Impact of Electricity Tariffs and Fuel Subsidy Removal on the Performance of Micro, Small, and Medium Enterprises (MSMES) in Benue State

Bridget Mlumun Akaakohol

doi:10.56201/wjeds.v11.no9.2026pg7.24

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Impact of Electricity Tariffs and Fuel Subsidy Removal on the Performance of Micro, Small, and Medium Enterprises (MSMES) in Benue State

Bridget Mlumun Akaakohol

Abstract

This study examined the effect of electricity tariff increases and fuel subsidy removal on the performance of Micro, Small, and Medium Enterprises in Benue State, Nigeria. The study was guided by the Resource-Based View and Keynesian Economic Theory. A cross-sectional survey research design was adopted, and data were collected from 370 MSME operators in Makurdi, Katsina-Ala and Otukpo using a structured questionnaire and interviews. Data were analysed using descriptive statistics, confirmatory factor analysis and structural equation modelling, while a paired-samples t-test was used to compare MSME performance before and after the policy changes. The findings revealed that electricity tariff increases had a significant negative effect on MSME performance (β = −.41, p < .001), while fuel subsidy removal also had a significant negative effect (β = −.47, p < .001). Jointly, the two factors explained 58% of the variance in MSME performance. The paired-samples t-test further showed a significant decline in overall MSME performance from 3.85 before the policy changes to 3.21 after the changes (t = 13.27, p < .001). The study concludes that rising electricity and fuel costs constitute significant constraints to MSME sustainability and growth in Benue State. It recommends targeted energy- cost support, improved electricity supply, promotion of alternative and energy-efficient technologies, measures to cushion fuel-related costs, and accessible financing for MSMEs.

Keywords

Electricity Tariff Increases; Fuel Subsidy Removal; MSMEs; Business Performance; Energy Costs

References

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Impact of Electricity Tariffs and Fuel Subsidy Removal on the Performance of Micro, Small, and Medium Enterprises (MSMES) in Benue State

Abstract

Keywords

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