Subsidy Removal Call: Emir Sanusi Under Fire

The Emir of Kano Muhammadu Sanusi II (Image source: news.yahoo.com)

Emir of Kano Muhammad Sanusi II yesterday came under fire for calling for the devaluation of the naira and removal of petrol subsidy. Orgnanized labour, a senator and others advised President Muhammadu Buhari to ignore the emir, describing his demand as not good for the poor. Heeding the call will take the economy back, rather than ginger it as suggested by the Emir.

The emir, who is the immediate past governor of the Central Bank of Nigeria (CBN), spoke last week in Lagos, after receiving a Life Time Achievement Award at the All Africa Business Leaders Award West Africa.

The Nation report continues:

He said: “Does it make sense at this time for the government to continue paying petroleum subsidies? It does not! When you are not earning because oil prices are down, you have to shut down those expense lines that had been known historically to be the site of rent-seeking.

“Fuel subsidy has to go, our tax base has to expand, value added tax (VAT) has to go up. We can’t continue having an economy in which we collect tax from oil, collect tax from telecoms companies, and then 60-70 per cent of the Gross Domestic Product (GDP) does not pay taxes. This is something that has to be looked at.”

Sanusi added: “I know that the government has announced its position on exchange rate… It is wrong to continue to pretend that you can keep the naira at a certain level, when the price of oil is falling, without depleting your reserves. You have to make a choice.”

Nigerian National Petroleum Corporation (NNPC) Group Managing Director Dr. Ibe Kachikwu, told the Senate during his ministerial screening that the president is not inclined to subsidy removal as things stand now.

CBN Governor Godwin Emefiele has also said the government would not devalue the naira, which is exchanged for ₦197 to the dollar at the official market.

Yesterday, Senator Shehu Sani (Kaduna central) on his Facebook page said: “I stand opposed to the devaluation of our national currency and; I stand opposed to removal of subsidy. Devaluing the naira and removing subsidy will worsen inflation, aggravate poverty and ignite a national uprising.

“Decades of adoption of such capitalist economic strategies by many countries in the developing world especially Africa led those nations to economic quagmire and paralyses.

“The poor must not continue to pay the price for the corruption and mismanagement perpetrated by past governments.”

An economic analyst, Mr. Henry Boyo, said: “I think we should ask what should be the implications of doing either or both of those recommendations. If you devalue the naira, there are a numbers of things that will happen. You will find that the cost of production in Nigeria will go up. You will also find that this will have an intimidating effect on the rate of inflation. You will find also that if Nigerian industries remain uncompetitive, they will reduce capacity and lay off workers. That will mean an additional burden on the level of unemployment in the country.

“You must recognize that the issue of devaluation of the naira is very closely tied to the issue of subsidy. On the other hand, instead of devaluing the naira, you follow a process that will actually make naira exchange rate to appreciate.”

Trade Union Congress of Nigeria (TUC) President Comrade Boboi Kaigama, said labour would not accept any further devaluation of the naira or subsidy removal on petroleum products.

“We see them as his personal views and we want to make it clear to him and anybody who wants to listen to his advice that it is not palatable to labour. We will never accept any further devaluation of the naira and we will not be part of the removal of oil subsidy.

“The government should wait for the consequence of listening to this call because by removing oil subsidy, you are further impoverishing Nigerians.

“We want a situation where those behind the subsidy scam are punished, then put our refineries in place, come back and discuss with organized labour and let us see whether it is feasible.

“Otherwise, without putting refineries in place and putting palliatives in place to check increase in prices of goods and transportation and you are calling for the removal of oil subsidy, I think you are very naive when it comes to looking at the consequence of the issue of removal of oil subsidy”

Nigeria Labour Congress (NLC) President Ayuba Wabba described the call for the subsidy removal as anti-masses which will further impoverish Nigerians.

The call, he said, reflected the fact that the former CBN chief has lost touch with realities.

He said labour would continue to fight any policy or calls that will bring hardship to the masses.

The former CBN governor, he said, was speaking the minds of the capitalists, marketers and those who want to milk the country dry.

“We are not in support of that call. There is no doubt that the former CBN governor is no more connected with the people. This is the language of the capitalists, the marketers and those who want to milk the country dry.

“But, we are happy that President Buhari is a former Petroleum Minister and he knows all the rot in the system. We urge him not to look back and we will continue to support him,” Wabba said.

General Secretary of the National Union of Textile and Garment Workers of Nigeria (NUTGWN), Mr Isa Aremu, said the former CBN governor was right to have advised the in-coming ministers against “flattery’’ of the President.

Buhari must also be wary of policy dictatorship that will further undermine growth and development as well as worsen poverty in the country, he added.

“There is no choice for the President between policy sycophancy and policy dictatorship/policy ambush. Emir Sanusi must rethink outside the box of neo-liberal IMF’s unhelpful policies of devaluation (which he commendably rejected as CBN governor). Nigeria needs a new paradigm of bold policy choices and new star-words in place of boring ideological mantra of devaluation and subsidy removal. The naira in recent times lost its value drastically to the existing devalued rate of ₦197 to a dollar.”