Journal of work and entrepreneurship reserch

Assessing The Transmission Of Fiscal Reform Dividends To Smes In Nigeria: A Quasi-experimental Analysis

Auteurs : Gumel Babandi Ibrahim .

Résumé

This study examines whether Nigeria’s fiscal gains from the 2023 fuel subsidy removal and foreign exchange harmonization have translated into infrastructure development and improved SME performance. It applies to a continuous-treatment difference-in-differences design, supported by instrumental-variable estimation, mediation analysis, robustness checks, and interviews with 25 SME proprietors. The analysis combines FAAC disbursement data, NEITI reports, macroeconomic indicators, construction statistics, state budget evidence, and SME interviews. FAAC disbursements rose from N9.18 trillion in 2022 to N18.54 trillion between January and October 2025, yet fiscal expansion did not automatically ease SME constraints. Larger FAAC increases raised infrastructure capital expenditure, while a 1 percent increase in infrastructure spending increased SME sales by 0.89 percent and employment by 0.72 percent. Infrastructure investment mediated 41.6 percent of the reform effect. Benefits were stronger for medium-sized firms, manufacturing and logistics enterprises, and states with stronger budget execution capacity. Inflation, exchange-rate pressure, energy costs, and recurrent expenditure weakened transmission. The findings establish a revenue-infrastructure-SME disconnects fiscal reform dividends reach firms only when converted into productive infrastructure, credible local spending, and targeted SME support.

Mots clés

Fuel subsidy removal ; foreign exchange harmonization ; infrastructure investment ; SME performance ; fiscal transfers