Oil Subsidy Regime and the Underdevelopment of Nigerian Economy: Issues and Realities

Abstract

The paper examines the oil subsidy regime and its contributory role to the underdevelopment of Nigerian economy. Oil has been a major source of income to Nigerian economy accounting for about 90 percent of her export earnings. Refineries built during the 60s to refine this product have become moribund and nonfunctional due to corruption, poor management and privatized interest orchestrated by leadership failure and bad governance. This has adverse effects on the growth and development of Nigerian economy. The paper relies its sources from secondary data. Dependency theory and Marxian political economy approach are used as the theoretical framework. Major findings revealed that subsidy regime never contributed to the development of Nigerian economy rather is a conduit pipe of appropriating resources unjustly; depriving the masses good source of livelihood and preventing the economy of getting to advanced stage of development by class of elites. The paper recommends gradual removal of subsidy with the intention of making state owned refineries functional and improving the welfare packages of Nigerians both in public and private sectors. This will serve as tangible palliatives that would help cushion the effects of removal. For this to be achieved, good governance through a quality leadership that has political will and legitimacy has to be in place.