At the \u201cBetter Leader for a Better Nigeria\u201d conference held by the Oxford Global Think Tank in Abuja, the Emir of Kano, Muhammadu Sanusi II, revealed new insight into why the Goodluck Jonathan-led federal government abandoned a full withdrawal of the fuel-subsidy regime in 2012. Rather than backing down purely due to public protest, Sanusi says, the decision was significantly shaped by acute national-security concerns associated with the insurgency of Boko Haram.<\/p>\n
Sanusi\u2014who served as Governor of the Central Bank of Nigeria (CBN) from 2009-2014 and was one of the most vocal advocates for subsidy removal\u2014described the so-called \u201cfuel subsidy\u201d as in fact a dangerously unsustainable \u201chedge\u201d. He explained that the federal government had guaranteed a fixed pump price of petrol regardless of shifts in global crude prices, exchange rates or interest rates, meaning Nigeria was exposed to unlimited cost escalation.<\/p>\n
\u201cIt was not a subsidy\u2026 what we had in this country is what in risk-management you call a naked hedge. The worst possible derivative you can have.\u201d \u2014 Muhammadu Sanusi II<\/p>\n
He gave this breakdown: as oil prices rose from US $40 to US $140 per barrel, exchange rate moved from N155 to N300, interest rates rose from 5 % to 15 %\u2014all costs the government absorbed.<\/p>\n
He said: \u201cWe moved from using revenues to pay subsidies, to borrowing money to pay subsidies, to borrowing money to pay interest on the borrowed money. We had become bankrupt.\u201d<\/p>\n
Sanusi maintained that if the Jonathan government had removed the subsidy in 2011, the pain would have been \u201ca very, very tiny fraction\u201d of what Nigerians now face.<\/p>\n
Why the hold-up?\u00a0Sanusi says the crucial reason for the partial back-down\u2014specifically the decision to do \u201c50 % not 100 %\u201d of the intended withdrawal\u2014was the very real fear that Boko Haram might exploit the nationwide demonstrations triggered by subsidy removal and carry out suicide bombing attacks, turning a protest into a mass-casualty event.<\/p>\n
\u201cIf one day one of these suicide-bombers goes to these Nigerians and explodes the bomb, and you have 200 corpses, it will no longer be about subsidy.\u201d \u2014 Sanusi<\/p>\n
In his account, the government under Jonathan was determined to enact the reform. He credits the president for that resolve\u2014even though the security situation forced a compromise.<\/p>\n
Beyond this, Sanusi used the platform to offer a broader critique of Nigeria\u2019s political class: he lamented that many of the nation\u2019s formally educated leaders operate as if \u201cilliterates\u201d, falling into praise-singing and self-interest rather than exercising responsibility and integrity.<\/p>\n
He argued that leadership in Nigeria should be about service\u2014educating children, saving lives, building infrastructure\u2014not personal enrichment.<\/p>\n
Recall that Boko Haram, which originated as a militant Islamist group in northeastern Nigeria around 2002\u20132009, by the early 2010s was conducting frequent suicide-bombing and mass-casualty attacks, especially in places like Kano, Abuja and Kaduna.<\/p>\n
The \u201cOccupy Nigeria\u201d protests of January 2012 erupted when the government attempted to raise pump price by removing or reducing the subsidy; many Nigerians, including sitting President Bola Tinubu, believed the move would sharply increase living costs. Although the protests were widely publicised, Sanusi is emphasising that in government deliberations, the security dimension weighed heavily.<\/p>\n
The idea of a \u201chedge\u201d rather than a standard subsidy is a useful explanation of the financial logic: the government guaranteed a maximum price, making itself liable for any difference between global cost and domestic pump price\u2014a structure with tail risk and no upside.
\nNigeria\u2019s economy has since suffered high inflation, exchange-rate pressure and fiscal stress\u2014factors Sanusi links back to the delay in subsidy reform.<\/p>\n","protected":false},"excerpt":{"rendered":"
At the \u201cBetter Leader for a Better Nigeria\u201d conference held by the Oxford Global Think Tank in Abuja, the Emir of Kano, Muhammadu Sanusi II, revealed new insight into why the Goodluck Jonathan-led federal government abandoned a full withdrawal of the fuel-subsidy regime in 2012. Rather than backing down purely due to public protest, Sanusi […]<\/p>\n","protected":false},"author":7,"featured_media":94295,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,5807,7],"tags":[147,584,2234],"class_list":["post-95696","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","category-crime-and-violence","category-news","tag-jonathan","tag-sanusi","tag-subsidy"],"_links":{"self":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/posts\/95696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=95696"}],"version-history":[{"count":0,"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/posts\/95696\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=\/wp\/v2\/media\/94295"}],"wp:attachment":[{"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=95696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=95696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/everyday.ng\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=95696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}