PETROL SUBSIDY

The removal of the petrol subsidy in Nigeria has led to a significant increase in fuel prices, posing serious economic challenges for small and medium-sized enterprises (SMEs). Given that SMEs contribute approximately 48% to Nigeria’s GDP and employ over 84% of the workforce, understanding how they adapt to rising fuel costs is critical. This study examines the impact of subsidy removal on SMEs, focusing on changes in pricing strategies, cost structures, automation investments, and diversification efforts. Using a mixed-methods approach, data is collected from SMEs across various sectors, including transportation, manufacturing, retail, and services. The study finds that rising fuel prices have forced many SMEs to increase product prices, optimize supply chains, and explore alternative energy sources. Additionally, some businesses are investing in automation and technology to reduce dependence on fuel, while others are diversifying their business models to mitigate risks. However, limited access to financing and economic uncertainty remain major barriers to these adaptive strategies. The findings of this study provide valuable insights for policymakers, suggesting the need for targeted support, such as tax incentives for automation, financial aid for SMEs transitioning to alternative energy sources, and infrastructure development to reduce reliance on costly fuel alternatives. The study contributes to existing literature by offering a holistic analysis of SME survival strategies in response to fuel price volatility in Nigeria.