Assignment On: Fuel subsidies removal can be seen as catalyst to economic and development of businesses in Nigeria. Write for or against Course Code: GENS 202 Course Title: Introduction to interpreneurship and innovation This assignment is submitted for the partially fulfilment of the General studies course for the academic year 2022/2023. Matric No: U22KC000000. Submitted to: Submitted on: Upsu EmmanuelINTRODUCTION Fuel subsidies refer to the financial support provided by the government to keep fuel prices low for consumers. Nigeria has been providing fuel subsidies for several decades to make fuel affordable for its citizens. However, fuel subsidies have beena contentious issue in Nigeria due to their economic, social, and environmental implications. (IMF, 2019). Removal of fuel subsidies: The removal of fuel subsidies in Nigeria has been a subject of debate and controversy for many years. Some argue that fuel subsidies are necessary to protect the poor and vulnerable segments of society, while others contend that fuel subsidies are a drain on the country’s economy and promote corruption, In recent years, there has been a growing consensus that fuel subsidies should be removed or phased out in Nigeria. (CIA, 2021) The removal of fuel subsidies in Nigeria has been met with mixed reaction. Some argue that it will lead to an increase in the cost of living for Nigeirans and cause inflation. Others suggest that it will lead to a reduction in government spending in alteration energy sources (Adeyeye, 2020). The removal of fuel subsidies could also lead to an increase in revenue for the government, which could be used to invest in infrastructure and social programs (Oyebola & Adenegan, 2019) Definition of terms 1. Development: refers to the process of improving the economic, social, and environmental condition of a county or region. In the context of Nigeria, development is a critical issue, given the county's large population, abundant natural resources, and economic potential 2. Economic: Economic refers to the activities related to the production, distribution, and consumption of goods and services. In Nigeria, the economy is dominated by the oil and gas sector, which accounts for a significant portion of the country’s Gop. 3. Economic Development: Economic development refers to the process of improving the economic conditions of a county or region, including increasing income levels, creating jobs, and recovering poverty. In Nigeria, economicdevelopment is a critical issue, given the country’s high poverty rate and large population. 4. Business Development: Business development refers to the process of creating and expanding businesses, including identifying new opportunities, securing financing, and building parnership. In Nigeria, business developmentis essential for creating jobs, generating income, and promoting economic growth. 5. Fuel subsidies: Fuel subsidies refer to the financial support provided by the government to keep fuel prices low for consumers. |Support or for that fuel subsidies should be removed in Nigeria, due to the following reasons: Firsly, fuel subsidies encourage smuggling and corruption. Nigeria's fuel subsidies have been plagued by corruption, with reports of fuel being smuggled out of the country and sold at a higher price in neighboring countries (Bloomberg, 2019). This not only deprives the country of revenue but also undermines the effectiveness of the subsidies. Secondly, fuel subsidies are a significant drain on the country’s economy. According to a report by the International Monetary Fund (IMF), Nigeria spent over $5.2 billion on fuel subsidies in 2018, which represents about 0.5% of the country’s GDP(IMF, 2019). The IMF argues that this money could be better spent on critical areas such as health, education, and infrastructure. Thirdly, fuel subsidies are regressive in nature and do not benefit the poor as much as they do the wealthy, A study by the World Bank found that 40% of fuel subsidies in Nigeria go to the richest 10% of the population, while only 13% goes to the poorest 40% (World Bank, 2016). This means that the poor do not benefit as much from fuel subsidies as the rich, despite the fact that they spend a larger proportion of their income on fuel. Foutly, fuel subsidies distort the market and discourage investment in the local refining and production of fuel. Nigetia is one of the largest oil-producing countries in the world but has not been able to import most of its refined fuel due to the poor state of itsrefineries. Removing fue! subsidies would create a level playing field for local producers and attract investment into the industry, leading to economic growth and job creation. In conclusion, there are several compelling reasons why fuel subsidies should be removed in Nigeria. Doing so would tree up resources for critical areas such as health and education, reduce inequality, curb corruption, and encourage investment in the local fuel industry.References Adeyeye, O. (2020). Fuel subsidy: To removal or notto remove? The Guardian. Retrieved from https://quardian.na/opinion/fuel-subsidy-to-remove-or-not-to-remove/ Bloomberg. (2019). Nigeria's fuel subsidies: A History of Corruption. Retieved from https:/Avww.blomberg.comvnews/articles/2019-05-16/nigeria-s-fuek-subsidies-a-history-o f£comupyion CIA. (2021). The world Factbook: Nigeria. Retrived from Intematinal Monetary Fund, (2019). Nigeria: Staff Concluding Statement of the 2019 Atticle IV Mission. Rettived from htips:vvww.imf.otg/en/News/Ariicles/2019/12!1 9/pr19478-nigeria-staff-concluding-state ment-of-the-2019-article-iv-mission Oyebola, O. D., & Adenegan, K.O. (2019). Fuel subsidy removal in Nigeria: Economic implications and lesson learned. Journal of African Business, 20(3), 319-363. World Bank. (2016). Fue! subsidy Reform in Sub-Sahara Africa: Experiences and Lesson. Retrived from htips://openknowledge.woridbank.otg/handle.10985/24236