The Emir of Kano, Muhammadu Sanusi II, has described Nigeria’s former fuel subsidy system as a “naked hedge” that bankrupted the nation by forcing the government to guarantee a fixed fuel price regardless of global market fluctuations.
Speaking during a public lecture on Nigeria’s economic challenges, Sanusi explained that what the country called a fuel subsidy was, in fact, a financial trap in which the Federal Government assumed unlimited risk on crude oil prices, exchange rates, and interest rates.
According to him, the structure of the subsidy forced Nigeria to borrow heavily not only to sustain the payments but also to service the interests on those loans.
“If you look at the template, all of those amounts were being absorbed. The Federal Government was saying I have an unlimited pocket,” Sanusi said.
“We moved from using revenues to pay subsidies to borrowing to pay subsidies, then to borrowing money to pay interest on the borrowed money. That’s how we went bankrupt.”
The former Central Bank Governor stressed that such fiscal irresponsibility was unsustainable, warning that “anyone who takes a naked hedge ends up being bankrupted especially with a commodity whose price you cannot control.”
Sanusi also reflected on the administration of former President Goodluck Jonathan, saying the economic pain Nigerians are facing today could have been significantly reduced if the subsidy had been removed in 2011.
“If Nigerians had allowed the Jonathan government to remove the subsidy in 2011, there would have been pain but a very tiny fraction of what we face today,” he said.
Sanusi disclosed that as CBN Governor at the time, he had supported the policy and assured that inflation would stabilize after a temporary rise. However, he noted that Jonathan’s partial reversal of the policy was driven by security fears linked to Boko Haram attacks.
“President Jonathan was determined to do it,” Sanusi said. “The only reason his government compromised and did 50 percent, not 100 percent, was Boko Haram.
If a suicide bomber had attacked protesters and killed 200 people, it would have gone beyond subsidy.”
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He praised Jonathan’s resolve despite the difficult political climate, emphasizing that the former president showed courage in pursuing necessary but unpopular reforms.
Sanusi further criticized Nigeria’s political elite, lamenting that many educated leaders have abandoned integrity for personal gain.
“By the time you become a governor, you should be beyond looking for money,” he said. “But many live like illiterates despite their education. The problem is not lack of knowledge, but lack of values.”
He urged political leaders to embrace fiscal discipline, transparency, and moral responsibility, saying these were the only ways to rebuild citizens’ trust and secure Nigeria’s economic future.
