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Nigerians Reject Sale of National Assets

October 4, 2016

Nigerians, including economic experts are clearly divided over the proposed plans of the federal government to sell some national assets to fund the current budget with labour unions promising to shut down the nation in protest if government goes ahead with its plan

By Olu Ojewale *

Buhari

Buhari

THE furore which has been generated over the alleged federal government’s plan to sell off national assets to offset this year’s budget is not about to end soon. In fact, gladiators on both sides of the divide are just about to begin the debate on the merits and demerits of the proposed action.

The reason being that Lai Mohammed, minister of minister of Information and Culture, disclosed on Wednesday, September 28, that the Federal Executive Council, FEC, was yet to take the final decision to sell national assets. The FEC, essentially comprises the president, the vice-president and the 36 governors.

Mohammed, who gave the information while fielding questions from State House reporters after the FEC meeting presided over by President Muhammadu Buhari, said that the recommendation of the National Economic Council, NEC, which comprises the vice-president and the 36 governors and the vice-president, that the assets to be sold was of no consequence.

He said: “The government is still working on the most comprehensive manner to lift the economy and the government will make its position known very soon. What the government will do is to expand the economy, everything you have heard so far is just suggestion, until the government makes its position known, all these assets sale, assets leasing, whatever is being bandied about, they are nothing but speculations. The government has yet to come out with its position on how to bail out the economy and it will take that position.”

Besides, he said the recommendation of the NEC was yet to be considered and approved by the FEC.

Indeed, if that is the case, it would be probably mean that the government wants to gauge the temperament of Nigerians towards the sale and may eventually sell the properties if there is enough support.

One of those in favour of sale with caveat is former President Olusegun Obasanjo, who has said that selling the national assets would not be a bad idea provided they are not sold to cabals but to the Nigerian public. He said that the number of shares an individual or corporate entity should buy in such public assets to be sold should be regulated.

Obasanjo gave his opinion in his goodwill message at the opening session of a two-day National Council of Finance and Economic Development conference held at the Green Legacy Resort, Olusegun Obasanjo Presidential Library, Abeokuta, Ogun State on Tuesday, September 27.

Specifically, the former president suggested that the government should consider selling some shares of the Nigeria National Petroleum Corporation, NNPC, to members of the public, but with a note of caution. “I do not see why 48 percent of the NNPC cannot be privatised. I think the problem is in the coinage “selling of asset” as if we want to throw out our inheritance.

“What we are actually doing by that is simply reorganising. It should, however, be done transparently and let it actually go public and not to cabals, their relations and friends. This is always the fear of Nigerians when issues like this arise.”

Some of the Nigeria’s economic experts have similarly backed the sale of federal assets. One of them is Rewane Bismarck, an economist and managing director, Financial Derivative, who want some of the national assets to be disposed off immediately so that government could have money to re-jig the floundering economy.  He said in an interview: “I believe in the sale of national assets in a strategic manner. That is you sell and go into a simultaneous repurchase agreement so when the prices go up you can buy it back and pay a carrying cost. But I am against selling the NLNG (Nigerian Liquefied Natural Gas), because it is a cash cow.

“You sell a non strategic asset at this time but even if you sell the strategic assets which are the Joint Ventures, you cannot even lock down. So we must have a simultaneous option to repurchase when the prices improve.”

Ekweremadu

Ekweremadu

Perhaps, understandably, the Manufacturers Association of Nigeria, MAN, is not ambiguous in its support of the call for sales of national assets and Aliko Dangote, chairman of the Danote Group, was one of the first persons to mouth his support for the plan. Frank Udemba Jacobs, president of the MAN, said: “Dangote spoke our minds. We are not saying government should sell its share completely in the NLNG. The NLNG is worth $15 billion so they can sell part of it and still maintain some level of ownership. That is what we are saying and by so doing we generate money to beef up our foreign reserve and engender confidence of the investing community both domestic and international in the economy.”

He continued: “Aliko Dangote spoke our minds. We believe we need to sell some assets to beef up our foreign reserve. It has gone so low and if we begin to spend from it, before long we won’t have any foreign reserve at all but if we can sell off some of these assets and then open up   the   economy through liberalisation of the foreign exchange,   people will have confidence to   bring in their dollars and move them out whenever they want.

“At present, government has 49 per cent stake in NLNG.   We think they should reduce that stake and that is the only government oil and gas business that is doing very well because 51 percent is owned by private sector. So if we can do the same in other oil and gas selected projects, like the joint venture businesses, I think there will be more efficiency in those companies.”

The Abuja Chamber of Commerce and Industry, ACCI, holds a similar view, saying the sale would be in order if would be properly channelled into reviving the economy. Tony Ejinkeonye, president of the chamber, said: “Africa’s richest man, Alhaji Aliko Dangote and other prominent Nigerians have called on the federal government to sell some national assets, instead of borrowing to get the country out of recession. This is quite apt.” Ejinkeonye said, “We truly support the call for the sale of the country’s national assets only if transparency is key in the entire process. If the right people acquire the assets, it will be better for the country and Nigerians by extension.

“If we must sell the assets, it must be in line with the existing privatisation policy of the country. The Nigeria Liquefied Natural Gas Limited, NLNG, is one of the assets those who are canvassing the sale listed. And that is the most viable oil asset we have. We are not against the sale of some of our national oil assets or reducing our holdings in them as long as it is properly done in the interest of the country and for the betterment of Nigerians,” the ACCI president said further. Besides, he said, if the assets could be privatised in partnership with core investors that have the experience and the wherewithal to run those assets, the mistakes of the past would not be repeated.

“Furthermore, the proceeds may be reinvested to save idle production outputs and hence sustain the production activities which in turn will increase purchasing power of Nigerians,” Ejinkeonye said.

The governor of the Central of Central Bank Nigeria must have also been thinking along that line. Two weeks ago, while speaking to the Nigerian Newspaper Proprietors Association, NNPA, Godwin Emefiele, governor of the CBN, said that the government could raise $40 billion from asset sale. Emefiele said: “Also in the short run, we can sell assets. You will recall that as at April 2015, I had an interview with Financial Times of London during which even before the government came on board, I had opined that there was need for the government to scale down or sell off some of its investments in oil and gas, particularly in the NNPC and NLNG as at that time when the price of oil was around $50-$55 per barrel. We actually commissioned some consultants that conducted the study and at the end of that study we were told if we sell 10 percent to 15 percent of our holding in the oil and gas sector that we could realise up to $40bn.” The CBN governor’s statement could, perhaps, be part of the consideration for the NEC recommendation for the assets sales.

Somehow, the sentiments expressed by the MAN and the ACCI are also understandable. Dangote is the leading light of both organisations and he is a successful global businessman. This has also raised suspicion that Dangote is merely interested in acquiring more business ventures, monopolise and get more wealth.

But Chukwuma Soludo, former CBN governor, is not in support of the current occupant of the office on the sale of government assets. Soludo also said the government would be making the same mistake that past administrations made, if it should decide to go ahead with its plan.

Ayuba Wabba

Wabba

He said he had described the plan as a joke when he first heard it, but decided to confront the issue when he noticed the government was serious. Apart from being hasty, he said the plan would short-change the country because it would be sold out of desperation.

Soludo said: “Part of the legacy of the oil resource curse on matters of public finance is a mindset that resorts to easy, albeit lazy approach to ‘quick fixes’ — with a gaze on the short term even when the issues are structurally long-term. So, I understand the mental framework that drives such a proposal especially given the pressures to show immediate results.

“But for the record, it is our considered view that the proposal is based on a false foundation. Our thesis is that in extreme, exceptional circumstances, sale of certain assets could be a last resort option but that Nigeria is currently not near that threshold and the institutional framework for its effective use is also not in place.

“Furthermore, we argue that any sale of assets now amounts to chasing pennies when by acts of omission or commission, we are losing pounds. Such a hasty auction of national assets can only benefit a privileged few with cash and access while jeopardising Nigeria’s long-term economic interests.  It will be a historic mistake.”

He further argued: “The argument that sale of assets is the only way to reflate the economy out of recession is troubling, and suffers what economists might call policy myopia or time inconsistency problem.” He, therefore, wondered what would have happened now if the past government had used asset sale to bail out the economy and what would happen in future if the country are to face similar situation.

He warned: “Even for non-performing assets, when privatization is forced and assets auctioned on an emergency basis to meet short-term needs, the danger signs are there for all to see. Nigeria will never get value for money under the circumstance. We all know what happens when someone urgently needs to sell his or her property to meet an emergency.

“What happens to the valuation/pricing? If we price them properly and wish to go through proper due process, the deal might take several years to conclude, thereby defeating the advertised purpose of immediate spending. On the other hand, if we insist on forced sale because we need cash urgently, we can as well imagine how the valuation will be done and how buyers will bid for them,” he said.

Nevertheless, he described the proposed asset sale as “largely self-serving and convenient for some privileged private sector operators with cash and access, the temporary rump up of reserves as well as temporary strengthening of the naira will enable them to take whatever forex they can get (at the official rate) knowing that it is just a temporary elixir. They can then round-trip same a few weeks after and rake in billions.”

Similarly, Peregrino Brimah, an economist and columnist, picked holes Kemi Adeosun, Nigeria finance minister’s argument that the proposed sale of assets could be compared to the Saudi plan to sell five percent or Aramco, Saudi Arabian Oil Co. Brimah listed 10 differences that made both proposal miles apart. According to him, Saudi Arabia plans to sell just five percent of its oil assets while maintaining an overwhelming 95 percent majority, while Nigeria has not indicated a plan to sell such a little fraction of each asset but to give them out whole.

Soludo

Soludo

Second, Saudi Arabia is selling from a position of strength, which would enable it get top price, while Nigeria is selling out of desperation due to inability to manage the assets thereby exposing itself for exploitation.

Third, Brimah pointed out that while Nigeria only intends to auction its assets to fund its budget, the Saudi Arabia intends to auction five percent of Aramco to fund a visionary master plan long-term reform programme, called “Saudi Vision 2030,” with the $2 trillion funds from the sale.

He noted the fact that Saudi Arabia actually also has a balancing budget problem, but insisted that it was not selling a fraction of its oil asset for the budget purpose. Besides, he noted “Nigeria has a poor record of privatisation, or better put, cabalisation of its assets. Nigeria has several options to recover several times more in billions of dollars from looted funds and funds given to banks than the paltry $15 billion its asset sales can furnish. Asset sale should only be considered after these avenues have been exhausted. Saudi Arabia does not have that option for the desired funds it seeks,” he said.

Brimah further arguing against using Saudi Arabia as template, noted that the Saudis’ idea was conceived by its government officials with careful thought and a long-term vision, “Nigeria’s knee-jerk proposal to sell its assets was dictated upon the government by its cabal.”

Besides, he said “while Saudi Arabia intends to utilise its proceeds in a sovereign fund, and to make investments globally, Nigeria’s asset sale is for local use: to fund its budget and pay salaries. The result of this internal cash dump will only increase inflation.”

That, indeed, could be another strong impetus for the Nigerian Labour Congress, NLC, to be vehement in its opposition against the asset sales. Only last Monday, September 26, all labour unions under the aegis of the NLC vowed to mobilise Nigerians for nationwide protests to shut down the whole country to resist the plan by the federal government to sell strategic assets under the guise of using the funds to be generated to get the country out of recession.

Ayuba Wabba, president of the NLC, argued that the consequences of the proposed asset sales would be more grievous, if Nigerians did not stop the government from carrying out the policy.

He made the comment on Monday, September 26, in Abuja, while inaugurating a think-tank of the NLC and the Academic Staff Union of Universities, ASUU, entrusted with the responsibility of leading the intellectual engagement with the federal government on the contentious move to sell the country’s assets.

Apart from shutting down the country, he disclosed that the NLC was also making preparations to battle the federal government in courts to prevent the planned sale of the assets, saying that the congress had secured the services of 20 volunteer lawyers, who had offered their services to the NLC on the issue.

Wabba said: “While it is important to rescue our country from the current economic recession, sale of our commonwealth and strategic assets is certainly not a move in the right direction, and all Nigerians must have the courage to oppose it.

“All the (national) assets are under threat depending on the interest of who is speaking; the NLNG, refineries, all the assets are presently under threat. If we work together, then we can try to defend these assets. It will take the effort of all of us to stop them.”

The NLC president does not need to sweat to get more support as they have since been coming of their own will. On the same Monday, September 26, the Arewa Consultative Forum, ACF, lent it support through Muhammadu Ibrahim, its national publicity secretary.

The ACF argued that the idea of selling off national assets to service the economy was completely “unwise” and should be discarded. It urged the government to learn from the past failures of the past assets sale privatisation efforts, saying none of them has yielded “the desired result in terms of judicious use of proceeds by the government or management of the assets by the new owners. Moreover, the amount to be realised is not worth the exercise. Government enterprises like the Nigeria Airways, Nigeria National Shipping Line, Ajaokuta  Steel Company, NITEL, PHCN, etc, that were sold to selected Nigerians and their foreign collaborators in the spirit of privatisation, only succeeded in converting public enterprises to private ones, and some later became comatose. The ones that survived, their service delivery cannot be said to be better.”

Besides, the ACF argued that selling of the nation’s major national assets like the crude oil refineries, federal airports, NLNG, which could be used as security against needed funds to boost the economy, should never be contemplated.

The view of Tanko Yakasai, former political adviser to ex-President Shehu Shagari, and one of the founders of the ACF, aligns with the group.  He said n Kano on Monday, September 26, that selling the country’s assets as solution to the current economic recession would further plunge the nation into another major economic crisis.

Yakasai argued further that such action in the name of reviving the ailing economy would at the end restrict income and impoverish the masses into abject poverty.

Dangote

Dangote

The elder statesman said:  “It happened to me before, I ran into economic crisis and I decided to sell my things; until I sold half of it, then I realised that there was no end to it, then I stopped. Again, I have realised that in Nigeria, we did it before, the British left us with the Nigeria National Shipping Line, they left us with the Nigeria Airways, they left us investment in banks, investments in NITEL and the rest of them. …  So, to me this idea of selling assets will not take Nigeria anywhere.”

Similarly opposed to the sale of assets is Ike Ekwerenmadu, deputy Senate President, who argued that no country would resort to selling its assets as a way out of economic recession. “UAE does not even allow you close to oil wells let alone sell them,” Ewerenmadu said. “For a country like Saudi Arabia, its budget each year is run by investments from oil revenue. Other countries are investing; I am sure we will not be fair to the next generation if we sell off our assets. If we must sell, we have to sell the non-performing assets so that people can turn them around and create employment,” he added.

Supporting, Shehu Sani, a senator of the ruling All Progressives Congress, APC, described proponents of sale of the country’s national asset as “economic predators and profiteers who want to take advantage of the situation in the country.”

He said privatisation in Nigeria had not delivered the much anticipated efficiency and services other than enrich a few fronts and their masters. “There is currently nothing to show for the sale of government houses, (and) firms. The advocates of sale of our collective national asset simply want to dispossess Nigerians and expand their business empire.” he said.

Sani, who is the chairman, Senate Committee on Foreign and Local Debts, said in a statement on Friday, September 23, that “Nigeria’s capitalist forces raped Nigeria to recession and now they want to kill and bury it.”

“They call themselves private sector and business men; they refused to invest in agriculture, solid minerals or science and technology, they simply want to buy off profitable public asset.

“There are no captains of industry in Nigeria other than crony businessmen, rent seekers, commission agents who depend on patronage from government,” he argued.

Indeed, Aliko Dangote, Nigeria’s business mogul and Africa’s richest man, had recently suggested that it would make more economic sense to sell off the country’s remaining asset like the NLNG and the NNPC Joint Ventures, and use the proceeds to help the economy out of recession.

Dangote’s suggestion, backed by Bukola Saraki, Senate president, Emefiele, actually sparked off the ongoing intense debate among Nigerians.

That notwithstanding, whichever group wins the argument, it has become apparent that the matter is never going to fade away soon not even after the government must have declared its stand. Indeed, the relics of moribund sold national assets such as the Nigerian Airways, Daily Times of Nigeria, Nigeria Telecommunications, NICON Insurance, Aluminium Smelter Company of Nigeria, ALSCON, among others are evidence of the nation’s mismanagement.

*Real News

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