The Emir of Kano, Muhammadu Sanusi II, has raised concerns over Nigeria’s current fiscal direction, questioning the Federal Government’s continued borrowing even after the removal of petrol subsidy.
Speaking in an interview shared by News Central TV on Friday, the former Governor of the Central Bank of Nigeria said that although removing fuel subsidy and freeing the exchange rate were necessary steps, poor timing and weak fiscal discipline could cancel out their expected gains.
He also criticized Nigeria’s long-standing dependence on foreign refineries while local refining capacity was left unused, describing it as a major system failure that needed correction.
“I have always said the subsidy regime was unsustainable. We cannot continue supporting foreign refineries. We’re an oil-producing country. Keeping refineries open abroad while we’re not doing our own,” Sanusi said.
Despite this, he expressed hope about the recent changes in the oil sector, pointing out that Nigeria is now producing more locally and even exporting refined products.
“Today, we have a situation where we have our own domestic refinery. We’re not importing petroleum products. We’re even exporting to Europe, and this is very good for the economy,” he added.
Sanusi warned, however, that the way the reforms were carried out matters just as much as the reforms themselves.
“Artificial exchange rates, especially when you’re printing money, cannot work. There was going to be a devaluation.
“For me, removing subsidy or liberalising exchange rates, these are good interventions. Were they done at the right time? Those are certain questions. Were there other things that should be done that have not been done? These are other issues.”
He further explained that doing reforms without tightening monetary conditions could weaken the naira.
“It’s not enough to say, oh, they removed subsidy. You had to. When you get to a point where 100% of your revenue goes into debt service, you cannot continue. Where is the money going to come from?
“However, if you decide to remove subsidy and liberalise exchange rates in an environment of very loose monetary conditions, before you have tightened money supply, the Naira drops to a bottomless pit. That was a timing issue.”
Sanusi also questioned why borrowing continues despite savings from subsidy removal.
“We’ve removed the subsidy. We’re now spending it. What we should not see is fiscal consolidation. You cannot remove wastages and continue borrowing. I’ve said this before. You need to see the benefits.
“If you’re not paying the subsidy and you’ve got the money, why are we still borrowing and borrowing? What are we borrowing for?” Sanusi questioned.
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