Credit where it’s due, caution where it’s needed: A reply to Emir Sanusi II

MaTaZ ArIsInG
Dallas, Texas

By Baba El-Yakubu

“Give me a one-handed economist. All my economists say, ‘On the one hand…’ then ‘but on the other…” These famous words of Harry S. Truman, the 33rd US President, capture a timeless truth about economic analysis: sound judgement requires looking beyond headline figures to the realities and qualifications that lie beneath them. Nigeria’s current economic situation demands precisely this kind of balanced assessment. There are genuine reasons for optimism, but there are equally compelling reasons for caution. Therefore, when the Emir of Kano, Muhammadu Sanusi II, says President Tinubu’s administration has pulled the economy back from the brink, the claim deserves serious engagement, not reflexive dismissal.

Last week, several newspapers reported his statement, which subsequently went viral on social media. On several points, he is right. The growth rate of 4.48 per cent in the second quarter of 2026 is far better than the sluggish average recorded during the Buhari administration, as he noted. The decline in inflation from about 30 per cent to the mid-teens offers genuine relief. The Dangote Refinery’s growing share of exports represents a significant structural shift. His criticism of the government’s tendency to treat every suggestion as an attack is also well-founded.

But the phrase “back from the brink” invites an important question: how far back? A patient whose fever has broken is not necessarily well. Indeed, the Emir-economist’s own description of the recovery as “the first step towards stability” suggests a more cautious interpretation than the headline might convey. This qualification is important because economic recovery must be assessed not merely by improvements in headline indicators but also by the strength and sustainability of the foundations supporting them. Here is why.

I must remind the Emir that the current debt arithmetic is unforgiving. The most important number in Nigeria’s economy is not GDP growth. It is the share of government revenue left after creditors are paid. The DMO reports that total public debt reached N159.28 trillion at the end of 2025. It stood at N159.35 trillion ($114.95 billion) by 31 March 2026. Some commentators note that much of the headline jump reflects naira devaluation rather than fresh borrowing, and that is a fair point. But it cuts both ways. Between March 2025 and March 2026, the debt stock rose by N9.96 trillion, with domestic debt accounting for roughly 87 per cent of the increase. The government is still borrowing, and increasingly from the local market at high interest rates.

The cost is visible. Total debt service reached about N16 trillion in 2025, with domestic debt service rising 46.6 per cent to N8.61 trillion. In the first quarter of 2026 alone, Nigeria spent N3.14 trillion servicing domestic debt, up 20.3 per cent year-on-year. Analysts have also warned that the debt-service-to-revenue ratio had reached 113 per cent by the first quarter of 2025.

Put plainly, a government that spends close to everything it earns on repayment, and interest cannot easily build roads, equip hospitals or pay teachers. Borrowing to pay interest crowds out the investment that would make the economy more productive. Growth driven by consumption and capital inflows, rather than infrastructure and human capital, rests on thin foundations. This is not only an academic concern. If more than half of every naira of revenue goes to creditors, “foundations for stability” are being laid with whatever scraps remain.

The Emir himself acknowledged that high oil prices tied to the conflict in the Strait of Hormuz are helping to draw in foreign portfolio investment. That deserves emphasis. A windfall from a distant war is not an economic reform. It is luck, and luck is not a strategy. In fact, following the Republican Party’s devastating defeat in last week’s US midterm elections, which was largely attributed to public dissatisfaction over the Iran war. Iran may begin serious negotiations to end the war. Our economy may run out of luck, soon.

The $55 billion reserve figure is encouraging, and the Emir was candid that much of it comes from volatile portfolio flows. This is the heart of the matter. Portfolio investors are drawn by high yields and leave when conditions change. We experienced this in 2015 and again in 2020, when sudden outflows hammered the naira and drained reserves in months. Reserves backed by foreign direct investment, export earnings and a diversified production base are durable.

We must make it clear that disinflation is not the same as affordability. Falling inflation, from roughly 30 per cent to 14.6 per cent, is welcome. But inflation measures the rate of change in prices, not their level. Prices did not fall; they merely stopped rising as fast. A household that saw food, transport and energy costs surge after petrol subsidy removal and naira unification has not had that income restored by slower increases.

Per capita figures deserve similar care. A 47 per cent rise in dollar GDP per capita since 2023 is partly a base effect, since the naira’s collapse in 2023 and 2024 had shrunk the dollar value of the economy so sharply. Recovery from a low base is not the same as prosperity. For the market trader in Wuse, the farmer in Kano or the civil servant in Kaduna, the question is not what the dollar-denominated average says, but whether wages cover rent, food and school fees. For many, they still do not.

The naira has been steadier than in the chaotic months after unification, but the underlying pressures remain. Persistent fiscal deficits, structural dollar shortages and heavy import dependence for raw materials and finished goods mean that any wobble in reserves or portfolio flows passes straight into prices. A weaker naira raises debt-servicing costs on external obligations as well, since Eurobonds and multilateral loans are repaid in dollars. We also remain exposed to geopolitical shocks, shifts in global interest rates and swings in crude prices, none of which we control.

None of this means the reforms failed. I am emphasising the need for cautious optimism. Removing fuel subsidies and unifying exchange rates were painful but necessary corrections, and the Emir is right that they have started something. The argument here is about emphasis and sequencing. Declaring that the economy has been pulled from collapse risks breeding complacency just when discipline matters most. Cautious optimism, by contrast, would ask for at least three things: (i) Revenue reform over fresh borrowing. Widening the non-oil tax base, plugging leakages and improving collection efficiency would ease the debt-service squeeze more sustainably than new loans. (ii) Protected capital spending. Debt service should not be allowed to starve infrastructure, health and education indefinitely. Concessional financing and more transparent project selection would help. (iii) Relief that reaches households. Targeted support, transport and food-supply improvements, and visible gains in real wages would turn macroeconomic statistics into lived experience.

The Emir deserves thanks for offering credit with candor, caveats included. His intervention models the balance the national conversation needs: neither the blanket pessimism that ignores real progress, nor the triumphalism that ignores real pain. Nigeria has stepped back from a cliff edge. But the ground it now stands on is still narrow, uneven and surrounded by risks that growth rates alone do not capture. Stability will be earned when the debt burden eases, when reserves rest on production rather than speculation, and when an ordinary Nigerian can say, without a statistician’s help, that life has become more affordable. Until then, the right posture is not celebration but vigilance.

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