Sanusi Lamido Sanusi, a former Central Bank of Nigeria Governor and Emir of Kano, has sparked national debate about Nigeria’s gasoline subsidy reduction and foreign exchange reforms, following a viral video in which he evaluated the economic policies and their long-term effects.
In widely distributed remarks, Sanusi defended important reforms while simultaneously criticising their timing and implementation plan.
His statements come amid continuous public debates about growing living costs and currency volatility.
He stated, “I have always said the subsidy regime was unsustainable. We cannot continue supporting foreign refineries. We’re an oil-producing country.”
He also stated that Nigeria’s past reliance on imported refined products while ignoring domestic refining capabilities was economically detrimental.
He noted a shift in the current structure, saying, “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.”
Sanusi also addressed the issues of exchange rate management and monetary policy, cautioning against artificial regulations that do not reflect market realities.
He said, “Artificial exchange rates, especially when you’re printing money, cannot work. There was going to be a devaluation.”
While he supports subsidy elimination and exchange rate reform, he emphasised the need of timing and sequencing in ensuring economic stability.
“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 also emphasised that policy actions should be reviewed holistically, rather than in isolation. To avoid economic shocks, he believes that reforms should be accompanied by supportive measures.
Sanusi cited Nigeria’s increasing debt profile as a key rationale for reform. He indicated that the government’s finances had reached a critical point prior to the elimination of subsidies.
“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, he cautioned that eliminating subsidies and liberalising exchange rates without tightening monetary policy could disrupt the economy.
“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.”
The former central bank chief also expressed concern about sustained government borrowing notwithstanding subsidy cuts.
“Secondly, we’ve removed the subsidy. We’re not spending it. What we should not see is fiscal consolidation.”
He stressed the need for discipline in public finance management, warning against wasteful borrowing practices.
“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?”
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