August 29, 2016
Emir Sanusi To Buhari: Here's What To Do To Grow Economy
He said that until the Buhari administration eliminates subsidies, fixes the power sector and digitizes state land registries, the economy will remain in the doldrums.
In a document made available to an online media which he presented at the meetings of the Joint Planning Board (JPB) and National Council on Development Planning (NCDP), Sanusi highlighted the abuse of subsidies in Nigeria and the need to totally put an end to subsidy regimes.
He applauded Buhari for steps taken so far on subsidy, which has become visible in the consumption pattern in Nigeria today, many people now spend wisely.
“The Buhari administration has already made great progress in stopping the fraud associated with the subsidy regime.
“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,” he said.
The Emir added that 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. This is N235 billion. The higher the tariffs go (as they are bound to do) the more quickly they will build.
“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 said that 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 three 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 allow private sector also drive investment. “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."
He also warned Buhari to be ware of China and protect Nigeria’s 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.”