The Emir of Kano and former Central Bank of Nigeria governor, Alhaji Muhammadu Sanusi 11 has advised President Muhammadu Buhari to remove the subsidy on fuel if he wants the Nigerian economy to bounce back.
Sanusi made the suggestion while speaking at the All Africa Business Leaders Award West Africa held in Lagos yesterday, October 23.
According to The Nation, Sanusi opined that Nigeria can no longer afford the many leakages that have affected its economy for a long time.
He said: “In the first two quarters of this year, this country spent over 500 billion naira on debt servicing. At end of this year, it will be over 1trillion which is more than the amount of money budgeted for health, education and defence combined.
“There is no room in the government’s balance sheet for borrowing and spending. We have no option but to block leakages and to stop non-priority expenditures.
“It is for this reason that we cannot afford to spend all our time talking about the past. It is time to look at what we are doing now and ask ourselves if the fiscal stance and monetary stance are the appropriate stances for the situation we are in.
“Does it make sense at this time for the government to continue paying petroleum subsidy? It does not, and we must say it.
“When you need fiscal consolidation, when you cannot borrow, when you are not earning because oil prices are down, you have to shut down, especially those expense lines that have been known historically to be the sights of those seeking rent.This fuel subsidy has to go.
The revered traditional ruler also called for the expansion of the country’s tax base and an increase in Value Added Tax.
He said: ”Our tax base has to expand, VAT have to go up. We can’t continue having an economy where we collect tax from oil companies, collect tax, maybe, from the telecoms companies, and then 60, 70 per cent of the GDP does not pay taxes. This is something that has to be looked at.
”We are Africa’s biggest oil producer but the biggest export from the United Kingdom to Nigeria is petroleum products. We don’t refine our own crude. We don’t have a petro-chemical industry. We burn our gas and we don’t have enough electricity.
“We produce cotton and import textiles from China. We have a large tomato belt and we import tomato paste. Everywhere you turn…we produce cassava, we don’t produce starch. And what we don’t have we export. It is so bad that we had a military government that conducted free democratic elections in Liberia. We exported democracy when we had a military government.”
Sanusi also asked the federal government to devalue the naira, adding that Nigeria’s economy is in danger of a long term slump unless the government tackles slowing growth.
“Let’s stop being in denial, we cannot artificially hold up the currency,” he said.
He further said that President Buhari, who is against a weakening of the naira,“needs help on the economy.”
“We are depriving certain key industries of imports, if we have to make a choice between economic growth and a devaluation, my recommendation is that we protect growth.”
“The portfolio flows are gone. Inflation is already upon us. You have fiscal consolidation. It is time to loosen monetary policy. Otherwise we compound an exchange rate crisis for businesses with high borrowing costs and declining demand, ” Sanusi said.
Recall that on October 9, Sanusi and Governor Abdullahi Ganduje of Kano state attended the Global Islamic Economy Summit in Dubai, where over 2000 policymakers, thinkers and business leaders from around the world gathered in the city to take part in the two-day summit hosted by the Dubai Chamber, the Dubai Islamic Economy Development Centre (DIEDC).
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