Kanu, 42, spent five trophy-laden years in north London under Arsene Wenger.
With the Frenchman now out of the fray, Kanu believes his young countryman can become as big as any player at the club.
“In Arsenal, you have big, big names. I don’t think he sees himself in that way,” the two-time African Footballer of the Year told Standard Sport.
“When I talk with him I want him to feel that way. Just because you’re younger than the other players doesn’t mean you’re not a star. He’s a star in his own right.
“When he comes to Nigeria he feels the pressure: he’s Iwobi, he needs to deliver. With Arsenal, he thinks ‘ok, there’s other names here, no problem’. He needs to change that.”
Iwobi has managed just nine goals for the Gunners to date, with that lack of end product having sparked exit talk at regular intervals.
Kanu is, however, convinced that the talented forward can prove to be a useful asset for Unai Emery and Arsenal – with a new contract already in the pipeline.
He added: “For me, he’s a special kid.
“Arsenal knows the quality he has got and they know he can deliver on that eventually.
“He didn’t just become a bad player overnight. If the team isn’t doing well it affects everybody. He’s a talented player who’ll do more and do better for Arsenal.”
While Iwobi remains on the books at Emirates Stadium for 2018-19, he does face fierce competition for places from the likes of Mesut Ozil, Henrikh Mkhitaryan, Pierre-Emerick Aubameyang and Alexandre Lacazette.
