FUEL SUBSIDY REMOVAL AND MANUFACTURING PERFORMANCE IN NIGERIA: EVIDENCE FROM ENERGY EXPENDITURE AND CAPACITY UTILIZATION DATA

In May 2023, Nigeria removed its decades-long fuel subsidy program, marking one of Africa's most significant energy policy reforms. Using quarterly data from the Manufacturers Association of Nigeria (MAN) and the Central Bank of Nigeria (CBN) for 2021-2025, this study examines the impact of subsidy removal on manufacturing sector performance. Using difference-in-differences and interrupted time-series methods with Ghana and Côte d'Ivoire as control countries, we find that manufacturers' energy expenditure increased by 103%. In comparison, capacity utilization declined from 59.8% to 57.2% post-reform. Employment losses totaled approximately 18,900 full-time equivalent positions (6.9% of pre-reform employment). However, we find no evidence that the reform induced energy efficiency improvements; rather, energy intensity increased by 12% as manufacturers shifted from grid electricity to diesel generators. Comparative analysis reveals that successful reforms shared characteristics Nigeria lacked: phase-in periods, pre-reform grid reliability investments, and advance stakeholder notification. We propose a sequenced reform strategy prioritizing grid reliability, natural gas infrastructure, and industrial energy-efficiency financing.