PETROLEUM SUBSIDY REMOVAL AND THE OPERATIONAL COST OF SMALL AND MEDIUM ENTERPRISES IN KOGI EAST SENATORIAL DISTRICT, KOGI STATE

ABSTRACT This paper examined the effect of petroleum subsidy removal on the operational cost of small and medium enterprises in Kogi east senatorial district, Kogi state. The survey research method was employed to gather information and data from both primary sources. A structured questionnaire was administered to a sample of 500 respondents selected from a population of 5000. Multiple regression was used in testing the hypotheses. It was found that exchange rate fluctuations has positive beta coefficient (0.569) with a p-value of (0.000) showing a strong statistical significant relationship with operational cost of small and medium enterprises in Kogi east senatorial district, Kogi state. It was also revealed that petroleum price hike has positive (0.590) and significant p-value of (0.000.) with performance of small medium enterprises in Kogi east senatorial district, Kogi state. The study concluded that subsidy removal has positive and significant effect on the operational cost of SMEs in Kogi east senatorial district, Kogi state. The study recommended that SMEs should consider implementing hedging strategies like forward contracts or options to manage exposure to exchange rate fluctuations, enabling SMEs to control operational costs and maintain financial stability. It was also recommended that SMEs should adopt alternative technologies to reduce reliance on petroleum-based inputs, enhancing resilience against price volatility.

1 28 Jun, 2024

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