Government will not sell critical assets, says Udoma
Experts Differ, As Opposition Mounts
As opposition gathers against proposals by some in the business and political class for government to sell some national assets, to shore up its foreign reserves, as well as, have funds to retool the economy against the present downward plunge, the Federal Government has denied that its fiscal stimulus plan entails selling off major critical assets.
Rather, government, according to the Minister of Budget and National Planning, Udoma Udo Udoma, plans to source immediate funds to reflate the economy and implement capital projects in the 2016 budget.
Udoma, while briefing newsmen on the forthcoming Nigeria Economic Summit, said the intention of government is just to get enough money to fund the 2016 budget and get the economy back on the path of recovery.
Government, he stated, needs to inject a large dose of funds into the system to get the economy back on track and to faithfully implement those provisions in the capital budget, tailored at reflating the economy and aiding the diversification process.
The Minister in a statement in Abuja, yesterday, by his Media Adviser, Mr. Akpandem James, explained that the country had lost almost half its expected revenue and would need to urgently source the shortfall to enable government faithfully implement the budget.
This unfortunate scenario, he explained, prompted the Economic Management Team to urgently work out a fiscal stimulus plan to generate immediate large injection of funds into the economy through asset sales, advance payment for license rounds, infrastructure concessioning, use of recovered funds, among others, to reduce the funding gap.
The other option, according to the Minister, would have been to source for additional loans, beyond the level of borrowing already projected for in the 2016 Budget. This would not be a wise option, as it would raise the level of debt service to an unsustainable level.
The Minister said: “Our goal is to unlock the economic potentials of the non-oil and high-employment sectors, so as to achieve a sustainable inclusive growth that will ensure that the majority of Nigerians become more productive, thereby reducing poverty.
On the option for sales, economics experts, Dr. Chukwuma Agwu and Dr. Okey Oyama Ovat, and a chieftain of the Northern socio-political organisation, Arewa Consultative Forum (ACF), Anthony Sani, at the weekend, said the suggestion does not make any economic sense, pointing out that managing public affairs cannot be compared with managing private business.
For instance, Agwu, a Research Fellow at the Institute for Development Studies, University of Nigeria and African Heritage Institution, Enugu, who cautioned on the idea, warned that such move could only plunge the country into worse unemployment situation.
Africa’s richest man, Alhaji Aliko Dangote, Senate President, Dr. Bukola Saraki and Emir of Kano, Mohammed Sanusi II had canvassed the possibility selling of national assets to enable government wriggle out of the economic recession and to fund its capital projects.
Agwu however argued that selling national assets with existing sets of policies and programmes of the Federal Government, may still not get the country out of recession.
“If you are selling assets with the existing sets of policies and programmes of the Federal Government, then, I am afraid you will lose the assets and you will not get out of the recession,” he warned.
He also warned that Nigeria is not a limited liability company and as such, addressing its challenges should not be compared to that of a limited liability company.
Rather than outright sales of assets, Agwu stated that using the assets as collateral for obtaining extra and immediate funding should be considered, as according to him, it would be more sustainable and more rewarding.
To stabilize the economy, he urged government to come up with a policy that will encourage industrialization.
Also speaking, the Head of Department of Economics, University of Calabar, Dr. Okey Oyama Ovat, warned that selling of government assets would further aggravate the sufferings of Nigerians.
He noted that one of the features of recession is mass unemployment. Ovat urged the government to reduce taxes as a way of motivating investors.
“When taxes such as personal income tax excise duties are reduced, investors will pay less taxes, which translate to a reduction in their cost of production.
“Investment demand will increase, employment will increase and output and national income will increase. Aggregate demand will also increase, as individual will now have more disposable income at their disposal.
“If this happens, this talk about mass unemployment in Nigeria will be drastically reduce and by extension, through the multiplier effect, the problem of recession would be taken care of”, he said.
Sani, ACF’s former National Publicity Secretary, cautioned Nigerians against embarking on the sale of national assets, saying; “all those canvassing for the sale of the national assets have forgotten that Nigeria has sold assets in the past, under the guise of privatisation and nothing came out of it, either by way of positive uses of the proceeds or good management of the assets by the new owners.”
But Temitope Samagbeyi, Partner, Business Tax Services in Ernst & Young, West Africa, disagrees. He said: “It has been shown that the government has no business been involved in certain activities. It is no longer news that Nigeria is in a deep recession and if care is not taken, things may go from bad to worse. At this point, the government needs funds to jumpstart the economy again and finance projects. Selling of the assets would enable Nigeria get cheap finance, to run its rising current account and budget deficits, and invest into infrastructure, as well as, agricultural projects that will help jumpstart and diversify the economy.”
Also, a chieftain of ACF, Alhaji Idris Shuaib Mikati spoke in favour of the sales of the assets. He explained that privatisation and the sale of pubic assets, will benefit the nation, if the funds realised, are effectively channeled for national development.
He said: “Basically, some advantages of selling government businesses are, to raise cash to meet urgent financial needs, reduce significantly the burden of funding the enterprises, particularly, if the businesses are not viable or well managed.”