The Federal Government is looking at generating as much as $16.4bn (N5tn at N305 to the dollar) through asset sales in the next four years to reduce the burden on the public budget.
The sales will help to tackle inefficiencies and stem “corruption in public enterprises,” according to a document prepared by the Ministry of Budget and National Planning, obtained by Bloomberg, which outlines the country’s plans for economic recovery from 2017 to 2020.
The document did not state the assets that the government might sell, but President Muhammadu Buhari is expected to introduce the proposal on an unspecified date this month.
However, there have been calls from within the government and outside for the government to consider the sale of some critical national assets to raise money to finance critical infrastructure in order to raise money to reflate the economy, which is being battered by recession.
For instance, the President of the Senate, Dr. Bukola Saraki, had on September 20, 2016, recommended the sale of some national assets and the utilisation of the proceeds for infrastructure development.
He said this was necessary for the nation to fight its way out of the current recession, adding that the measures should include part sale of the Nigeria LNG Limited; reduction of government’s share in upstream oil joint venture operations and financial institutions such as the African Finance Corporation; and the privatisation and concession of major/regional airports and refineries.
That same week, the National Economic Council, which comprises Vice-President Yemi Osinbajo and the 36 state governors, endorsed plans by the Federal Government to sell some national assets as part of efforts to address the economic recession in the country.
The sale of national assets was said to be one of the recommendations of the Minister of Budget and National Planning, Senator Udo Udoma, during the NEC meeting.
The same sentiment was echoed by the Emir of Kano, Alhaji Muhammadu Sanusi; and Africa’s richest person and President of the Dangote Group, Aliko Dangote.
However, the organised labour, comprising the Nigeria Labour Congress, Trade Union Congress of Nigeria and the Nigeria Union of Petroleum and Natural Gas Workers, kicked against the move, warning the Federal Government to reject the recommendations to sell the country’s assets.
The groups described the advice given by the Senate President, Sanusi and Dangote as selfish and not in the national interest, vowing to resist any further sale or concession of national assets under the guise of fighting economic recession.
When contacted on the latest development and for a list of the assets proposed for sale, the Special Adviser on Media to the Minister of Budget and National Planning, Mr. Akpandem James, said he was not aware of plan to sell the assets.
Rather, he said what the government’s Economic Reform and Governance Project prescribed was the privatisation of some selected national assets.
According to him, the privatisation of the assets is the second item on the 12 priority strategies to reposition the nation’s economy out of the 59 developed under the ERGP.
Estimations show that the country’s economy contracted by 1.5 per cent in 2016, partly because of a decline in the price and output of oil, the biggest export and revenue generator.
Buhari had proposed a 20 per cent increase in this year’s budget to stimulate the economy and help the Gross Domestic Product expand by an average of 4.7 per cent annually over four years and reach seven per cent in 2020.
The Head of Research at Vetiva Capital Management Limited, Pabina Yinkere, told Bloomberg, “They could look at reducing government stakes in oil joint ventures from around 55 per cent to 40 per cent or 45 per cent; that alone can generate over $10bn.
“Non-oil assets like concession airports are a more difficult sale because they will involve a lot of transactions.”
The government targets oil production of 2.5 million barrels a day by 2020 to boost export earnings, it said in the document. Output declined to an almost three-decade low of 1.4 million barrels a day in August after militants in the Niger Delta region bombed pipelines to demand more benefits from the resource.