Emir of Kano, Sanusi, hits Buhari govt over plan to borrow $30b
… says Buhar govt lacks ideas of getting Nigeria out of recession
Emir of Kano,Alhaji Sanusi Lamido Sanusi, has cautioned President Muhammadu Buhari's administration on grave consequences of borrowing $30 billion from external sources.
Sanusi, the immediate past governor of Central Bank of Nigeria thinks that Buhari's administration lacks the right policies to fix Nigeria's economy.
The emir, who is never shy of making his opinions know no matter whose ox is gored, was categorical that even if the Senate approves the loan, Nigeria will not be able to get enough willing lenders to fulfill her demand for such huge amount in loans.
The former CBN governor spoke in Abuja, in his paper titled: “A plan to restore confidence, direction and growth,” during a policy dialogue organised by an economic think tank, the Savannah Centre for Diplomacy, Democracy and Development.
Sanusi allged that the CBN is “illegally” lending to federal government, adding that the problem of the current government is not having the right policies to fix the current economic woes.”
The ex-CBN governor argued that for a country that has five exchange rates, it would be difficult for a $30bn loan request to sail through.
He said since the country's foreign exchange lacked credibility, the Federal Government should embrace private sector investments as a means of pushing the economy out of recession.
Sanusi also said oil alone could not help Nigeria out of the current economic situation because it would “never make Nigeria rich.”
He said, “I can tell you for free, if the Senate today approves that we can borrow $30bn, honestly, no one will lend to us. It should be approved and I will like to see how you will go to the international market with an economy that has five exchange rates.
“There is one rate for petroleum marketers, there is inter-bank rate, there is another for money market operators such as Western Union, MoneyGram, there is bureau de change rate and there is a special rate that you get when you call the CBN for a transaction.
“So who will lend you money when they don't know your exact reserve and exchange rate? I want to see who will lend you money when the Niger Delta bombing of oil facilities is there, when the main source of the loan repayment is oil.”
Sanusi further said the country's population had increased by over 40 million people since 2015, saying that unfortunately, the government had found it hard to increase capital expenditure.
He also warned on the continuous dependence on the Chinese government, saying that imports from China had scrapped the nation's local industry.
“We trust China too much. We need to be very careful. They are killing our textile and other industries and yet they are selling to us,” he said.
He urged the government to reduce its debt service through greater loan concessionary.
He said the country had in the past 15 years been borrowing money to pay salaries and fuel subsidy, adding that there was a possibility that the country would keep borrowing in the next 15 years, as previous loans were not channelled into health, power or other infrastructural development.
Sanusi also said the June 2016 forex reform should be implemented to unite the market through a single transparent rate rather than creating four new rates.
“The Senate should support tax incentives and other benefits to encourage the private sector,” he added.
Sanusi, who further noted that the CBN's lending to the government since Buhari came into power had spiked from about N1.5tn to over N4.5tn, added, “The CBN-FGN relationship is no longer independent. In fact, one could argue that their relationship has become unhealthy.
“CBN's claims on the FGN now top N4.7tn — equal to almost 50 per cent of the FGN's total domestic debt. This is a clear violation of the Central Bank Act of 2007 (Section 38.2) which caps advances to the FGN at five per cent of last year's revenues. Has CBN become the government's lender of last or first resort?”
“Nigeria produces one barrel of oil for 80 Nigerians; Saudi Arabia produces one for three Saudis,” he said, noting that growth in any economy should be driven by “consumption, investment and net export.”