Transport Subsidies and Social Benefit in Nigeria: A Policy-Level Conceptual Analysis

Abstract

Although transport subsidies are intended to promote equity and accessibility, Nigeria’s heavy reliance on universal fuel subsidies has produced regressive outcomes, fiscal inefficiency, and limited social impact due to poor targeting, weak governance, and the absence of an integrated, transparent, and inclusive subsidy framework. Transport subsidies represent one of the most contentious instruments in mobility policy, oscillating between poverty alleviation, equity enhancement, and fiscal unsustainability. This paper undertakes a conceptual review of global and Nigerian experiences to examine how and for whom transport subsidies generate social benefits. The review identifies gaps in integrating fuel and transport subsidies into a unified social-welfare framework, in gender- and disability-sensitive evaluations, and in assessing alternative instruments such as mobility vouchers. The paper proposes a reorientation toward transparent, impact-driven subsidy models that prioritise accessibility and equity, offering actionable lessons for Nigerian transport policy. Drawing on welfare economics, transport justice, and political-economy frameworks, the analysis highlights that subsidies can correct market failures and expand accessibility, but only when targeted, transparent, and aligned with equity objectives. International evidence from London, Oslo, and Nairobi demonstrates that technology-enabled and performance-based subsidies improve affordability, labour-market participation, and environmental outcomes. By contrast, Nigeria’s heavy reliance on universal fuel subsidies—absorbing up to 2% of GDP—has proven regressive, disproportionately benefiting higher-income groups while eroding fiscal space for pro-poor investments. Public transport interventions, such as the Lagos BRT and Abuja Unity Bus, deliver measurable gains but remain constrained by scale and governance weaknesses.