How should the Federal Government tackle the recession that is causing so much pain – and controversy – in the land?
Some experts and leading politicians have suggested the sale of some assets, saying this will provide the cash to reflate the economy, reopen factories and put money in the people’s pockets.
Pushing this view are business giant Aliko Dangote, former Central Bank of Nigeria (CBN) Governor Muhammad Sanusi II, the Emir of Kano and Senate President Bukola Saraki, among others.
But Labour cried out yesterday that the idea will make a few to amass the wealth of all and deepen the seeming despair in the land.
Also against that line of action are Deputy Senate President Ike Ekweremadu and former Benue State Governor George Akume, a senator.
Besides, the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) believes an assets sale will not work.
Sanusi, speaking yesterday in Lagos at the launch of the “2016 Banking Sector Report” published by Afrinvest West Africa Limited, said one of the options available to the government is to sell down some oil assets and the refineries to private sector operators who will pump dollars into the economy, so as to strengthen the naira.
He said: “One option is to sell down some assets, sell down some refineries in a manner that does not hurt your strategic interest. Sell down some oil assets, sell down some refineries, in a transparent manner that gives you value. You can also have options to buy them back later.”
According to him, such steps would lead to increase in foreign exchange inflow into the economy, which is what the economy needs right now.
He also urged the government to create a level playing field for both the Nigerian and foreign investors.
“We have to get to a point when we welcome investors of all nationalities, who are willing to set up production plants here to turn our own raw materials into finished goods. Rwanda, Ethiopia have all done that very well. There is nothing we are saying that haven’t been done by other African countries. We need to go into investment-driven model. China has grown into investment-driven model. Nigeria needs to move into investment-driven model,” he said.
Sanusi said Nigeria’s growth have over the years been driven by rising commodity prices, and the rising domestic debt that went into consumption.
Ekweremadu, speaking during the Senate plenary yesterday, said: “I have heard about the issue of selling of our assets. I need to caution that other countries are not doing the same. United Arab Emirate (UAE) does not even allow you to the oil wells let alone selling them.
“And, of course, a country like Saudi Arabia, their budget each year is run by investments from their oil revenue, not even the earnings. While other countries are investing we want to sell the little we have. I’m not sure we will be fair to the next generation if we go ahead to sell the little we have. So, if we must sell we have to sell the non-performing assets so that people can turn them around and create employment.”
Akume noted that a lot of money had been reported to have been stolen from the nation’s coffers.
He recalled that former Central Bank of Nigeria (CBN) Governor Charles Soludo reported that $60 billion was stolen from the country’s foreign reserves.
Akume said that another former CBN governor, the Emir, also reported that $20 billion was stolen. He said that the money could be recovered.
Akume added: “From these and from monies going through other sources, at least we should be able to recoup over $50 billion. If we succeed in doing this, do we still have to sell our assets as is being canvassed?
”The thing is very straight; there is a buyers’ market and there is a sellers’ market. If we want to dispose of our oil assets at this time when the prices of oil have crashed, precisely how much are you going to realise?
“We are making a mistake here; what we are intending to do is to very unpatriotically ensure that those who are within the bracket of the stolen dollars will still come to buy.
”I believe that this is not the time to strip these assets. Fortunately, the CBN governor made a very powerful statement that the worst days of the recession are over and, therefore, we have to look elsewhere and not to sell our assets.”
During his welcome address to senators on Tuesday, Saraki said the Executive must raise capital from asset sales and other sources to shore up foreign reserves. This will calm investors, discourage currency speculation and stabilise the economy. The measures should include part sale of NLNG Holdings; reduction of government share in upstream oil joint venture operations; sale of government stake in financial institutions e.g. Africa Finance Corporation; and the privatisation and concession of major/regional airports and refineries.
The CBN Governor’s argument is that there is the need for the government to scale down or sell off some of its investments in oil and gas, particularly in the NNPC and NLNG … Now if we choose to do that now, we could still get $10-$15b or maybe $20b.
“If we have that kind of liquidity, it will be easy for us to really stimulate the spending and also to turn the economy around… I am optimistic we will be able to stimulate the economy and earn foreign currency that we can really use to kick-start, stimulate the economy.
“Don’t forget, even in the U.S., when the economic crisis started, the U.S. government stimulated the economy with about $900b and what was injected into the economy and subsequently injected $85b monthly for an extended period of time…
But the Revenue Mobilisation Allocation and Fiscal Commission in a statement by the Commission’s Acting Chairman, Shettima Umar Abba Gana, argued that it would be unwise for the Federal Government to dispose of its crown jewels that generate revenue and keep the Federation Account healthy over the long term.
The statement recalled that when the government sold Petroleum Marketing Companies, the NNPC was forced to establish NNPC Retail Ltd, adding that when some IOC’s sold some oil blocks in the past, the revenue had not been remitted into the Federation Account.
“It is the considered view of the commission that Nigeria’s assets, like the Nigerian Liquefied Natural Gas (NLNG) and other strategic national resources, should not be sold to meet short-term financial obligation”
The commission is of the opinion that the same amount could be borrowed from the IMF and the revenue from these same Assets used to repay the loans over 10 to 20 years after which the Federation would still retain the Assets and continue to enjoy their regular annual dividend payments.
The commission advised that instead of selling off such vital assets which generate considerable funds for the Federation, wealthy Nigerians should be encouraged to set up their own LNG projects, since Nigeria which ranks seventh in the world and first in Africa with natural gas reserves base totalling 188 trillion cubic feet (Tcf) as at May 1, 2015. In addition, Nigeria’s natural gas is regarded as one of the best in the world as it has low hydrogen sulphide (H2S) or carbon dioxide (CO2) impurity levels.