Subsidy Withdrawal Averted Economic Collapse – Sanusi

Muhammad Sanusi II, Emir of Kano and former Governor of the Central Bank of Nigeria (CBN), has stated that eliminating the petrol subsidy was a critical move that prevented Nigeria from sliding into bankruptcy.

Speaking at the second edition of the Kano International Poetry Festival (KAPFEST), hosted by the Poetic Wednesdays Initiative, Sanusi described the subsidy policy as economically damaging and unsustainable, saying it placed an enormous financial burden on the government.

He explained that the system required the government to absorb the cost difference between the actual market price of petrol and the artificially low price paid by consumers. This included covering fluctuations in global oil prices, exchange rates, transportation, and refining costs.

“Subsidy meant the government saying: if the real cost of petrol is N100, Nigerians will only pay N70, and the government will pay the remaining N30,” Sanusi said. “But it went further—government fixed the price at N65 per litre, regardless of whether oil sold for $10 or $100 per barrel. Who paid the difference? The government. That was never going to be sustainable.”

He criticised past administrations for neglecting the country’s local refineries, pointing out that the subsidy policy mainly benefited foreign refineries while depriving the Nigerian economy of job opportunities and industrial growth.

According to Sanusi, if the vast amounts spent on subsidies had been redirected toward developing domestic refining capacity, Nigeria would have been in a much stronger economic position today.

While he acknowledged that subsidies can have a role in economic policy, he emphasized that they should be used to support production, not consumption.

Reflecting on his tenure as CBN Governor in 2012, Sanusi recalled warning that the subsidy regime was akin to “a man running toward a ditch.” He noted that dwindling government revenues made it impossible to sustain the payments, eventually forcing the country to borrow just to fund subsidies and service mounting debts.

“It became completely unmanageable. What I warned about has now come to pass,” he said.

He urged Nigerians to view the removal of fuel subsidies not only as a fiscal necessity but also as a chance to lay the groundwork for a more resilient, self-sufficient economy.