Why Nigerians are suffering Economic Hardship –Lamido Sanusi

If you want to understand why Nigeria and Nigerians are suffering economic hardship, Emir of Kano, Sanusi Lamido Sanusi, is here with the answer.

The monarch who was former Central Bank of Nigeria (CBN) Governor, said Nigeria’s economic hardship is as a result of  cumulative effects of the country’s failure to remove the fuel subsidy over a decade ago.

“The government told 200 million Nigerians they would not pay more than a fixed amount per litre, no matter what happened to oil prices or exchange rates.

“When oil went from $40 to $140, the federal government paid the difference. When the naira depreciated from N155 to N300, the government paid the difference,” Sanusi said at the Oxford Global Think Tank Leadership Conference held on Tuesday in Abuja.

Describing what Nigerians generally took for fuel subsidy as a dangerous financial arrangement that functioned more like a hedge, he said it simply exposed the country to unlimited fiscal risk.

“That was not a subsidy; it was the worst form of derivative, an open-ended hedge.”

“At some point, we were borrowing money not just to pay subsidies, but to service the interest on the loans taken to pay those subsidies. That was bankruptcy by policy,” he stated, explaining that not only was the government borrowing to fund the fuel subsidy but that it was also accumulating debt servicing those borrowings.

Nigerians are suffering economic hardship now because the leadership failed in the courage to remove the subsidy.

“If we had removed it then, inflation would have risen slightly from 11 to about 13 per cent and stabilised. Now, we are facing inflation above 30 per cent. This is the cost of delay,” he said.

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“Many Nigerians think the central bank or the Ministry of Finance can simply create prosperity; they cannot.

“Their job is to provide stability and predictability, the foundation upon which private investment and economic growth can occur,”

“The central bank’s role is not to create growth or employment but to provide stability and an environment conducive to growth, and I believe the current leadership has made progress in that regard,” Sanusi said.

To reverse structural imbalances currently contributiong to economic hardship, Emir Sanusi pointed to the CBN’s recent policy reforms.

These measures at reducing exchange rate distortions, curbing inflation, and rebuilding investor confidence in Nigeria’s monetary system could help in the direction.