The Political Economy of Fuel Subsidy Reform and Public Sector Productivity: Evidence from the Benue State Civil Service, Nigeria (2012-2026)

Abstract

The removal of Nigeria's petroleum subsidy in May 2023 constitutes one of the most consequential fiscal adjustments in the country's post-2012 political economy, yet its institutional consequences at the subnational level remain empirically under-examined. This study investigates the political economy of fuel subsidy reform and its implications for public sector productivity in the Benue State Civil Service, Nigeria, over the period 2012–2026. Anchored on Political Economy Theory, incorporating Rentier State and Dependency perspectives, the study adopted a convergent mixed-methods design integrating quantitative data from 402 valid questionnaires with qualitative evidence from twelve key informant interviews (KIIs). Descriptive statistics, paired-samples t-tests, multiple linear regression, and binary logistic regression were applied to the quantitative data, while Braun and Clarke's (2019) six-phase framework guided thematic analysis of the qualitative data. Findings show that although nominal monthly take-home pay rose by approximately 12.6 per cent following subsidy removal, transportation expenditure increased by 194 per cent and food expenditure by 71.2 per cent, producing a statistically significant decline in real wage value (t(401) = –12.89, p < .001) and a fall in household savings from 8.2 to 2.4 per cent. Transportation cost increase (β = –.412), energy cost increase (β = –.298), and real wage decline (β = –.245) jointly explained 52.4 per cent of the variance in administrative productivity (R² = .524, F(5, 396) = 43.78, p < .001), whereas access to government palliatives showed no statistically significant association with institutional performance (p = .067–.216). Informal coping strategies were significantly and negatively associated with institutional performance (Wald χ² = 27.82, p < .001). The study concludes that fuel subsidy reform in a rentier political economy redistributes fiscal adjustment costs onto fixed-income public servants, gradually converting bureaucratic institutions into sites of household survival rather than purely instruments of service delivery. It recommends statutory wage indexation, institutional transport support, performance-based management reform, and enhanced fiscal transparency in the utilisation of subsidy-related savings.