Multivarites Analysis on the Effects of Petroleum Fuel Subsidy Removal on the Nigerian Economy in the Era of Artificial Intelligence

Abstract

This study aims to determine the effects of petroleum (Premium Motor Spirit) subsidy removal on the Nigerian economy in the era of artificial intelligence. Fuel subsidies began in the 1970s and became institutionalized in 1977. While the concept of subsidy itself is noble, its administration in Nigeria has been beleaguered with serious allegations of corruption and mismanagement. According to the World Bank, Nigeria's total revenue in 2000 was USD 10.8 billion. By 2010, this amount increased to USD 67.9 billion. Yet the Nigerian government has spent over USD 30 billion on fuel subsidies over the past 18 years. This has significantly impacted funds available for critical infrastructure and other essential sectors such as education, health, and defense. Primary and secondary sources of data were used for the study. A multivariate statistical method of data analysis was used and it was discovered that while the source of livelihood (salary/income) remains constant at USD 36.42 (approximately N30,000.00), the removal of fuel subsidy had given rise to an increase in the pump price from N230/liter to N1200/liter, hike in transportation to 61.27% from N3848.68 to N7885.68, high cost of living (bread from N350 to N1200). Rent increases (average N250,000/annual) and prices of goods (foodstuffs: maize ranges N35,000-N70,000/bag, Rice N20,000-N75,000/bag, Cassava flour from N3,500 to N32,000) resulting to inflation and increase in crime rates in the society. These affected the economic growth rate of the country. The use of Artificial intelligence for economy policy formulation can help the government in identifying the pros and cons before the subsidies removal and save the economy from plummeting adversely