The Emir of Kano, Muhammadu Sanusi II, has expressed concern over Nigeria’s economic direction, questioning why the Federal Government continues to borrow heavily despite removing fuel subsidy.
Speaking in an interview shared by News Central TV on Friday, the former Central Bank of Nigeria Governor said the removal of fuel subsidy and liberalisation of the exchange rate were necessary reforms, but warned that poor timing and weak fiscal discipline could weaken their intended impact.
He criticised the country’s long-standing dependence on foreign refineries while domestic capacity remained underutilised, describing it as a structural imbalance that is only now beginning to change.
“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.
He noted that Nigeria is now gradually shifting toward local refining, saying the country has moved from being a heavy importer of petroleum products to beginning to export.
“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.
While acknowledging the policy direction, Sanusi stressed that the sequence and timing of reforms remain a major issue.
He said, “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.”
According to him, implementing exchange rate liberalisation without first tightening monetary conditions worsened pressure on 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 further questioned the rationale behind continued borrowing despite the removal of subsidy payments, arguing that savings should reflect in government finances.
“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.
