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British Journal of Multidisciplinary and Advanced Studies 6(2),1-23, 2025
Engineering and Technology
Print ISSN: 2517-276X
Online ISSN: 2517-2778
https://bjmas.org/index.php/bjmas/index
Published by the European Centre for Research Training and Development UK
1
Assessing the Effect of Subsidy Removal on Cost-
Significant Material and Labour within Anambra
State Construction Economy
Uchechi Vanessa Alintah-Abel1, Francisca Nkachukwu Okeke2, Eucharia Chika Enebe3
1Department of Quantity Surveying, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria
2Department of Quantity Surveying, Enugu State University of Science and Technology, Agbani, Enugu
State, Nigeria.
3Department of Quantity Surveying, Enugu State University of Science and Technology, Agbani, Enugu
State, Nigeria.
email: uv.alintah-abel@unizik.edu.ng
doi: https://doi.org/10.37745/bjmas.2022.04253 Published March 06, 2025
Citation: Alintah-Abel U.V., Okeke F.N., Enebe E.C. (2025) Assessing the Effect of Subsidy Removal on Cost-
Significant Material and Labour within Anambra State Construction Economy, British Journal of Multidisciplinary
and Advanced Studies, 6 (2),1-23
Abstract: The goal of most countries is the desire to maintain a stable price level of goods and
services. This however, appears to be an uphill task given the incidence of subsidy removal that is
presently ravaging the developing economies of the world. The study aimed at establishing a
relationship between subsidy removal and construction material, and labour prices. To achieve
the aim, a survey design approach was conducted. Data was obtained in other to get the prices of
the construction materials and wages paid to labourers, through quarterly prices of construction
materials from Nigeria Institute of Quantity Surveyors (NIQS) published journals, Fobis
International Market, and Ogidi Building Material Markets, Onitsha, Anambra State. Meanwhile,
Descriptive statistics and a multiple regression model were used to analyze the data collected. It
was discovered that subsidy removal in Nigeria has been far from stable, and has affected material
and labor prices non-uniformly and inconsistently. Hypotheses was also postulated; results shows
that there is a significant relationship between building material prices and the subsidy removal
in Anambra State and that subsidy removal does affect the labour costs, wages of skilled and
unskilled labour, within Awka, Anambra State. The study finally concluded that Government
should also ensure a steady supply of power from the power sector as against the epileptic power
supply and reduce the increase in power tariff, repair the local refineries, and focus more on
encouraging the local refining of petroleum products instead of importing them in order to reduce
constant increase on our domestic prices for petroleum products and consequently inflation on the
materials too.
Keyword: Subsidy, Labour, Material, Cost-Significant, Construction, Economy.
British Journal of Multidisciplinary and Advanced Studies 6(2),1-23, 2025
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INTRODUCTION
Academic dictionary of economics as cited by (Adeniran, 2016), defined subsidy as the cash
incentive given by the government to an industry with a view to lower the price of the product of
the concerned industry and to raise it competitive power. In economic theory, subsidies can be
used to offset market failures and externalities to achieve greater economic efficiency (Ogunode
& Aregbesola, 2023). Subsidy has been researched and defined by different respective authors as
it has been a serious issue of debate in recent times. Moreover, In the most general terms, subsidy
can be defined as any government assistance that allows consumers to purchase goods and services
at price lower than those offered by a perfectly competitive private sector because there is an
intervention of government. Project clue (2023), incited that subsidy is a decrease in the market
price of products and services by the government so that people with limited purchasing power
can obtain such goods and services. It occurs when the government assists customers in paying a
price that is lower than the market price for consumer products (Dabara, Olatoye, and
Okorie,2021). In economic theory, subsidies can be used to offset market failures and externalities
to achieve greater economic efficiency (Ogunode and Aregbesola, 2023). Similarly, world bank
also defined subsidy as the amount of money given to the industry or company by the state or a
public body to keep the price of commodity or service at a lower price as asserted by (Oladipo and
Oni 2012) and also established that inflation, exchange rate, import, interest rate, money supply
and demand for money have a significant effect on the prices of construction materials and cost
labor in Nigeria.
Furthermore, one important objective of subsidy is to keep its prices below the cost of production
as noted by (Ogunode, AIshaya, and Ayoko, 2023). Subsidy removal is an official elimination
and stop payment of subsidies on products formerly subsidized (Fathurrahman, Lapanjang, and
Bahrudin, 2017) The reality of subsidy is that as the pump price of fuel increases, invariably the
cost of everything in Nigeria increases. Fuel subsidy has been a major policy in Nigeria since the
1970s, with the aim of ensuring that petrol is affordable to the citizens. Fuel subsidy is a
government discount on the market price of fossil fuel to make consumers pay less than the
prevailing market price of fuel. When subsidies are in place, consumers would pay below the
market price per litre of the petroleum product. Globally, there are debates about fuel subsidy
because of its huge amount and its effect on citizen’s welfare and the fiscal health of a nation. The
size of global fossil fuel subsidy is large and is estimated at $1 trillion in 2022 from $325 billion
in 2018, according to the International Energy Agency. This amount is significantly higher than
the value of global which was estimated at $204 billion in 2022 and larger than the combined
government revenue of developing countries.
The government was spending a significant portion of its budget on subsidizing fuel, leading to
fiscal challenges. The fuel subsidy system in Nigeria was plagued by corruption and fuel
smuggling, where subsidized fuel was often illegally sold in neighboring countries for a higher
price (McCulloch, Moerenhout, and Yang, 2021). This has led to calls for the removal of global
British Journal of Multidisciplinary and Advanced Studies 6(2),1-23, 2025
Engineering and Technology
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Online ISSN: 2517-2778
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3
fossil fuel subsidy so that the saved funds can be channeled to assist the poor and vulnerable in
need of humanitarian assistance in developing countries (Couharde and Mouhoud, 2020), (Ozili,
and Ozen, 2021). Despite this favorable argument, a large literature documents the negative
consequences of fuel subsidy which include increasing air pollution and greenhouse gas emissions
(Sweeney, 2020), road congestion, (McCulloch et.al., 2021). road accidents and premature deaths,
(Parry, Black and Vernon,2021). foregone tax revenue (Sweeney, 2020). and it increases
inequality between the poor and the rich (McCulloch et. al., 2021). The removal of fuel subsidies
in Nigeria presents a significant policy shift with profound implications for public project delivery.
Without subsidies, suppliers were able to increase their price without facing competition from
subsidized import. However, policymakers in many countries are reluctant to remove fuel subsidy
and to implement fuel subsidy reforms because such reforms may result in a significant increase
in fuel or electricity prices which could lead to economic hardship for low-income and poor
citizens, and might lead to massive protest and increase the risk of a revolution or the overthrow
of the incumbent government. In Nigeria, fuel subsidies were first introduced in the 1970s as a
response to the oil price shock in 1973. Fuel subsidies were partially removed in 1986. Since then,
the fuel subsidies have been in place. In 2012, the government abruptly removed fuel subsidy. The
removal led to massive protests which was intended for the government to reinstate the fuel
subsidy it had removed (Ozili and Obiora, 2023).
The government subsequently reinstated fuel subsidy in 2012 due to the massive protests. Since
then, fuel subsidy payment in Nigeria has grown enormously. In 2022, fuel subsidy reached ₦4
trillion (US$6.088 billion) which amounted to 23 percent of the national budget of ₦17.126 trillion
(US$25.87 billion) in 2022. As a result, the Federal government could no longer maintain fuel
subsidy in 2023, and the government announced that fuel subsidy would be removed in June 2023.
The subsidy removal led to an increase in the price of petrol. This action or decision leads to
increase in transportation, building materials and manufacturing, the construction industry is also
expected to feel the pinch. Recent evidence in the Nigerian literature shows mixed effect of subsidy
removal especially in Anambra where buildings are collapsing in different locality like Onitsha,
Nnewi, Awka and other places due to substandard materials are now invoke with wrong
specifications, which resulted to excessive death both adult and school children. The study
reoccurred that there was no substantial systematic palliative that is in place before the removal.
The study therefore necessitates the gaps by identity the effect of subsidy removal on cost-
significant material and labor within Anambra state construction economy; and secondly at what
extent has subsidy removal influenced labor costs, wages of skilled and unskilled labor in Anambra
state’s construction sector.
LITERATURE REVIEW
A. Factors Affecting Building Materials and Labour on Subsidy Removal
Construction projects involve the extensive use of materials both local and imported. Theywere all
naturally occurring in the ancient times, for example, stone, wood, straws, clay, lime, and brick
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(Akanni, 2006) (Taylor, 2013). The following factors are established economic factors that
contribute to increase in building material prices and labour, increase in prices of petroleum
products, inflation, transport duties, important duties, demand, supply exchange rates, and market
conditions, all these factors mentioned above are as a result of subsidy removal in Anambra state,
Nigeria. The presupposes that increase in the price of building materials such as cement, steel,
timber, copper, masonry, PVC, bitumen, aggregates and so forth, will invariably, lead to an
increase in construction costs and affect the performance of the construction industry. However,
with the ravaging effect of persistent increase in price of materials and equipment due to subsidy
removal in Anambra state Nigeria, some of these investors are also discouraged from investing in
the construction sector. Increase in the prices of petroleum Products: The removal of subsidy has
led to the rise in the prices of petroleum products. This has also contributed to low demand with
high price for petrol, and equally reduced the quantity of petrol purchased. The increase in petrol
will definitely affect the cost of materials, cost of equipment and cost of transportation when
bringing it to construction site and labour too as asserted by (Akanni,2006) (Udosen and Akanni,
2010),
• Inflation: Inflation is the general upward trend of prices of goods and services within an
economy. One of the major constraints in the Nigerian construction industry today has been
the rapid inflation in the cost of the building materials as discussed by Windapo,
Ogunsanmi and Iyagba, 2004). He equally observed that the situations arising from the
rapid increase in the cost of building materials may degenerate to acute shortages of
housing with the millions of middle- and low-income families being priced out of the
market for home ownership all across Nigeria. A certain review of literatures reveals that
there are several factors affecting construction costs for large buildings. In the study of
Anambra state construction industry, Omoregie and Radford, (2006) sampled the opinions
of contractors, consultants and clients and they discovered 15 factors responsible for
project delays and construction escalation in Anambra state, Nigeria. Their survey revealed
price fluctuation as the most severe cause of project cost escalation which is attributed to
the limitation in exchange rate which in turn affects construction material prices and
general price level.
• Transportation: Transportation refers to the process of conveying or moving of goods and
services and people from place to place. Good and Jebbin (as cited by Adenirian, and
Yusuf, 2016) defined transportation as a system for carrying passengers, raw materials,
and goods from one place to another both internally and internationally, often through
power driven machines. Sinclair, Artin and Mulford (2002) noted that increased in fuel
will inversely affect the transport cost. Furthermore, high transport and freight costs have
been identified as the factors responsible for building material price increases in African
countries such as Nigeria, Uganda, and Kenya (Matthew, 2009) (Mwijagye, 2011) (Editor,
2011).
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• Government Policies: Mansfield, Ugwu, and Doran, (1994) and Obadan, (2001) indicated
that government policies highly contribute to the economic increase in price of building
materials sector. Adekoya (2003) also identified government fiscal policies as one of the
factors affecting the cost of building materials in the Nigerian construction industry. The
situation has triggered unnecessary increment on goods and have tripled within and across
major cities in Anambra state, Nigeria. This policy had led to increase in costs of
construction in terms of labour and petroleum related materials input cost and equipment.
Due to this high increment in construction materials, the contractors go for substandard
materials which would lead to collapse of that buildings. Subsidy removal affect the cost
of construction materials, transportation to bring it to site, machineries and labourers used
for construction. Consequently, government policies on construction materials costs have
caused more harm especially after the removal of subsidy which has resulted in higher
overall construction expenses and potentially delay or cancel planned projects due to lack
of funding.
• Exchange Rates on Raw Materials and Input Costs: The exchange rate between two
currencies is the amount for which one currency is exchanged for the other, and is used in
determining the strength of one currency to another. The degree to which building material
prices are affected by exchange rate movements depend on the types and quantities of
materials being imported by a country at a specific time, the need to import the raw
materials used in the production of building materials locally is highly needed (such as
copper, timber and steel) are internationally traded commodities (Busreport, 2006)
(Mohammed, 2006) (Anderson, 2011) (Prior, 2011) and (Iyengar, 2011). acknowledged
that rising raw materials costs along with other factors such as oil, gas and energy are the
key causes of increases in the prices of building materials such as cement, roofing
membranes and water proofing. Import duties are a charge on goods and products brought
into the country and are put in place to protect local producers from clients trying to
outsource cheaper goods from abroad. Import duties on materials have been noted to affect
the construction industry and building material prices in countries such as Malaysia, India,
Uganda, Kenya and Oman.
B. Causes Of Subsidy Removal
There are many causes that led to the removal of subsidies on petroleum in Nigeria. One of the
primary causes has been the sharp decline in the value of the Nigeria Naira, which has made it
more difficult for the government to continue subsidizing construction materials and equipment.
In addition, the high level of corruption in the country has also played a role, as it has made it
difficult for the government to effectively distribute subsidies to those who need them. There has
been a history of corruption and mismanagement of public funds in government revenue. This has
made it more difficult for the government to fund social programs, including subsidies for
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construction materials and equipment (Obadan, 2001). Other causes were discussed by Nigeria
Economic summit (2023)
• Opportunity cost on development spending: Fuel subsidy payment diverts part of the
resource for developmental purposes towards consumption. thereby, the resources that
should have gone into infrastructure, education, health, and security with positive
externalities are going into consumption.
• Strain on government's fiscal space: The ever-growing fuel subsidy bills continue to hit
deep into government resources. With revenue shortage, fuel subsidy payment means the
government will need to borrow to invest in order aspects of governance.
• Shortage of supply: The lower-than-market clearing price causes scarcity. It discourages
producers and suppliers from entering the market and is often associated with excess
consumption. Besides, the fact that neighbouring economies operate at market-clearing
prices encourages the smuggling of subsidised products out of the country. Therefore, fuel
subsidy causes scarcity of fuel in the market.
• Market distortion and inefficiency: By nature, subsidy deviates the prices from market
clearing prices. Coupled with the opaqueness in the process, the activities in the market are
often disrupted as players wait on the government for clearance. The product is often
unavailable, and people often buy at higher prices than the market price.
• Disincentivises investment: Fuel subsidy discourages investors in the sector as they cannot
guarantee their operations efficiency, profitability, and competitiveness due to market
distortions.
• Rips of oil sale benefit: Nigeria is a major oil-producing country but depends on imports
for fuel. With fuel subsidy in place, the government is ploughing back its earnings
regarding foreign exchange and revenue to fuel imports. Therefore, foreign exchange
earnings and government revenue is ripped off on the spot with little to commit to public
finance.
• Breed rent-seeking and corruption: Due to opaqueness and weakness in oversight of the
process, fuel subsidy payment has allowed unethical and corrupt practices such as the
inflation of landing costs and padding fuel import bills.
C. Effect of Subsidy Removal on Cost-Significant Material and Labour
Subsidy removal is an official elimination of subsidies on products formerly subsidized. Subsidy
removal is the decision of the government or institutions to stop payment of subsidies on the
products or services previously subsidized (Ogunode & Aregbesola, 2023). Petrol was N185.00 to
N200.00 per liter on May 2023, before the last escalation of petrol the price, currently the price is
between N1000.00 and N1200 per liter, depending on locations and oil marketers.
Labour cost is an important part of project cost as it includes almost 30-50% of overall cost (Jarkas
and Bitar, 2012). Abdul, Hassan, Yunus and Hashim (2012) agree that construction labor
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productivity is one of the major elements of every company success and competences, which is
mainly associated with labour performance. Subsidy removal has really affected construction cost,
time overruns in construction projects, cost of transportation, fund to finance the project by the
client, materials and equipment.
The cost of building materials poses a significant threat to both the construction industry and
people aspiring to own a house (Anosike, 2009) (Mekson, 2008) (Mohammed, 2008) (Njoku,
2007); for example, a bag of cement which is valued at N1,350 in 2006 goes as high as N5800 in
N1,850 in 2009 (Anosike, 2009. Idoro, and Jolaiya (2010) affirmed that many project were not
completed on time due to the cost of materials, which have been on the increase. These frequent
increases give rise to cost overruns, claims, housing supply shortage leading to high cost of urban
housing accommodation construction cost estimate losing usefulness within short periods,
difficulty in forecasting and planning and frequent contract price variations, all of which often lead
to project abandonment. (Nwuba, 2004) (Akuwusola, 2007)
The situation has triggered unnecessary queues in filling stations while transportation fares have
tripled within and across major cities in Anambra state, Nigeria. This removal of subsidy had led
to increase in costs of construction in terms of labour and petroleum related materials input cost
and equipment. Due to this high increment in construction materials, the contractors go for
substandard materials which would lead to collapse of that buildings. Subsidy removal affect the
cost of construction materials, transportation to bring it to site, payment paid to wages and
machinery used for construction. Consequently, transportation costs for construction materials
rises, resulting in higher overall construction expenses and potentially delay or cancel planned
projects due to lack of funding.
As a result of subsidy removal, the cost of building materials poses a significant threat to both the
construction industry and people aspiring to own houses (Anosike, 2009) (Mekson, 2008)
(Mohammed, 2008) (Njoku, 2007); for example, a bag of cement, which is valued at N4000.00 in
2022, goes as high as N6000.00 in 2023 (field survey 2023). Increase in the price of building
materials has multiplier effects on the industry and many projects were not completed on time due
to the increase in cost of materials. The general direction at which prices of building materials are
increasing in Anambra state was as the result of subsidy removal in Nigeria. According to
Akindele (2024). Idoro, and Jolaiya, (2010), the predominance of many uncompleted and
substandard buildings was connected to the inflation and high cost of building materials. Subsidy
removal can lead to a decrease in the availability of certain materials, as manufacturer and
importers may not be able to afford to keep them in stock. This subsidy removal can also lead to a
decrease in the quality of materials, as manufacturers may reduce costs by using lower-quality
materials.
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METHODOLOGY
To achieve the aim of this study, a survey design approach was conducted. Relevant secondary
data was obtained in other to get the prices of the construction materials and wages paid to
labourers, and the quarterly prices of construction materials were collected from Nigeria Institute
of Quantity Surveyors (NIQS) published journals, Fobis International Market, and Ogidi Building
Material Markets, Onitsha, Anambra State. Meanwhile, Descriptive statistics and a multiple
regression model were used to analyze the data collected, thus embracing the aim and hypotheses
of the study.
This study tested the following Null hypothesis;
H01: There is a no significant relationship between building material prices and the subsidy
removal in Anambra State.
H02: Subsidy removal does not affect the labor costs, wages of skilled and unskilled labor,
within Awka, Anambra State.
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DATA ANALYSIS AND DISCUSSIONS
Table 1: PRICES OF MATERIALS, FROM JANUARY - MAY 2023 BEFORE SUBSIDY REMOVAL AND
JUNE – NOVEMBER 2023 AFTER SUBSIDY REMOVAL.
Material
Jan
Feb
March
April
May
June
July
August
Sept
Oct
Nov
Cement
4200
4200
4500
4500
4500
4600
4600
5800
5800
5500
5300
Granite
420000
420000
420000
420000
430000
500000
600000
600000
600000
600000
600000
Sharp
sand
120000
120000
125000
125000
125000
200000
200000
200000
200000
210000
210000
16mm.
rod
6600
6600
6600
6600
6600
6800
8000
8400
8400
8400
8600
12mm.
rod
3600
3600
3800
3800
3800
4000
4800
4800
4800
4800
5000
Source: researcher’s field work (2024).
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Descriptive Analysis of Data
Fig 1: Showing Cost Trends of 50kg Bag of Cement in Awka from January - May before subsidy removal and June - November after
subsidy removal.
From the chart above, it can be observed that the price of cement is not steady and the patterns in the trend were higher
when subsidy was removed.
Fig 2: Cost Trends of Granite (Per 30tonnes) in Awka from January - May before subsidy removal and June - November after subsidy
removal.
0
1000
2000
3000
4000
5000
6000
Jan Feb March April May June July August Sept Oct Nov
4200 4200 4500 4500 4500 4600 4600
5800 5800 5500 5300
Cost of cement 50kg bag
0
100000
200000
300000
400000
500000
600000
Jan Feb March April May June July August Sept Oct Nov
420000 420000 420000 420000 430000
500000
600000 600000 600000 600000 600000
Cost of Granite (Per 30tonnes)
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From the chart above, it is observed that the price of granite from Jan-May was steady and obtained
an upward trend in June when subsidy was removed.
Fig 3: Cost Trends of sharp sand (Per 30tonnes) in Awka from January - May before subsidy removal and June - November after subsidy
removal.
From the above chart, it is obtained that the price of sharp sand is steady between Jan-May during
subsidy and obtained an upward trend in June till November when subsidy was removed.
Fig 4: Cost Trends of Reinforcement of 1 Whole Length of 16mm and 12 mm Steel Rods in Awka from January - May before subsidy
removal and June - November after subsidy removal.
0
50000
100000
150000
200000
250000
Jan Feb March April May June July August Sept Oct Nov
120000 120000 125000 125000 125000
200000 200000 200000 200000 210000 210000
Cost of shard sand (Per 30tonnes)
0
2000
4000
6000
8000
10000
Jan Feb March April May June July August Sept Oct Nov
6600 6600 6600 6600 6600 6800
8000 8400 8400 8400 8600
3600 3600 3800 3800 3800 4000 4800 4800 4800 4800 5000
Cost of 1 Whole Length of 16mm
and 12 mm Steel Rods
16mm. rod 12mm. rod
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From the above chart, it was observed that the price of steel rods was not steady, and showed a
steady increase from June when subsidy was removed.
TABLE 2: HOW SUBSIDY REMOVAL INFLUENCES LABOR COST, WAGES OF
SKILLED AND UNSKILLED LABOR IN THE CONSTRUCTION SECTOR IN
ANAMBRA STATE.
Salary
Jan
Feb
March
April
May
June
July
August
Sept
Oct
Nov
Salary paid to
concrete mixer Per
day(8hrs)
5000
5000
5000
5000
5000
6500
6500
6500
6500
6500
6500
Salary paid to Block
molder Per
day(8hrs)
7000
7000
7000
7000
7000
8500
8500
8500
8500
8500
8500
Salary paid to
Skilled laborer Per
day(8hrs)
5000
5000
5000
5000
5000
7000
7000
7000
7000
7000
7000
Salary paid to Un-
Skilled laborer Per
day(8hrs)
3500
3500
3500
3500
3500
5000
5000
5000
5000
5000
5000
Fig 5: Salary paid to Concrete mixer (per day) in Awka from January - May before subsidy removal and June - November after
subsidy removal.
0
1000
2000
3000
4000
5000
6000
7000
Jan Feb March April May June July August Sept Oct Nov
5000 5000 5000 5000 5000
6500 6500 6500 6500 6500 6500
Salary ( ₦)
Salary paid to concrete mixer Per day(8hrs)
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From the above chart, it was observed that steady salary of 5000 per day to concrete workers but the prices
were higher when subsidy was removed.
Fig 6: Salary paid to block moulder (per day) in Awka from January - May before subsidy removal and June - November after
subsidy removal.
From the above chart, it was observed that there was a steady salary for block molder during Jan
to May but the prices were escalated when subsidy was removed.
Fig 7: Salary paid to laborers (per day) in Awka from January - May before subsidy removal and June
- November after subsidy removal.
0
2000
4000
6000
8000
10000
Jan Feb March April May June July August Sept Oct Nov
7000 7000 7000 7000 7000
8500 8500 8500 8500 8500 8500
Salary ( ₦)
Salary paid to Block molder Per day(8hrs)
0
1000
2000
3000
4000
5000
6000
7000
Jan Feb March April May June July August Sept Oct Nov
5000 5000 5000 5000 5000
7000 7000 7000 7000 7000 7000
3500 3500 3500 3500 3500
5000 5000 5000 5000 5000 5000
Salary ( ₦)
Salary paid to Laboreres Per day(8hrs
Skilled laborer Un-Skilled laborer
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From the above chart, it was observed that steady salaries were been paid to both skilled and
unskilled laborers till June when the subsidy was removed and the prices increased from 5000 to
7000 and from 3500 to 5000 for skilled and unskilled laborers respectively.
Fig 8: Trends of price of fuel in Nigeria from January - May before subsidy removal and June -
November after subsidy removal.
0
100
200
300
400
500
600
700
Jan Feb March April May June July August Sept Oct Nov
195
250 250 250 250
450
500
620 630
670 685
Price of fuel ( ₦)
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TA BLE 4.3: DESCRIPTIVE STATISTICS
Variable/Statistic
Minimum
Maximum
Mean
Std. Deviation
Skewness
Kurtosis
Fuel price
195
685
440
143.320
1.554
1.606
Cement
4200
5800
4950
514.406
-0.327
-1.624
Sharp Sand
420000
600000
16250
139.522
0.194
0.059
Equipment hiring
45000
210000
510,000
129.522
0.182
0.049
Granite
120000
210000
110,000
768.526
0.149
-1-07
Steel rod
6600
8600
7600
582.101
-0.399
-1-998
Salary
5000
7000
6090
203.700
1.925
1.874
Source: Analysis of survey data (2024)
Hypothesis 1:
There is a no significant relationship between building material prices and the subsidy removal in
Anambra State
A multiple regression model was used to determine the interrelationships between the dependent
variable (fuel price) and the predictors or independent variables (i.e. Cement, sharp sand, granite,
reinforcement bars, equip-hiring and salaries). The regression equation adopted is as follows:
Y = a + b1CEM + b2SSAN + b3EQHI + b4GRA + b5RB + b6SALA
Where:
Y = Fuel prices
CEM = Cement (X1)
SSAN = Sharp sand (X2)
PSAN= Equipment hiring (X3)
GRA = Granite (X4)
RB = Reinforcement bar (X5)
RSHT = Salary (X6)
b1, b2 …….bn are multiple regression coefficients for the independent variables
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“a” is an error term which points to the fact that a proportion of the variance in the dependent
variable Y is unexplained by the regression equation.
Table 4: Model Summary
Model
R
RSquare
Adjusted
R Square
Std.
Error of
the
Estimate
R
Square
Chang
e
Change
Statistics
F Change
d
f
1
d
f
2
Sig.
1
.95
.91
.887
4819.584
.917
3
0
.
8
5
1
.000
7
7
0
4
4
Table 5: ANOVA
Model
Sum of
Squares
df
Mean
Square
F
Sig.
Regression
35.874
5
71.975
30.804
.000
Residual
32.126
14
23.795
Total
39.000
19
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Table 6: Coefficients
Model
Unstandardized
Coefficients
B Standard Error
Standardized
Coefficient
Beta
T
S
i
g
.
(Constant)
-413.983
259.84
71.975
-1.593
.
1
3
4
Cement
-6.685
8.367
-.240
-.799
.
0
3
8
Sharp sand
-4.875
5.564
.349
.275
.
0
4
7
Granite
13.510
5.260
.724
2.568
.
0
2
2
Steel rod
.773
7.504
.031
.103
.
9
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1
9
salary
4.281
1.094
.607
3.913
.
0
0
2
The results indicated that the overall model is statistically significant, [F (5, 14) = 30.804, P =
0.000]. Table 4.21 presents the coefficients, the enter method was employed in the analysis (this
will cause all predictors to be included in the output. The above analysis could be interpreted that
there is a strong significant relationship between building material prices and the fuel prices in the
study area.
Hypothesis 2:
Subsidy removal does not affect the labor costs, wages of skilled and unskilled labor, within
Awka, Anambra State.
Table 7: Summary of Hypotheses Test
Test
Value of
Level of
Critical
Decision
Test
Significance
value
statistics
Correlation
1.73
0.05
0.811
Reject Ho, there is a significant
relationship
Analysis
Using Correlation Analysis
T calculated = 1.73
Degree of freedom = 5-1 = 4
Level of significance = 5= 0.05
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The critical value (ttab) = 0.811
The calculated value (tcal) was indicated to be greater than the table value (ttab) i.e. 1.73 > 0.811,
thus we reject the null hypothesis and conclude that subsidy removal affects the labor costs,
wages of skilled and unskilled labour, within Awka, Anambra State.
CONCLUSION AND RECOMMENDATION
The study, based on its findings, was discovered that subsidy removal in Nigeria has been far from
stable, and have affected material and labor prices non-uniformly and inconsistently. It concludes
that there is a significant relationship between building material prices and the subsidy removal in
Anambra State and that subsidy removal does affect the labour costs, wages of skilled and
unskilled labour, within Awka, Anambra State. This aligns with the research by Akindele (2024).
who discovered negative correlations between fuel subsidy removal and labor costs. Furthermore,
the study showed that subsidy removal impacts negatively on building material prices in Anambra
State. This is in line with Anwanakak (2023 who stated that Pump fuel prices and the cost of goods
and services are positively correlated in Nigeria, meaning that rising fuel prices would raise the
cost of products and services. In this aspect, materials and equipment leading to an increase in
construction costs. Moreover, the high cost of building materials poses a significant threat to both
the building sector and people aspiring to build their houses and as such, therefore there is need to
provide lasting solutions, bring about steady building material prices, and avoid circumstances of
persistent and continual price increase on construction activities.
Thus, the study recommends that the negative impact of fuel subsidy removal on Cost- Significant
Material and Labour within Anambra State Construction Economy can be eradicated or minimised
if strategic planning and policies that can combat the negative effect of fuel subsidy removal are
put in place by the Federal Government. This can be in the form of subsidising transportation for
citizens by operating effective Mass transit schemes. Government should also ensure a steady
supply of power from the power sector as against the epileptic power supply and reduce the
increase in power tariff, repair the local refineries, and focus more on encouraging the local
refining of petroleum products instead of importing them in order to reduce constant increase on
our domestic prices for petroleum products and consequently inflation on the materials too.
Finally, this will improve both the construction economy in Anambra state and Nigeria as a nation
for it will generate more avenue for country progress in generally.
ACKNOWLEDGMENT
This research would not have been possible without the exceptional support of my student who is
now demised; Late Miss Ifunanya. She went extra mile to help to source data from the markets.
May she continue to rest in the Lord.
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