The Emir of Kano, Muhammad Sanusi II, commended President Muhammadu Buhari for his recent Speech declaring war on poverty, which, according to Emir, was well received “nationally and internationally”.
The Emir spoke on Tuesday at the 3rd National Treasury Workshop convened in Kano by the Office of the Accountant General of the Federation.
Addressing the workshop, the Emir however noted that addressing poverty will require taking difficult and painful decisions to free up resources for investment in education, health and infrastructure
According to him, the funding needed for these investments cannot be raised from taxation during an economic slowdown.
He said: “One major area of concern is the huge amount the country continues to spend on subsidizing petroleum products.
The Emir recalled that in his days as Central Bank Governor, he had alerted the nation that in 2011 for example, the Federal Government earned $16 billion from the oil sector but the nation spent $8 billion in importing petroleum products and $8.2 billion on subsidies of the same products.
The result is that all the money earned from oil went into petroleum imports. This situation is unsustainable and could eventually lead to bankruptcy if not addressed.
Continuing, Emir Sanusi recommended as a first step that the Federal Government should convert subsidy regime from a “naked hedge”, which it is today, to a proper subsidy for example, the Federal Government could pay 30% of the cost of petroleum products this year, and reduce it by 10% annually until by 2022 the subsidy is eliminated.
Although, he recognized that it would be politically difficult to remove the subsidy one time, he insisted that Nigerians must be ready to pay a higher price for petroleum products if oil price goes up.
The government needs to put the money saved into education, health and other development projects.
The Emir also advised the Federal Government to stop subsidizing electricity tariffs as poor people will pay cost-recovery tariffs if they have 24-hour supply of electricity.
This enables them earn income from small enterprises and lift themselves out of poverty.
He gave an example of Cote d’ Voire where in Abidjan there is regular supply of power and the citizens pay cost reflective tariffs.
Emir Sanusi raised concerns about recent reports that Debt Service/revenue ratios have risen to 70% and stressed that clearly the nation cannot afford to continue spending on these subsidies.
He advised treasurers to advise their principals on the unsustainability of these arrangements in order to strengthen the fiscal balance sheet of the government and improve the economy.
At the beginning of his speech the Emir had expressed reluctance to speak at these events because every suggestion made to improve things is always treated as a criticism.
In fact, he said he had decided not to attend such events but was there to honor the Accountant General of the Federation who hails from Kano.