Nigeria’s Finance Minister, Taiwo Oyedele, has warned that any move to restore petrol subsidy could trigger capital flight, weaken the naira significantly and push the exchange rate towards ₦4,000 per dollar.
Oyedele issued the warning on Monday during a press briefing at the 2026 International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand, where he defended the Federal Government’s economic reforms and cautioned against reversing the removal of petrol subsidy.
According to the minister, even an announcement that the government was considering bringing back the subsidy could unsettle investors, undermine confidence in Nigeria’s economic direction and place further pressure on the foreign exchange market.
He warned that the naira could come under severe pressure, potentially depreciating to ₦3,000, ₦3,500 or even ₦4,000 to the dollar if investors interpreted a return to subsidy as a reversal of the government’s reform programme.
Oyedele explained that uncertainty over economic policy could prompt foreign investors to withdraw their funds from Nigeria. Such capital outflows could increase demand for foreign currencies, weaken the naira and raise the cost of importing goods and services.
He also warned that the reaction might extend beyond international investors. Wealthy Nigerians, business owners and middle-class citizens could seek to protect their savings by converting more of their money into dollars, further increasing demand for foreign exchange.
The consequences, he argued, would ultimately affect ordinary Nigerians through higher prices, rising import costs and additional pressure on household finances.
Oyedele maintained that reinstating petrol subsidy could undermine the very relief its supporters hope to achieve. Although subsidised petrol might initially appear cheaper at the pump, a significant depreciation of the naira could increase the cost of importing fuel and other essential products, potentially eroding the benefit to consumers.
His warning comes amid continuing public debate over the effects of subsidy removal and the wider economic reforms introduced by President Bola Tinubu’s administration.
Tinubu announced the removal of petrol subsidy during his inauguration on May 29, 2023, declaring that the policy would no longer be funded through the national budget from June of that year. The decision marked a major change in Nigeria’s fuel pricing policy and was intended to reduce government expenditure on subsidy payments.
However, the transition has placed considerable pressure on households and businesses, particularly through higher transport costs and the rising cost of goods and services. The hardship has continued to fuel calls for government intervention to make petrol more affordable.
Oyedele nevertheless argued that reversing the policy could create fresh economic problems by weakening investor confidence and increasing the government’s financial burden.
The minister also rejected suggestions that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins amounted to a return to subsidy. He described the move as a commercial decision rather than a government-funded payment designed to cover the difference between the cost of petrol and the price paid by consumers.
The distinction is important because a commercial price reduction does not necessarily mean that the government has resumed paying subsidies from public funds.
While Oyedele’s projection highlights the potential risks of reversing current policies, the movement of the naira depends on several factors, including foreign exchange supply, investor confidence, government revenue and broader economic conditions. The ₦4,000 figure is therefore a warning about a possible outcome, not a confirmed forecast that the exchange rate will reach that level.
For Nigerians already struggling with high living costs, the debate presents a difficult policy question: how can the government ease the burden of expensive petrol without creating further pressure on the currency, public finances and prices?
Oyedele’s position is that restoring the subsidy could deepen those pressures rather than provide lasting relief. The challenge for the Federal Government remains finding ways to reduce the hardship facing households while maintaining economic stability and rebuilding public confidence in its reforms.
