The way out the current economic challenges in Nigeria has continued to generate debate among Nigerians both at home and in Diaspora. As a matter of fact, recently the Senate President Bukola Saraki made a suggestion that President Mohammadu Buhari led administration should put for sale the national assets in order to come out of the ongoing economic recession. This, he said, was necessary for the nation to fight its way out of the current recession.
Saraki who said this recently to Senators at the resumption of plenary in Abuja, pointed out that; “The measures should include part sale of NLNG Holdings; reduction of government share in upstream oil joint venture operation; government stake in financial institutions, e.g, African Finance Cooperation; and the privatisation and concessions of major/regional airports and refineries.
Economic Confidential findings reveal that, there is no problem with the federal government selling its assets in an attempt to come out of recession.
The findings further show that the main argument for privatization is that private companies have a profit incentive to cut costs and be more efficient. If you work for a government-run industry, managers do not usually share in any profits. However, a private firm is interested in making profit and so it is more likely to cut costs and be efficient.
There is no doubt that private firms have shown degrees of improved efficiency and higher profitability. The President of the Senate, Bukola Saraki has recommended the sale of some national assets and the utilisation of proceeds for infrastructure development.
On the other hand, government owned corporations are motivated by political pressures rather than sound economic and business sense. For example a state enterprise may employ surplus workers which are inefficient. The government may be reluctant to get rid of the workers because of the negative publicity involved in job losses. Therefore, government owned enterprises often employ too many workers thereby increasing inefficiency.
Reacting to this issues, a Professor from the department of Banking and Finance from the Nasarawa State University, Professor Uche Uwaleke said; “I do not think the state of the country’s economy has reached the point where viable national assets such as the NLNG must be sold in order to generate revenue. “If a country is in a liquidity trap to the point where the government loses the capacity to borrow, then it can sell its assets.
“Then a case can be made for the sale of non-critical assets at least to keep the government running. “Nigeria is not in any liquidity trap and so the issue of selling performing assets does not arise. The NLNG is not in any way a burden on government resources, as a matter of fact; the company has a record of regular dividend payments to the government. “So, why sell off the government’s majority stake in the company as has been suggested.
According to him, “it was only a bankrupt state that could sell its national assets and Nigeria could not be said to be bankrupt. He said that was the reason the government hoped to borrow from external sources including issuing Eurobonds to revamp the country’s economy. “Notwithstanding the high ratio of debt service to government revenue, the ratio of the country’s debt stock to GDP at less than 25% is within sustainable level.”
In another development, a statement made available to newsmen in Abuja from the office of the Vice President, the National Economic Council (NEC) monthly meeting presided over by Vice President Prof Yemi Osinbajo (SAN), expressed support for the plans and proposals of the Federal Government to steer the country out of recession.
“While acknowledging the current economic challenges and difficulties, governors at the meeting also endorsed the work of the President’s Economic Management Team and specifically commended the Budget & Planning and Finance Ministers.”
Among the measures for economic revitalization, are a plan to generate immediate larger injection of fund into the economy through assets sales, advance payment of licence renewals, infrastructure concessioning, and use of recovered funds etc. to reduce funding gaps, implementation of Fiscal Stimulus/Budget Priorities.
Also commenting on this issue to Economic Confidential, the President of Nigeria Labour Congress (NLC), Ayuba Wabba said; “experience has shown that privatisation has not worked. Most of the national assets Nigeria sold off have not done well; selling off the assets will not be in the interest of Nigerians. According to him, most of our national assets that have been sold under the banner of privatisation, none of them has succeeded. Many countries of the world have passed through this same period of recession and their approach to addressing the issue is not to sell their commonwealth, leaving them in the hands of a very few.”
According to him, “It is worrisome that those canvassing for this are looking forward to buying these assets themselves. I don’t think it will be productive for us as a nation to dispose of these assets to meet short time need. It will certainly not be productive and not in the interest of the larger Nigerian public.”
Labour has condemned the idea, saying it will make a few to amass the wealth of all and deepen the seeming despair in the land.
On his part, Chieftain of the People’s Democratic Party, PDP and former member of the Sen. Ahmed Makarfi-led Caretaker Committee, Barr. Kabir Usman, has warned against such moves to sell off the nation’s valuable national assets.
Barr. Kabir however stressed the urgent need for President Buhari to quickly redirect and re-engineer his government by dissolving and re-constituting a new cabinet.
The call came in view of the severe implications of the current economic downturn on the purchasing power of Nigerians which according to Kabir is mainly due to the lackluster decision making process of the Muhammadu Buhari led administration alongside its numerous policy somersaults.
Usman in a statement recently warned the present administration to immediately halt the idea of disposing valuable national assets like the NNPC, NPA, NLNG and other prized institutions including petroleum refineries and depots, saying it will amount to tactically returning Nigeria to the era of colonial rule and glaring neo-colonialism with far reaching national security implications.
According to him, the already approved sale of national assets is an admittance of failure on the part of the administration of Muhammadu Buhari and against the social contract the APC entered with Nigerians during its campaign ahead of the 2015 general elections which sold along with their change mantra.
In all this, most analysts are not in support of the sale of national assets. But some of the analysts still maintain their ground on the fact that if the government has a good work plan on how to ensure the assets are sold to genuine business men who will manage them in the interest of national growth, there is nothing wrong in selling them. For instance a Nigerian, Adebayo Ogunlesi who owns London city Airport acquired Gatwick Airport in England and is still doing well in business.