Muhammadu Sanusi II, who was dismissed as Nigeria’s central bank governor last year, called on his successor to devalue the naira and warned that Africa’s biggest economy is in danger of a long term slump unless the government confronts slowing growth.

“Let’s stop being in denial, we cannot artificially hold up the currency,” Sanusi, now the Emir of Kano, Nigeria’s second-ranked Muslim leader, said in a speech on Thursday in Lagos broadcast on CNBC Africa. President Muhammadu Buhari, who opposes a weakening of the naira, “needs help on the economy,” Sanusi said.

Under current Governor Godwin Emefiele, Nigeria’s central bank has virtually fixed the exchange rate since March, even as other oil exporters from Russia to Colombia and Kazakhstan have let their currencies weaken. Nigeria, Africa’s top crude producer, derives two-thirds of government revenue and 90 percent of export earnings from sales of the commodity. Rationing dollars and limiting foreign-exchange trading have stabilized the naira, which has remained at about 198-199 per dollar since declining 8 percent in the first quarter.

The central bank’s moves are hurting the economy, said Sanusi, 54. It expanded 2.35 percent on an annualized basis in the second quarter, the slowest pace since at least 2010.

“We are depriving certain key industries of imports,” he said. “If we have to make a choice between economic growth and a devaluation, my recommendation is that we protect growth.”

The government can’t afford fuel subsidies any longer and interest payments on debt are on track to reach 1,000 billion naira ($5 billion) this year, which “would be more than the amount of money budgeted for health, education and defence combined,” Sanusi said. “There is no room on the government’s balance sheet for borrowing.”

Monetary officials should lower the main interest rate from a record high of 13 percent to help stimulate the economy since the government lacks the funds to boost spending in the face of lower oil prices, Sanusi said.

“The portfolio flows are gone,” he said. “Inflation is already upon us. You have fiscal consolidation. It is time to loosen monetary policy. Otherwise we compound an exchange rate crisis for businesses with high borrowing costs and declining demand.”

Portfolio investors have fled Nigeria, with foreign holdings of naira government bonds falling to less than 10 percent of the total from 27 percent in 2013, according to Standard Chartered Plc. In September, JPMorgan Chase & Co. kicked Nigeria out of its local currency emerging markets bond indexes, tracked by more than $200 billion of funds, saying exchange controls made it difficult for international investors to buy and sell naira debt.

Sanusi said ministers acted like “courtiers” under previous administrations and shouldn’t do the same in Buhari’s cabinet.

“I hope people will have the courage to know that loyalty is about telling your boss the truth,” he said. Buhari, who came to power in May, has nominated ministers, although he hasn’t announced their portfolios and the Senate still has to approve them all.

Sanusi, who became governor in 2009, was suspended by former President Goodluck Jonathan in February 2014 after he accused the state oil company of withholding billions of dollars from the government. He won praise from investors for cleaning up the banking sector after a crisis in 2009 and attracting more bond and stock investment from abroad.

“Lamido Sanusi, being an expert, has his ground for saying this,” Ibrahim Mu’azu, a spokesman for the central bank in the capital Abuja, said by phone. “The central bank may look into what he is saying.” (Bloomberg)

•Photo shows Emir Muhammadu Sanusi II.

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