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Says President must beware of China
Muhammad Sanusi II, emir of Kano and former governor of the
Central Bank of Nigeria (CBN), has recommended steps President Muhammadu Buhari
must take to revive the Nigerian economy.
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| Alhaji Sanusi Lamido Sanusi, Emir of Kano |
In a document acquired by
TheCable, as presented at the meetings of the Joint Planning Board (JPB) and
National Council on Development Planning (NCDP), Sanusi highlighted the
problems with the economy, and profferd solutions for the Buhari-led admin.
Eliminate wastful and abuse-prone subsidies
Sanusi highlighted the
abuse of subsidies in Nigeria and the need to totally put an end to subsidy
regimes. He applauded Buhari for the steps taken so far on subsidy, which
has become visible in Nigeria’s consumption pattern.
“The Buhari administration
has already made great progress in stopping the fraud associated with the
subsidy regime,” Sanusi said.
“PMS import volumes have
fallen from an average of 57 million litres/day in 2011 to 35 million
litres/day in 2016. This is an achievement. The next step should be a full and
unequivocal elimination of subsidy regime.”
Fix failures in power sector value chain, starting with DISCOs
Sanusi said the president’s
team must “petition for a specific debt raising programme to address unpaid
arrears. Until this happens no new investment can take place”.
“Raise public awareness
about the necessity of cost-reflective tariffs, including the hike in 2016.
Raise fresh capital to pay off arrears to Gencos. These are N235bn and
building. The higher the tariffs go (as they are bound to do) the more quickly
they will build,” he said.
“Until these backlogs are
paid, no one is going to invest in new generation capacity. Force Disco owners
to make stipulated investments in metering. What I’m told is that many disco
owners have failed to honour their terms of the agreement, both in investing in
metering and upgrading the old infrastructure.
“Until this failure in the
value chain is addressed, collection rates will never be good enough to achieve
cost recovery, and the government/NBET will always be on the hook for the
shortfall.”
He also called for a
resolution of gas supply issues.
Digitise state land registries, streamline relevant legislation
Quoting World Bank’s Doing Business index,
Sanusi said: “Nigeria remains one of the most difficult countries in which to
register property. State governments can do something about this.
“In fact, Lagos State has
already taken great strides towards simplifying the procedure of registering
land by merging all relevant laws into a single piece of legislation.”
He asked that land
registries be taken online and made easier for businesses in Nigeria.
Re-prioritise public spendingtowards investment in human capital
development
“In Nigeria, the public
sector wage bill went up from N443bn in 2005 to N1.659 trillion in 2012, driven
by a 53% increase in civil servants’ wages in 2010,” he said.
“The government has
consistently prioritised recurrent expenditure over investment – all the more
so in times of economic difficulty and leading up to elections.”
He called for
investment in human capital if Nigeria must make its way out of this economic
quagmire.
Private sector investment in capital expenditure
“The economy has quadrupled
in nominal terms since 2005, and the population has grown by over 40 million,
but capex has barely changed.
“The major problem for
Nigeria is revenue. Across all 3 levels of government, it collected just US$117
per person in 2015, and invested US$17. Kenya, with half of Nigeria’s level of
wealth on paper, collected almost twice as much in taxes.
“If Nigeria is going to
adopt an investment-driven model, it cannot rely on the public sector alone.”
Sanusi urged Buhari’s
men to let the private sector also drive investment.
Set forex rate to give incentive to capital inflows, catalyse FDI
“Nigeria has made dramatic
changes to its FX regime, moving from a hard peg to a free float. These bold
steps have gone a long way to restoring its credibility.
“On a trade and inflation
weighted basis, the naira has gone from one of the most over-valued currencies
in the world to one that is now under-valued.
“A major barrier to bringing
capital in from abroad has been removed; a major incentive to take capital out
has also been removed.”
He said such incentives
must be maintained as government set interest rates at levels that deter
capital flight, dollarization.
BEWARE OF CHINA… PROTECT INFANT INDUSTRIES
“Beyond fixing the basic
supply side issues, Nigeria also needs to take measures to protect its infant
industries.
“Large surplus countries
like China have been using the promise of investment and cheap debt to gain
unfettered access to Africa’s local markets.
“But the relationship has
become imbalanced. Without manufacturing capacity of its own, Africa can never
provide meaningful employment for its youth.
“Successful policies in
cement and auto assembly should be replicated for petro-chemicals and
agro-processing.”
He concluded that
government must get the appropriate macro policies in place and create a
supportive business environment.
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