The removal of the fuel subsidy prevented the naira from crashing to as low as N3,500 per dollar, according to the Chairman of the Nigerian Refining Society (NRS), Dr. John Adeyemi. Speaking at a press briefing in Abuja on Friday, Adeyemi credited the policy decision with averting a catastrophic devaluation that would have further impoverished millions of Nigerians.
Subsidy Removal Averted Naira Collapse
Adeyemi explained that if the subsidy had remained, the government would have continued to borrow heavily to fund it, putting immense pressure on the naira. He noted that the subsidy cost the country approximately N10 trillion in 2023, a figure that could have ballooned to N15 trillion in 2024 without removal.
“The subsidy was a fiscal time bomb. Its removal, though painful, saved the naira from hitting N3,500 per dollar,” Adeyemi said. He added that the savings from subsidy removal have been redirected to infrastructure and social investment programmes, which are crucial for long-term economic stability.
Market Reactions and Economic Impact
Following the subsidy removal in May 2023, the naira has experienced significant volatility, trading around N1,500 per dollar in recent weeks. Analysts argue that without the reform, the currency could have depreciated much further, as the central bank would have struggled to defend it.
The NRS chairman also highlighted that local refineries, including the Dangote Refinery, are beginning to reduce Nigeria’s dependence on imported fuel, which should ease pressure on the foreign exchange market. He projected that as domestic refining capacity increases, the naira could strengthen to N1,200 per dollar by the end of 2026.
Government’s Position and Public Reaction
The federal government has consistently defended the subsidy removal, stating that it was necessary to prevent fiscal crisis. However, labour unions and opposition parties have criticised the policy, citing increased transportation costs and inflation.
In response to the NRS chairman’s comments, the Minister of Finance, Mrs. Zainab Ahmed, reiterated that the government is committed to mitigating the impact on the poor through targeted interventions. “We are working to ensure that the benefits of reform are felt by all Nigerians,” she said.
Future Outlook and Recommendations
Adeyemi recommended that the government maintain a stable foreign exchange policy and invest in modular refineries to boost production. He also called for transparent management of subsidy savings to build public trust.
As Nigeria continues to navigate its economic reforms, the NRS chairman’s warning serves as a reminder of the dire consequences that were avoided. The path forward remains challenging, but with sustained policy discipline, the naira’s stability could be secured.
