The Emir of Kano, Muhammadu Sanusi II, has cautioned the Federal Government against continued reliance on borrowing, arguing that Nigeria risks undermining the benefits of recent economic reforms if fiscal discipline is not enforced. Speaking in an interview posted by News Central TV on Friday, the former Governor of the Central Bank of Nigeria (CBN) acknowledged that the removal of petrol subsidy and liberalisation of the exchange rate were necessary steps, but stressed that poor timing and loose monetary policies have weakened their impact.
Sanusi described Nigeria’s past subsidy regime as unsustainable, criticizing the practice of supporting foreign refineries while domestic refining capacity remained idle. “We cannot continue supporting foreign refineries. We’re an oil-producing country. Keeping refineries open abroad while we’re not doing our own,” he said.
He welcomed the shift toward domestic refining, noting that Nigeria has transitioned from being a heavy importer of petroleum products to an exporter. “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.
Despite this progress, Sanusi questioned whether the reforms were implemented at the right time. He argued that liberalising the exchange rate in an environment of loose monetary conditions contributed to the rapid depreciation of the naira. “Artificial exchange rates, especially when you’re printing money, cannot work. There was going to be a devaluation,” he explained.
Sanusi emphasized that while subsidy removal and exchange rate liberalisation were unavoidable, sequencing was critical. “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,” he said.
He warned that reforms carried out without complementary fiscal and monetary adjustments risk eroding their intended benefits. “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?” he asked.
The Emir expressed concern that despite eliminating subsidy payments, the government continues to borrow heavily. “We’ve removed the subsidy. We’re now spending it. What we should see is fiscal consolidation. You cannot remove wastages and continue borrowing,” he said.
Sanusi questioned the rationale behind persistent borrowing, asking: “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’s remarks highlight the delicate balance Nigeria faces in managing its economy. While reforms such as subsidy removal and exchange rate liberalisation are designed to stabilize public finances and attract investment, their effectiveness depends on disciplined fiscal management and coordinated monetary policy.
The Emir’s warning reflects broader concerns among economists that Nigeria’s debt profile, coupled with inflationary pressures and currency depreciation, could undermine growth prospects. His call for fiscal consolidation underscores the need for government to channel savings from subsidy removal into productive investments rather than debt accumulation.
Despite his criticisms, Sanusi expressed optimism about Nigeria’s shift toward domestic production and export of petroleum products. He described this as a positive development that could strengthen the economy if managed properly. However, he insisted that reforms must be accompanied by structural changes to ensure long-term sustainability.
The Federal Government faces mounting pressure to demonstrate that recent reforms will translate into tangible benefits for citizens. Analysts suggest that fiscal consolidation, tighter monetary policies, and investment in domestic industries will be critical to stabilizing the economy.
Sanusi’s intervention adds weight to calls for greater accountability in public finance management. As Nigeria navigates the post-subsidy era, the challenge remains to balance reform with discipline, ensuring that the sacrifices made by citizens yield lasting economic gains.
