallet system for smallholder farmers, tax rebates on essential commodities, support for agricultural inputs, dam construction for dry season farming, nationwide distribution of grains, and the revival of cost-free extension services for farmers. By shedding light on subsidy removal dynamics, the study benefits policymakers, economists, and stakeholders navigating economic policy decisions in Nigeria.
Keywords
Compensation Mechanisms, Subsidy Removal, and Structural Equation Model (SEM)
Citations
IRE Journals:
Dr. Joshua Jeremiah Dandaura , Dr. Aminu Umaru , Abubakar Sani , Irimiya Christabel Musa
"Designing Appropriate Compensation Mechanisms for Subsidy Removal in Nigeria: The Role of Fiscal Policy" Iconic Research And Engineering Journals Volume 7 Issue 12 2024 Page 16-25
IEEE:
Dr. Joshua Jeremiah Dandaura , Dr. Aminu Umaru , Abubakar Sani , Irimiya Christabel Musa
"Designing Appropriate Compensation Mechanisms for Subsidy Removal in Nigeria: The Role of Fiscal Policy" Iconic Research And Engineering Journals, 7(12)
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