The issue of fuel subsidies was at the forefront of a policy discussion and book presentation attended by notable people in Abuja on Wednesday.
Some dignitaries, including Lamido Sanusi, Nasir El-Rufai, and World Bank Country Director in Nigeria Shubham Chaudhuri, stated the policy should be scrapped due to its bad impact on the country’s economy.
According to Sanusi, a former Emir of Kano, the Federal Government’s continued subsidy payments amount to “stupidity” when the nation is clearly on the verge of “bankruptcy.”
He, therefore, called on the incoming government of Asiwaju Bola Tinubu to stop the policy.
Sanusi, who is also a former governor of the Central Bank of Nigeria (CBN), said those in support of subsidy must realize that “cheap fuel” is not more beneficial to the poor than education, healthcare, and power.
His words: “In 2011, we tried to explain that it’s bad economics; for every $1 billion Nigeria spends on fuel subsidy, it is $1 billion out of education, $1 billion out of healthcare, $1 billion out of power, $1billion out of infrastructure.
“What you (people in support of subsidy) are saying is that for the poor people in this nation, cheap fuel is more important than education, more important than healthcare, more important than power, etc. If you do that for 30, 40 years, what kind of country are you going to have? Which is what we have had.”
Sanusi described what currently obtains in Nigeria as a hedge and not a subsidy.
He added: “As subsidy is, you’ll say if the price is X, we’ll pay 20 percent of it. That’s a subsidy. You will never pay more than X. For a product, whose price I do not control, it doesn’t matter whether the oil price is $200 or $150 a barrel, the Nigerian government has an unlimited pocket, and it will fund the difference.
“The exchange rate can move from N150 to N500 and the Nigerian government will fund it (subsidy). It’s stupidity. You’re heading to bankruptcy. We are walking into bankruptcy with our eyes open.
“We can’t ignore that, and therefore, if I have a new government on May 29 that tells me, ‘Oh, I’m going to continue paying this subsidy for the next three years,’ I’m going to say you’re not serious.
“I’m going to just close my eyes and get ready for the next election in 2027 because we’re going to be here in 2027 talking about the same things.
“People say phase it, but what happens if you start phasing and a year from now you’ve had a massive devaluation? ”
El-Rufai, who is the governor of Kaduna State, said that President Muhammadu Buhari had agreed that fuel subsidy spending made no sense but refused to halt it.
He said: “Between September and November 2021, the National Economic Council gave us an assignment to work out what to do if we withdraw the subsidy, how much will be raised, etc. We worked with experts and the World Bank.
The council, according to him, developed a framework on what to do with what would be saved once the subsidy is halted, and how to release more money for education, health, infrastructure, etc.
“We came out with a report on what to do with the resources, which will be transparently explained to Nigerians. Components of it include investment in security, social protection, etc. The report is there,” the governor said.
El Rufai explained in 2022, governors sensed danger when they noticed that the Federal Government budgeted N200 billion for roads and N1.2 trillion subsidy.
The governor said he approached the President and asked: “Does it make sense to you for us to spend N200 billion on all federal roads in Nigeria in one year, and six times that on cheap petrol?
“He (President) said it ‘doesn’t make sense’. So, why are we doing it? This is something we’ve been studying for many years. We have a framework and the economic council agreed, all the 36 governors of Nigeria agreed that it should be withdrawn. We had a clear plan on where the money would go.
“Some of it will go to the Federal Government, some to the states, local governments areas, and for interventions. We all agreed. The President said, no! That’s it.“
World Bank Country Director Chaudhuri repeated the bank’s call for subsidy removal, stressing that it was adversely impacting Nigeria’s economy.
Anambra State Governor Charles Soludo, who also attended the event organized by the Carnegie Endowment for International Peace and Agora Policy, said there must be institutional change “for Nigeria to have economic diversity, speed, and sustainability.”
“If we don’t tame the politics, if we don’t produce what I call productive politics, rather than consumption-oriented politics that has dominated over time, we are not going to be able to achieve both speed and sustainability,” he added.
