The former Emir of Kano, Muhammadu Sanusi II, has disclosed that former President Goodluck Jonathan’s decision to halt the removal of the fuel subsidy in 2012 was primarily due to fears that the Islamist militant group Boko Haram would attack protesters.
Mr Sanusi, who was the Governor of the Central Bank of Nigeria at the time, said the government feared a suicide bombing at protest grounds could have caused mass casualties, shifting the national crisis from an economic issue to a major security disaster.
He made these revelations on Tuesday while speaking at the Oxford Global Think Tank Leadership Conference, which was themed “Better Leader for a Better Nigeria.”
A “Naked Hedge” and Bankruptcy
Mr Sanusi provided a detailed economic explanation of the subsidy, which he described as a fundamentally flawed policy. He argued that what Nigeria called a fuel subsidy was essentially a “naked hedge,” which exposed the country to massive financial liabilities.
According to him, this arrangement forced the Federal Government to bear the full cost of maintaining fuel prices, irrespective of changes in global oil prices, exchange rates, or interest rates.
“If you look at the template, all of those amounts were being absorbed. The Federal Government was saying I have an unlimited pocket,” he said.
He detailed the dire financial consequences of this policy, stating, “So move from a point where we were using revenues to pay subsidies to where we had to borrow money to pay subsidies, to where we had to borrow money to pay interest on the borrowed money, we had become bankrupt.”
“Anyone who takes a naked hedge ends up being bankrupted, especially with a commodity where you don’t control the price,” Mr Sanusi added.
The Pain of Delay
The former central bank governor stated that Nigeria’s current severe economic difficulties could have been significantly less severe if the Jonathan administration had gone ahead with the subsidy removal in 2012.
He revealed that the Central Bank of Nigeria had calculated the potential inflationary impact and was prepared to manage it.
“If Nigerians had allowed the Jonathan government to remove the subsidy in 2011, there would have been pain. But that pain would have been a very, very tiny fraction of what we are facing today. This is the cost of today,” Mr Sanusi said.
“At that time, we worked out the numbers in the Central Bank, and I stood up and put my credit in front of the line and said, ‘Remove the subsidy today; inflation moves up from 11 percent to 13 percent. I will bring it down a bit later.’ Oh, that’s about 30-something per cent inflation. That was where we were.”
The Boko Haram Ultimatum
Mr Sanusi then revealed the critical, previously undisclosed security reason that led to the policy’s suspension. He explained that President Jonathan was determined to remove the subsidy, but the government compromised due to a specific and grave security threat.
“And it was like, if one day one of these suicide bombers goes to these Nigerians and explodes the bomb, and you have 200 corpses, it will no longer be about subsidy. So I got to give President Jonathan the credit. He was determined to do it,” Mr Sanusi stated.
He clarified that public protests, while significant, were not the ultimate deciding factor.
“The only reason the government compromised and did 50 percent, not 100 percent, was Boko Haram.
“If one suicide bomber had attacked protesters in Lagos, Kano, or Kaduna, and 200 people died, it would have gone beyond subsidy.”
Despite the policy’s eventual suspension, Mr Sanusi commended former President Jonathan for his courage in pursuing the reforms in the face of such a severe security threat.
Critique of the Political Elite
The Emir also used the platform to criticise Nigeria’s political class more broadly. He expressed his disappointment that many highly educated leaders abandon moral principles for personal gain once in office.
He lamented the widespread lack of integrity in public life, stating, “By the time you become a governor, you should be beyond looking for money. But many live like illiterates despite their education.”
The event provided a rare insight into the complex interplay of economic policy and national security that shaped one of Nigeria’s most significant recent economic decisions.
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