Forex subsidy caused greater harm than fuel subsidy –Abiodun

From Juliana Taiwo-Obalonye, Abuja

Ogun State Governor, Dapo Abiodun, has declared that the foreign exchange subsidy constituted a far greater threat to Nigeria’s economy than the petrol subsidy inherited by President Bola Tinubu’s administration.

Speaking on the sidelines of the National Economic Council (NEC) Conference at the Presidential Villa, yesterday, Abiodun described the twin subsidies as the biggest economic distortions confronting the country prior to 2023.

The NEC conference brought together governors, ministers and top economic experts to evaluate ongoing reforms and chart strategies towards achieving a $1 trillion economy.

He noted that while fuel subsidies attracted more public attention, the forex subsidy inflicted deeper damage by eroding investor confidence and destabilising the Naira.

“One of the most profound points made was that the biggest subsidy was actually forex, not fuel,” the governor said, referencing comments made by Central Bank Governor Olayemi Cardoso during a panel session at the conference.

He explained that the prolonged existence of both subsidies undermined confidence in the local currency and encouraged speculation, as individuals and businesses increasingly hoarded dollars.

“At one point, people had no confidence in holding the Naira because of the speed of depreciation. People began to stockpile foreign exchange. That situation has now been reversed,” he stated.

The governor credited recent monetary and fiscal reforms introduced by the Tinubu administration with restoring stability and rebuilding trust in the forex market.

“Today, there is stability in the forex market. There is confidence in the forex market, and there is confidence in holding the Naira. That is where sustaining the economy begins,” he added.

He stressed that macroeconomic stability remains the most critical factor in attracting investment, arguing that infrastructure alone cannot drive growth without reliable economic policies.

“You can build all the roads you want, but if investors are not confident that they can bring in their money and repatriate it at a determined exchange rate, they will not come,” he said.

He described the administration’s economic reforms as a major success and identified security, infrastructure and power sector development as the next key priorities.

The governor commended Vice President Kashim Shettima, NEC chairman, for organising what he called a highly productive and enlightening conference.

“This summit has been very insightful. Speakers were assembled across various sectors to highlight where we started in 2023, the gains we have made, and how we intend to achieve a $1 trillion economy,” he said.

He emphasised that security remains a crucial enabler for economic progress, warning that insecurity could scare away potential investors regardless of improvements in infrastructure.

“You can have good roads and policies, but if people don’t feel safe, they won’t come,” he said, while acknowledging that Nigeria has recorded “significant progress” in the last two to three years.

He highlighted ongoing federal projects such as the Lagos–Calabar Coastal Highway and the Sokoto–Badagry Road as transformative initiatives that would enhance trade and national connectivity.

For Ogun State, he noted, the coastal highway would unlock major economic opportunities by improving access to ports and reducing travel time for goods and services.

On power sector reforms, he praised President Tinubu for signing legislation that allows states to generate, transmit and distribute electricity.

“Ogun State now regulates its electricity market. We are generating, transmitting and distributing power, and we are moving towards building a state grid. This will significantly boost investment and public-private partnerships,” he said.

He further stressed the importance of strong federal–state collaboration in sustaining reforms, adding that President Tinubu’s background as a former governor has strengthened relations with the states.

“Under his watch, governors have never had it so good. He understands that states are closest to the grassroots and that federal policies succeed only when states domesticate them,” he concluded.