Privatising idle assets will boost Nigerian economy
The nine-month old strike by the Academic Staff Union of Universities (ASUU), to us parents, is born out of government’s inability to get enough funds to fulfill her promise to pay ASUU their emoluments and development demands. Certainly, ASUU demands are legitimate; they are behaving in tandem with their counterparts the world over. Government should meet their demands. Government should stop suffering the Nigerian people through poor allocation of resources. We don’t know how much is being wasted on sustaining the National Youth Service Corps (NYSC). But if you scrap NYSC and add its allocation to education in order to satisfy ASUU, it will raise education to the minimum 26 percent of the budget recommended by the United Nations. We do know that Nigeria was more united before 1973 when NYSC started than now. It is justice and equity that will unite Nigeria, not NYSC. Yakubu Gowon established NYSC when he didn’t know what to do with petrol dollars rolling in.
Moreover, there are many other needs battling for Federal Government’s attention. With the devastating impact of the COVID-19 pandemic, government has to cut costs to thrive. And Nigeria has assets wasting away all over the country. Government should leverage on these assets to boost its revenue to enable her fulfil financial obligations. The idle assets exist in real estate and agriculture; are worth $900 billion according to an estimate by the U.S consulting firm Price Waterhouse Coopers. Economists say privatising these assets, which daily lose their real value through wear and tear- will generate worthwhile capital for the government.
In fact since these assets are depreciating by the day, like the Parliament buildings by the Race Course in Lagos, and the Federal Secretariat in Ikoyi. Government should sell them off holding 30 percent of its equity in case of misuse; when it would be recovered and sold again. Perhaps, government should go into government-private partnership or concession of these assets wasting away. Let government invite buyers or partners for the railways and paper mills in order to get jobs for the people. What about the refineries, iron and steel industry and the motor assembly plants? Government should find partners for their revival.
Indeed, with electricity as the linchpin of industrial growth, government should invite nuclear plant industries perhaps from France to build power plants to generate electricity for us. Rather than prioritising equity as a sustainable form of funding, the government has opted for borrowing which creates debt for the future generation. This ignoble policy has garnered a debt burden of N31 trillion, according to DMO data of June 2020. Most if not all the debt is foreign denominated which is susceptible to the vagaries of foreign exchange volatility. It means for every N100 generated as revenue, government will be spending N70 to service its debt. This policy is unsustainable for an economy hoping to create a great future for its younger generations.
Sadly, there is no way these ballooning debts can translate to any meaningful growth since the borrowers have no growth plan at their disposal. These debts were entered into to stave off bankruptcy. Even so, Nigeria is still bedeviled with myriads of problems. Among them are weak economic growth of 2 percent, high unemployment of 27 percent, soaring commodity prices, falling per capita income, weak purchasing power owing to inflation and widening inequality. According to the head of the Presidential Economic Advisory Council, Doyin Salami, “The country needs 19 million jobs and must grow at 6 percent yearly within the next decade to tackle poverty and unemployment. And private investment must be at the heart of that growth.” Salami urged state governments to let out unproductive assets in their states to attract investment.
For the Chief Executive of Financial Derivatives Company, Bismarck Rewane, the average level of fixed investments in the Nigerian economy at 15 percent is too low for our $450 billion GDP. He said we need up to 40 percent for it to have impact on the economy. According to Rewane, an investment led strategy is most effective for developing economies. He said that was the strategy adopted for prosperity and growth in Singapore and Indonesia. “If you invest any amount in the private sector, you will gain a 6.25 percent lift, which is the multiplier effect needed. This is a better strategy as against keeping money with government. This strategy also helps in creating employment and reducing income inequality. Over 60 percent of the country’s gross capital formation is stranded with government.”
“Rather than raising debt, we need to sell our assets. This is because debt sustainability undermines fiscal consolidation,” he said. However, it is heart warming from documents displayed in the Senate recently, that government plans to sell off some of our assets to raise N434 billion. This it wants to get from the sale of integrated power plants in Geregu, Omotosho, and Calabar this year. Government also plans to concession the National Theatre, Lagos; Tafawa Balewa Square, all the River Basin Authorities; while the National Stadium, Lagos, and the Moshood Abiola Stadium Abuja were also planned for privatization.
In any case, data from the Budget Office of the Federation showed that Nigeria recorded no privatization proceeds in the first half of 2020, a deviation from the N63.02 billion it promised to generate from privatization proceeds. On the whole, ignorance and lack of will from our policymakers is responsible for Nigeria’s decline and her experience of two recessions in five years.
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