Recession: Proposed national assets sale divides experts
the fourth quarter, we will be out of recession. It should be a partnership between government and the private sector. We have all the answers,” he said.
He said if the government boosted its reserves as suggested, the naira would fall to N250 to the dollar and help the economy. “Once we can sell assets and put $15bn together, you would be very shocked at how much the dollar would actually drop. What is happening today is mere speculation,” he maintained.
Senate President Bukola Saraki also urged the federal government to raise capital from asset sales to shore up the nation’s foreign reserves.
In the same vein, Emir Sanusi said: “We need to consider the sale of some of our oil assets in a manner that does not hurt our strategic interest. We can even add a buy-back clause if we want.”
The emir, who said the CBN had been getting its decisions right in the last three monetary policy meetings, insisted that the country needed the dollar at this time. He noted that the inflow of dollars into the economy would move the naira to “its fair value as it is currently undervalued.”
Dr. Ayo Teriba, the chief executive officer of Economics Associates, told Daily Trust on Sunday at an Afrinvest function last Wednesday that: “We don’t need to persuade anybody about foreign direct investment. We already have dollar assets here in Nigeria. India realised the limit of what investors could own in assets that previously used to be owned by government. That’s the way they did it.
“Last year, in many of the sectors, the new limit became 100 per cent. By this, no physical investment is taking place, but money will flow into your capital accounts.
“Nigeria wants to own 100 Ezekwesili suggested that rather than selling the assets, government should embark on key structural reforms such as petroleum sector deregulation and liberalisation, civil service reform and increased investment in agriculture per cent of pipelines, electricity transmission equipment, 100 per cent of the refineries. For foreign direct investment that will take over brown-field assets, it is not a matter of confidence but that of access.”
The Manufacturers Association of Nigeria (MAN) was categorical in its position on the issue. “MAN wholly supports the call for the sale of national assets by the federal government,” the association stated.
The president of MAN, Dr. Frank Udemba Jacobs also told our correspondent: “Dangote spoke our mind. We are not saying government should sell its shares completely in the NLNG, which is worth $15bn. They can sell part of it and still maintain some level of ownership.
“By so doing we will generate money to beef up our foreign reserves and engender confidence in the investing community, both domestic and international.”
Also, speaking at an interactive session with top media executives in Lagos last weekend, the CBN governor disclosed that the country would soon commence the sale of about 15 per cent of its oil assets held by the Nigerian National Petroleum Corporation (NNPC), which is expected to yield an inflow of $10bn for the country.
Emefiele said a team of consultants had been commissioned to carry out a study on the proposed sale. He noted that the country’s income would have been beefed up to $15bn if the assets had been sold earlier in the year.
Last Monday, the minister of finance hinted that the federal government might opt for asset sales next year to boost public coffers.
“We have started working on the 2017 budget, and we are looking at a mixed strategy of debt and asset realisations,” Adeosun told the CNBC Africa.
But apart from Senate President Saraki, other members of the leadership of the Senate seem to be against the planned sale of the assets. Saraki’s deputy, Senator Ike Ekweremadu, opposed the proposed sale, arguing that it wasn’t wise for any country to sell off its precious jewels.
“I have heard about the issue of selling of our assets. I need to caution that other countries are not doing the same. The United Arab Emirate does not even allow you to get to their oil wells, let alone selling them.
“If we must sell, we have to sell the non-performing assets so that people can turn them around and create employment. We need to amend section 162, especially from sub-sections 3,4,5,6, where every money in the Federation Account is shared among the other levels of government,” Ekweremadu said.
In the same vein, Sen. George Akume (APC, Benue NorthWest) said: “The thing is very straight. There is a buyer market and there is a seller market. If you want to dispose of your oil assets at this time when the price of oil has 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 sell these assets. Fortunately, the CBN governor made a very powerful statement that the worst days of the recession were over. Therefore, we have to look elsewhere and not sell our assets. We should rather focus on industrialisation through agriculture and try to revamp this economy.”
Sen. Ovie Omo-Agege (Labour Party, Delta Central), also opposed the sale. Omo-Agege was emphatic that the NLNG generates over $22bn per annum; hence, selling it off alongside others would be “the biggest mistake of the century.” He recalled that when Russia went into recession, it never contemplated selling its assets, but approached the situation by deliberate reinvestment, which made it better afterwards.
In her official Twitter handle (@ obyezeks), a former vice president of the World Bank, Africa Division, Obiageli Ezekwesili, argued that what Nigeria needed was economic reform and better management.
“Managers of the economy must resist our wonderful politicians now chorusing quick fixes like asset sale. There are no easy options here. It seems that the default instinct of our political class is ‘sell and spend.’ It won’t work.
“Any asset sale at all should be within the context of an empirically guided, deliberated and deep structural reform of the sector of the said asset. The economy can’t get back to the high and sustainable growth rates necessary for wealth creation and poverty reduction without macro-economic stability,” she warned.
Ezekwesili suggested that rather than selling the assets, government should embark on key structural reforms such as petroleum sector deregulation and liberalisation, civil service reform and increased investment in agriculture.
A renowned economist and managing director of Financial Derivative, Mr. Rewane Bismarck, also said the NLNG was a cash cow and should not be sold.
“I believe in the sale of national assets in a strategic manner. That is, you sell and go into a simultaneous repurchase agreement so that when the prices go up you can buy it back and pay a carrying cost. But I am against selling the NLNG because it is a cash cow.
“You can sell a non-strategic asset at this time. But even if you sell the strategic assets, you cannot even lock down. So we must have a simultaneous option to repurchase when the prices improve,” he said.
In the same vein, Dr. Biodun Adedipe, the chief consultant of B. Adedipe Associates said: “I am not in support of the sale of the nation’s oil assets because of recession. That will amount to a desperate move to water the storm. What are we going to use the money for?”
The acting chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Shetima Umar Abba Gana, also faulted the proposal, saying, “Nigeria’s gas reserve, which totals 188 trillion cubic feet, is the best in the world because of its low hydrogen sulphide impurity levels.
“It is the considered view of the commission that Nigeria’s assets like the NLNG and other strategic national resources should not be sold to meet short term financial obligations.”
Also, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) described those calling for the sale of national assets as “enemies of Nigeria.”
They urged the federal government to drop the planned move to “avoid incurring the wrath of workers.”