Abstract
This study investigates the effects of
oil subsidy removal on the performance of small and medium enterprises (SMEs)
in Kano Metropolis, Nigeria, focusing on operational efficiency, profitability
margins, and sustainability. SMEs, recognized as critical drivers of economic
growth and employment, face compounded challenges from subsidy removal,
including increased operating costs, inflationary pressures, and restricted
access to finance. Employing a primary data collection approach, the research
utilizes questionnaires, surveys, interviews, and focus groups to gather
insights from a representative sample of 436 SMEs selected through systematic
sampling. Guided by Stakeholder Theory and Transaction Cost Economics, the
study examines the interplay between subsidy removal and key variables such as
consumer behavior, inflation dynamics, and economic growth indicators. The
findings reveal that oil subsidy removal significantly increases operational
costs, reduces profit margins, and amplifies financial strain, with cascading
effects on SME resilience. Consumer behavior shifts, driven by higher fuel
prices, negatively impact sales, while inflation dynamics exacerbate price
instability and operational inefficiencies. The study underscores the need for
targeted policies, including subsidy reinvestment programs, infrastructural
development, and access to affordable credit facilities, to mitigate these
adverse effects. This research contributes to scholarly discourse by bridging
gaps in literature regarding subsidy reform's impact on SMEs and offers
actionable recommendations for policymakers and stakeholders to foster SME
growth and sustainability in challenging economic landscapes. The implications
extend beyond Kano, offering insights applicable to roader contexts of economic
reform and SME development.
Keywords: Oil Subsidy
Removal, SME Performance, Kano Metropolis, Economic Reform, Operational
Efficiency, Inflation Dynamics.
DOI: www.doi.org/10.36349/fujpam.2024.v3i02.002
author/Adamu Muhammad PhD
journal/FUJPAM Vol. 3, No. 2