Former governor of the Central Bank of Nigeria (CBN) and Emir of Kano, Muhammadu Sanusi II has openly questioned Nigeria’s continued resort to heavy borrowing despite the removal of fuel subsidy, warning that the country may be failing to translate key reforms into tangible fiscal stability.
Speaking during an interview on News Central TV, the former Central Bank of Nigeria governor acknowledged that ending the subsidy regime was necessary but raised concerns about policy sequencing and execution.
Sanusi argued that while subsidy removal and exchange rate liberalisation were structurally sound reforms, their implementation may have lacked the necessary supporting measures to cushion economic shocks.
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He was particularly critical of Nigeria’s historical dependence on foreign refineries despite its status as an oil-producing nation, describing the model as economically unsustainable.
“We cannot continue supporting foreign refineries. We’re an oil-producing country,” he said.
However, he noted that recent improvements in domestic refining—especially through the Dangote Petroleum Refinery—signal a positive shift away from import dependence.
Despite these gains, Sanusi questioned the fiscal outcomes nearly three years after subsidy removal.
“If you’re not paying the subsidy and you’ve got the money, why are we still borrowing and borrowing? What are we borrowing for?”
He stressed that eliminating subsidy costs should ordinarily lead to fiscal consolidation, not an expansion in public debt, warning that the absence of visible benefits raises serious concerns about public finance management.
Sanusi’s remarks come amid claims by Solomon Adeola, Chairman of the Senate Appropriation Committee, that Nigeria is saving over N10 trillion annually from subsidy removal. Yet, government borrowing has continued to climb under President Bola Tinubu.
In early April, the Federal Government increased its 2026 borrowing plan by N11.31 trillion, pushing total projected borrowing to N29.20 trillion. The President also recently sought Senate approval for a $516.3 million external loan to fund the Sokoto–Badagry Super Highway.
Meanwhile, debt servicing pressures are intensifying. Data from the Debt Management Office shows total debt service rose to about N16 trillion in 2025—up 22.9 percent from N13.02 trillion in 2024—with Federal Government bonds accounting for the bulk of domestic interest payments.
Sanusi maintained that while subsidy removal was overdue, Nigeria risks undermining the reform’s benefits if rising revenues are not matched with disciplined fiscal management and reduced reliance on debt.
