Selling national assets?

THE current government of President Muhammadu Buhari, as part of its strategy of confronting and getting Nigeria out of the present economic recession, has touted the sale of some national assets in order to have the direly needed revenue to prosecute its programmes. Part of the reality of the economic downturn has been the decline in the revenue accruing to the government, particularly in foreign exchange.  And the government believes that one way of getting revenue would be to sell off some of the country’s assets. Indeed, it would seem to have made up its mind on this move, as it got the governors, through the National Economic Council (NEC), to support the move even as it also trumpeted the agenda in the wake of the strong opposition to it from across the country. Yet it has also suggested that the planned sale is a mere rumour.

It has also been suggested that the government would likely put a repurchase clause in the sale agreements in order to ensure that it can, at any point in the future, get the assets back. It has also been stated that the government would also consider selling only part of the assets where it is possible. The government’s narrative suggests that what is important is to get additional revenue, particularly as it is having problems with funding the 2016 budget, and that it would not be out of place if it disposes of some of the current national assets to get the needed revenue.

Yet, what this narrative also confirms is the flaw in the  planned sale of national assets as there is nothing to suggest that there is any other strategy associated with it than to simply obtain revenue. If the argument is that the government needs the additional revenue to commit to the building of infrastructure, it is not likely that any of the assets to be sold would also not be part of the national infrastructure framework, in which case it would be difficult to convince anybody about the imperative of selling some assets in order to get some other assets when there is no evidence that the current assets are no more useful. For if the assets are not useful, the government would be hard pressed to get buyers for them.

Government’s conviction that it would soon be able to dispose of the assets suggests that those earmarked for disposal are valuable assets that would command instant buyers. This evidently makes the government’s case more difficult to present and understand, as it would be hard to justify selling important and valuable assets in order to get new important and valuable assets. Since the assets to be sold are still valuable and important, getting new infrastructure would not justify their sale. Rather, the government ought to be making a case about reforming the governance processes and if there are government assets that are not performing, part of the remedy for such non-performing assets would be sale or lease agreement for their private takeover. Not many Nigerians would frown at government action on non-performing assets.

In any case, such action would not be new as this was the logic behind the privatisation policy in the country through which entities such as the defunct Nigerian Telecommunications (NITEL), which was spectacularly not performing, were sold. But this scenario would not apply to assets such as the Nigerian Liquefied Natural Gas Company (NLNG) which has been paying dividends to the government and is running effectively. Stripping the country of such assets would be a deliberate negative action to deprive the country of its most important and performing assets.

Fortunately, the Senate has passed a resolution asking the executive to jettison the idea of selling the national assets. And many civil society groups including labour unions have also spoken out against the planned sale. The vociferous opposition to the sale is because many Nigerians are persuaded that this is just a mere ploy to get enough revenue in government’s hands, to be wasted on irrelevances, as is usual in the country. Nigerians are worried that rather than protecting available assets during a recession and ensuring that things do not degenerate and deteriorate beyond the current level, government is contemplating selling assets just to allow it to continue to have funds for itself.  Yet, this is the time that should necessarily call for restraint and frugal existence on the part of all, particularly those in government.

Besides, is it not better for the country to live within its means and spend only within the ambit of the resources available to it, including whatever could be legitimately borrowed? There is no denying that Nigeria is currently going through hard times, but what this should connote is the preservation  of existing assets, in order to have the backbone to withstand the hard times. Even with the planned inclusion of a repurchase clause, what exactly is the country going to gain by selling off the assets now only to want to buy them back in the future? If the assets would still be useful in the future, why sell them now?

The government evidently has no business using performing national assets to buoy up its revenue profile since such assets are already serving the purpose for their establishment. It is in this sense therefore that we strongly add our voice to the throng urging the government to forget about the idea of selling national assets for revenue. The gains from such an action are not evident and are at best dubious.