Nigeria has significant asset base to unlock liquidity, restore fiscal plan ― BPE

Director-General of Bureau of Public Enterprises (BPE), Mr Alex Okoh, on Monday, expressed optimism that Nigeria is blessed with a significant asset base that could unlock liquidity, restore fiscal plan and development agenda.

Mr Okoh stated this during the public hearing on the bill for an Act to repeal the Public Enterprises (Privatisation and Commercialisation) Act, 1999 and enact the Public Assets Reform Bill, 2021 for improved efficiency and management of public assets in Nigeria.

This, according to him, will not only boost the dwindling revenue of the government but also increase government savings and stimulate economic growth, reduce the fiscal deficit, reduce the escalating debt burden and provide employment opportunities for thousands of unemployed Nigerian youths.

He said: “According to a recent publication by PWD, Nigeria owes as much as $900 billion worth of debt capital locked up on the residential real estate and agricultural lands, including Federal Government abandoned property estimated at $230 billion. Surprisingly, the nation’s net liabilities is less than 10 per cent of these figures. Clearly, we have no business being where we are currently in terms of our fiscal constraints. The bill is in the best interest of the nation and the economy,” he noted.

The BPE helmsman who decried the country’s rising debt stock despite the dwindling revenue argued that about 70 to 80 per cent of the country’s revenue is used to service debt.

He disclosed that “Nigeria’s debt to GDP ratio is average 34 per cent which is higher than the international threshold of 30 per cent.

“Debt service to revenue ratio is 98 per cent which is above the World Bank threshold of 22.5 per cent. Debt to revenue ratio is estimated to be at 538 per cent at the end of the second quarter of this year which has also exceeded the international threshold of about 250 per cent.”

In the bid to attract requisite investment into the economy, he stressed the need to put in place a credible and robust mechanism to reset and reform the economy especially a robust asset optimisation and public, private partnership framework to attract private capital into infrastructure development, thereby stimulating economic growth.

According to him, from inception, a total of 234 Public Enterprises have been successfully reformed by way of privatization, commercialization and in some cases, concessioned, ranging from the privatisation of Federal Government interest in previously State-owned Banks and Insurance Companies; privatisation of oil marketing companies and the concessioning of 24 port terminals.

In his brief remarks, Chairman, House of Representatives Committee on Privatisation and Commercialisation, Hon Makama Misau, underscored the need for a proper legislative framework for delivery on over $11.3 trillion Public-Private Partnership (PPP) arrangements on asset development across the country.

However, in his presentation, President of Nigeria Labour Congress (NLC), Comrade Ayuba Wabba reiterated opposition against the privatisation of public assets since President Olusegun Obasanjo’s administration, frowned at various abuses by way of asset stripping and sale of the commonwealth to vested interests.

“If by now, we have privatised 234 Enterprises in Nigeria and we say that it is aimed at creating wealth and address the issue of poverty, yet we are the poverty capital of the world, then something is wrong with that policy. So, let us not come here and auger coat. Let us say it the way it is.

“The idea that GSM was privatised is wrong, let us correct the narrative. There was a GSM revolution around the world and we keyed into it by killing NITEL. If you go to Britain now, you can still make calls using landline. In the process of bringing in that GSM, Nigerians were exploited. When GSM came into Nigeria, if you compare it with other countries, we were exploited. That was not a process of privatization. It was a process of allowing people to come and invest in our economy.

On the issue of ports, let me make the point that the same people anchoring privatisation were the same people who bought the ports. It was a process of taking our commonwealth and handing them to few against the spirit and letters of the Constitution especially Section 16. So, it is wrong today that the state has no business in business.

“They will not privatise moribund assets, they look at the viable ones. The issue of NITEL, what they did was assets striping, including the Power holding. The assets were first stripped and sold and no value has been added. Check the steel rolling mills which were privatised. The first thing they did was shut down the place and sell off the assets. I don’t think we should continue in this light. We must be able to say no.”

In his presentation, Minister of Works and Housing, Mr Babatunde Fashola, who stressed the need for a review of the previous concessioning and privatisation of public assets, said: “I am not against private sector investment or participation in national development; I am not against it.

“So, let me make my position very clear. But it saves that a conversation has persisted, suggesting that every time we have a developmental problem, the silver bullet is given to the private sector – PPP. I think that it is a conversation that has been heard in very general terms and it needs to be interrogated in a very granular form – some detail. I just wish to point this honourable committee in that direction.

“The first thing I want to first ask is that, of all the assets that we have disposed of and the reasons for disposing of them or for commercialising them or for privatising them, have we achieved the objective that we set out to achieve? I think we should ask that question.”

While noting that a substantial part of the Nigerian economy is made up of Micro, Small and Medium Enterprises, he observed that “how many of them turn over N1 billion? Let us go to the foreign investments: in the last 15 years, which countries are providing development funding? It was only China and China is now pulling back. All the other economies – America is sitting on $23 trillion debt.

“We are not in a bad place in terms of PPP. If we really looked into the studies that I have done, we would see those other jurisdictions. India, the totality of its assets, 67 per cent of it is being funded by the government as against 33 per cent which is private. In South Africa, it is 94 per cent public, 6 per cent private. In Malaysia, it is 67 per cent public, 33 per cent private. In the United Kingdom, it is 84 per cent public, 16 per cent private.

“Now in Nigeria, from the figures we have done, we seem to be almost about 50-50; if you look at our public works budget. If you look at the PIDF (Infrastructure Development Fund), the SUKUK and the Road Infrastructure Tax Credit Scheme which just injected about N320 billion this year as a ratio of public expenditure to what is in the budget which is about N300 billion alone, you would see that we are almost at par. Therefore, there is some significant injection of private capital.”

In his keynote address, the Speaker, Hon Femi Gbajabiamila, who was represented by the Majority leader, Hon. Alhassan Ado-Doguwa noted that at this period of dwindling economic resources and crunch, it was necessary for the country to review the manner it manages its assets.

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Nigeria has significant asset base to unlock liquidity, restore fiscal plan ― BPE