EFFECTS OF OIL SUBSIDY REMOVAL ON SMALL AND MEDIUM ENTERPRISES IN KANO METROPOLIS

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.