Former Emir of Kano Muhammadu Sanusi II lamented the economic problems in Nigeria, calling it an oil economy with no oil income.
At the 7th Kaduna Economic and Investment Summit (KadInvest 7.0), which was hosted in the state over the weekend, Sanusi gave a speech.
Sanusi, a former governor of the Central Bank of Nigeria (CBN), lamented the ten-year decline in crude oil revenues.
Beyond the difficult global setting, Nigeria faces challenges that are wholly self-inflicted, he noted.
“Oil revenues, previously vital to the federal government, have been declining steadily for more than ten years. Regardless of the state of the oil price situation, this has been occurring.
The federal government of Nigeria (FGN) is expected to receive just $2.9 billion in oil proceeds this year, compared to roughly $60 billion in 2011, after annualizing the realised income over H1’22.
One of the major financial management oversights in emerging markets is present here (EM).
Budgeting has become gradually less realistic, borrowing requirements have grown, and the methods for financing deficits have become progressively less conventional as a result of this PFM failure.
Sanusi claimed that yearly record deficits are recorded and that bigger goals are established each year only to be dutifully missed.
According to him, Nigeria’s issues are more a result of poor design and implementation than a flaw in the system, which is functioning as expected.
“In the absence of the targeted revenues—both oil and non-oil—the CBN’s technological advancements have become the federal government’s crutch.
“These have already surpassed a record-breaking N19.9 trillion, more than four times the realized income from the previous year.
“These currently make up more than one-third of the CBN’s balance sheet as a whole. When compared to FGN revenues of N2,402 billion in H1’22, debt service for the FGN increased by 108% to N2,597 billion due to the expense of servicing all conventional debts and these new ones.
Sanusi claimed that the first and most evident issue with the current situation is the gasoline subsidy’s presence and the opportunity it provides for fraud.
According to the NNPC, the average daily gasoline usage in Nigeria is 66 million liters, and on some days that number might reach 100 million liters.
“This is about comparable to Indonesia (2019), a nation with a GDP per capita that is nearly three times higher than Nigeria’s, twice as many automobiles, and 2.5 times as large as Nigeria’s road network.
And this goes beyond the effects of subsidies. Iran’s official gasoline prices are 5 US cents per liter, or less than 15% of Nigeria’s pump prices.