How did the continent's largest economy find itself in this mess?
A former Central Bank of Nigeria Boss turned Emir of Kano, Alhaji Muhammad Sanusi II, revealed shocking details regarding the state of Africa's Iargest economy. He submitted that Nigeria was on the verge of bankruptcy, and urgently needs to curb its subsidy policy on petroleum products and electricity.
Sanusi spoke during the ongoing third National Treasury Workshop organised by the office of the Accountant General of the Federation holding in Coronation Hall, Government House, Kano, Northern Nigeria.
The emir advised President Muhammadu Buhari’s administration to cancel subsidy on petroleum products and electricity tariffs if the economy must stabilise.
He said: “The country is bankrupt and we are heading to bankruptcy. What happened is that the federal government do pay petroleum subsidy, pay electricity tariff subsidy, and if there is rise in interest rates, federal government pays.
“What is more life threatening than subsidy that we have to sacrifice education, health sector and infrastructure for us to have cheap petroleum?
“If President Buhari is fighting poverty, he should remove the risk on the national financial sector and stop the subsidy regime.”
With a GDP of over 500 billion dollars, and a population size galloping above 200 million, it has increasingly become impracticable for the government to embark on social welfare policies such as subsidies on petroleum. Corruption, insecurity are other aggravating issues that has evaded solutions.
Sanusi maintained that Buhari must tell Nigerians the fact about the economic situation and also act quickly on it because the nation is already bankrupt.
According to the traditional ruler, “Since I have decided to come here, you have to accept what I have said here. And please, if you do not want to hear the truth, never invite me.
“So, let us talk about the state of public finance in Nigeria. We have a number of very difficult decisions that we must make, and we should face the reality. His excellency, the president said in his inaugural speech that his government would like to lift 100 million people out of poverty, it was a speech that was well received not only in this country, but the world-wide.
“The number of people living with poverty in Nigeria are frightening. By 2050, 85 percent of those living in extreme poverty in the world will be from the Africa continent. And Nigeria and the Democratic Republic of Congo will take the lead.
“Two days ago, I read that the percentage of government revenue going to debt services has risen to 70 percent. These numbers are not lying. They are public numbers. I read them in the newspapers. When you are spending 70 percent of your revenue on debt services, then you are managing 30 percent.
“And then, you continue subsidizing petroleum products; and spending N1.5 trillion per annum on petroleum subsidy! And then we are subsidizing electricity tariff. And maybe, you have to borrow from the capital market or the Central Bank of Nigeria to service the shortfall in the electricity tariff, where is the money to pay salaries, where is the money for education, where are other government projects?”
A fundamental issue is the self-denial of authorities that all is well. Before his election as president for the first term in 2015, Mr Buhari had criticized the past administration, claiming that there was nothing like subsidy, "it doesn't exist", he stated. The reality on ground seems to overwhelm the present administration that it finds it difficult to increase pump price of fuel. Its a sorry case!
However, Sanusi lamented that for 30 years, successive governments have had this project called petroleum subsidy, insisting that this is the right time to stop it so as to save the nation’s economy.
Header Image Credit: WSJ
Are you impressed, have any concerns, or think we can improve this article? Comment below or email us.