Forex subsidy caused greater harm than fuel subsidy – Abiodun

From Juliana Taiwo-Obalonye, Abuja

Ogun State Governor Dapo Abiodun, on Tuesday, declared that the foreign exchange subsidy posed a more severe threat to Nigeria’s economy than the petrol subsidy inherited by President Bola Tinubu’s administration. He described their combined effect as the largest economic distortion facing the country before 2023.

Abiodun made these comments on the sidelines of the National Economic Council (NEC) Conference at the Presidential Villa in Abuja. The event brought together governors, ministers and top economic advisers to assess reforms and map a route to a $1 trillion economy.

The governor pointed out that while fuel subsidies drew widespread scrutiny, the forex subsidy eroded investor trust and naira stability far more deeply.

“One of the most profound points made was that the biggest subsidy was actually forex, not fuel,” Abiodun said, referencing Central Bank Governor Olayemi Cardoso’s panel remarks.

He detailed how prolonged forex and fuel subsidies undermined naira confidence, spurring speculation as Nigerians and firms hoarded dollars over the local currency.

“At a 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 said.

Abiodun credited Tinubu’s recent monetary and fiscal measures with steadying the forex market and rebuilding trust.

“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.

Macroeconomic steadiness, he argued, forms the bedrock of investor appeal – outweighing even infrastructure without reliable 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,” Abiodun said.

He hailed the Tinubu government’s macroeconomic overhauls as a flagship success, with security, infrastructure and power reforms as the next priorities.

Abiodun praised NEC chair, Vice President Kashim Shettima, for an 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.

Security ranks as the vital follow-up enabler, he stressed, since threats deter investment despite strong infrastructure.

“Insecurity will scare investors away. You can have good roads and policies, but if people don’t feel safe, they won’t come,” Abiodun said, while noting Nigeria’s “significant progress” over the past two to three years amid some persistent issues.

He spotlighted federal megaprojects like the Lagos–Calabar Coastal Highway and Sokoto–Badagry road as transformative for trade and connectivity. For Ogun State, the coastal highway enhances port potential by slashing travel times and easing the movement of goods.

On power, Abiodun lauded Tinubu’s signing of laws empowering states in electricity generation, transmission and distribution as “revolutionary”.

“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.

Stronger federal–state ties are key to reform endurance, Abiodun said, boosted by Tinubu’s gubernatorial background.

“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 said.