In a conversation with The Sun, Muhammadu Sanusi II, the emir of Kano, related an incident in which the former administration, at a time when the value of the naira was N197 to the dollar, suggested borrowing $1.8 billion from China to build a 75-kilometer rail line...READ THE FULL STORY HERE▶
With his experience as a former governor of the Central Bank of Nigeria and as an economist, he claimed to have anticipated the possibility of the naira falling in value and the debt being unmanageable.
He repeatedly warned the administration that the debt would skyrocket to N1 trillion a year, far beyond the state’s ability to collect income, if the naira dropped to N500 to a dollar.
He said, “I will give you an example from my experience in Kano. The previous government wanted to borrow $1.8 billion from China to build 75 kilometers of rail.”
“Forex then was N197 to a dollar. As a trained economist and former Governor of the Central Bank of Nigeria, I could see the growth in the money supply, and I was sure that the naira was not going to remain at that artificial level of N200 for a long time.”
“Part of my job was to advise the government. I told them, look, this amount of money you want to borrow, if the naira depreciates to N500 to the dollar, this money will become N1 trillion.”
“Your internally generated revenue is not up to N20 billion; you will need about N100 billion per annum just to service the debt. It is not sustainable.”
Sanusi said that the authorities disregarded his advice in spite of his frequent warnings. Anxious about the long-term effects, Sanusi claimed he was forced to openly criticize the loan.
He said that if the loan had been taken, the government would not have been able to pay salaries and other basic expenses, and budgets for things like education would have suffered because of debt payments.
He calculated that the train project would now cost N3 trillion, taking into account the current exchange rate of N1,500 to the dollar.
Although Sanusi admitted that taking a strong stand on the matter almost cost him his emirate, he felt it was vital to stop future generations from having to shoulder the weight of unmanageable debt.
