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🇳🇬 Nigeria /Economy & Trade

‘Why are we still borrowing?’, Sanusi questions FG’s debt rise despite subsidy removal

From The Punch · (Apr 24) English Critical tone

Summarized and contextualized by DistantNews.

TLDR

  • The 16th Emir of Kano, Muhammadu Sanusi II, questions Nigeria's continued borrowing despite removing the petrol subsidy.
  • He argues that while subsidy removal and exchange rate liberalization were necessary, the timing and lack of fiscal discipline undermine their benefits.
  • Sanusi criticizes the practice of supporting foreign refineries while domestic capacity remains underutilized, emphasizing the need for fiscal consolidation.

The 16th Emir of Kano, Muhammadu Sanusi II, a respected voice in Nigeria's economic discourse, has voiced strong concerns regarding the Federal Government's fiscal policies. In a recent interview, the former Governor of the Central Bank of Nigeria (CBN) directly challenged the rationale behind continued heavy borrowing, particularly in the wake of removing the costly petrol subsidy.

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.

— Muhammadu Sanusi IICritique of Nigeria's energy policy and support for foreign refineries.

Sanusi acknowledged that the removal of fuel subsidies and the liberalization of the exchange rate were essential reforms. However, he pointedly questioned the timing and sequencing of these measures, suggesting that they were implemented without adequate fiscal discipline. This, he argued, risks negating the potential positive impacts of these necessary adjustments. The monarch highlighted a systemic failure in supporting foreign refineries while Nigeria's own refining capacity lies dormant, a paradox for an oil-producing nation.

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.

— Muhammadu Sanusi IIQuestioning the timing and sequencing of economic reforms.

His critique extends to the government's borrowing habits. Sanusi posed a pointed question: "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?" This sentiment reflects a broader concern among many Nigerians about the nation's mounting debt burden and the perceived lack of transparency or clear benefit from continuous borrowing. The Emir's intervention serves as a critical reminder of the need for prudent fiscal management and a clear demonstration of the benefits of the reforms undertaken.

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?

— Muhammadu Sanusi IIChallenging the government's continued borrowing despite subsidy removal.
DistantNews Editorial

Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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