On proposed sale of national assets

Discussions on how to get the Nigerian economy out of recession and set it back on the path of growth seem to be firming up after 16 months of lack of a clear policy direction and trading blames by the Federal Government. The government had officially admitted recently that the economy has slid into recession after the negative growth recorded in the first two quarters of 2016.
One of the discussions currently on the table is the proposed sale of national assets by the Federal Government, which could fetch billions of dollars needed to plug Nigeria’s infrastructure deficit as well as fund a bigger stimulus package to revive Nigeria’s ailing economy. According to economic experts, selling some of these public assets could raise as much as $55 billion.
Some of Nigeria’s public assets have been a drain on public funds instead of generating the required revenue to run them. Weak decision on the privatisation of these assets has been blamed on the abundance of oil money prior to this period as well as lack of political will on the part of government.
Business leaders say the government this time needs boldness, tenacity of purpose and vision with emphasis on a new wave of privatisation through the sale of Federal Government assets. The assets being considered include the scarce 4G telecommunication spectrum, majority stakes in joint ventures (JV) with multinational oil companies that together produce over 1 million barrels of oil a day, stakes in the National Independent Power Plants (NIPPs), National Theatre and stadiums, among others.
Aliko Dangote, president of the Dangote Group and Africa’s richest man, said recently that the real challenge was to have the political will to sell some government assets, adding that it was an easier route than going to International Monetary Fund (IMF) or World Bank to borrow money.
“This is because what we actually need to do is to beef up the external reserves. As a businessperson, if I have challenges with funds, I would not hesitate in selling some of my assets to remain afloat and transit to a better condition. It wouldn’t make any sense if I kept any asset, suffocating the whole organisation in the process,” Dangote argued.
BusinessDay calculations estimate that reducing government’s 55 percent equity in the joint ventures with Royal Dutch Shell, Chevron, ExxonMobil and Total by 10 percent could raise $50 billion for the Federal Government, while selling a 10 percent stake in its NLNG equity holdings may be able to bring in between $2 billion and $4 billion.
Similarly, selling scarce 4G spectrum and stakes in the National Independent Power Plants (NIPPs) could also earn an additional $2 billion for the government. Other asset sales would obviously raise more money and even allow them to be managed well. Nigeria gets most of its earnings in the JVs from taxes and not dividends from equity holdings, meaning that a slight reduction in its equity stake would not materially affect future earnings.
It is also heartwarming that the Senate has bought into the asset sales argument. The Senate recently told the executive to stop the blame game and get the nation’s economy out of recession by raising capital from asset sales. The upper chamber also promised to consider any bill from the President which would help the nation out of recession.
We must state here that Nigerians are hungry and businesses are strangulated with its adverse consequence on jobs. Government must, therefore, quickly consider immediate steps to bail the economy out before it slides further into depression.
But in supporting the sale of national assets, we must emphasise the need for due diligence and transparency in the entire process as well as accountable and judicious use of proceeds of the sale. Time is ticking.