To sell off your assets because you are broke is short-term, myopic thinking. It's knee-jerk stuff.
It's okay to reach for the panic button during an economic recession.
Nigeria is in dire straits--oil output has dipped, the economy has hit consecutive negative GDP figures, the public and private sectors are retrenching workers by the truckload, small and medium scale businesses are groaning, the price of a bag of rice has skyrocketed and everywhere you turn on the streets, gloom and doom stares back at you.
The default reaction in the midst of all the hoopla concerning the economy will be to tender irrational proposals. And we've had quite a few.
On Tuesday, Senate President Bukola Saraki joined the likes of business mogul Aliko Dangote and Central Bank of Nigeria (CBN) Governor Godwin Emefiele in calling for the sale of government assets to stave off the biting recession.
Speaking to CNBC Africa, Dangote proposed a wholesale auction of government assets. “I think the real challenge for us is now for us to have the political will in terms of selling some assets. I think it’s an easier route than the IMF (International Monetary Fund) or the World Bank to borrow money, because what you need to do is actually to beef up the reserves.”
Emefiele was next: “In the short run, we can sell assets. You will recall that as at April 2015, I had an interview with Financial Times of London during which even before the government came on board, I had opined that there was need for the government to scale down or sell off some of its investments in oil and gas, particularly in the NNPC (Nigeria National Petroleum Corporation) and NLNG (Nigeria Liquefied Natural Gas) as at that time when the price of oil was around $50-$55 per barrel,” he said.
“We actually commissioned some consultants that conducted the study and at the end of that study we were told that if we sold 10% to 15% of our holding in the oil and gas sector, we could realize up to $40b.
“Unfortunately, the markets have become soft. If we choose to do that now, we could still get $10-$15b or maybe $20b", said the CBN Governor.
After a two-month long recess, Saraki sang from a similar hymn sheet on the resumption of plenary on Tuesday, September 20: “The Executive must raise capital from asset sales and other sources to shore up the foreign reserves. This will calm investors, discourage currency speculation and stabilise the economy.
“The measures should include part sale of the NLNG Limited; reduction of government’s shares in upstream oil joint venture operations; sale of government’s stake in financial institutions e.g. Africa Finance Corporation; and the privatisation and concession of major/regional airports and refineries,” said Nigeria's Senate President.
To hear the trio say it, sale of assets is some silver bullet to solving all economic problems.
It's easy to propose sale of national assets as a panacea to Nigeria's economic woes when you run offshore and shell companies and when your cronies will be best placed to acquire these assets when auctioned. It's easier to propose sale of strategic national assets when the senate you preside over, embarks on recess more than it does actual work.
History will remember that the nation's parliament embarked on a recess at a time Nigerians needed them most to deliberate on pieces of legislation that would have gone some way in ameliorating economic pangs.
At the onset of the Buhari administration, the federating units couldn't pay the salaries of workers. The States were darn broke, for want of a better expression.
It was the NLNG that came through for the federal government at the time. An intervention package to help bankrupt States pay outstanding workers’ salaries came from the $2.1 billion dividend paid to the Federation Account by the NLNG.
It's funny that a Senate President will propose that an administration in which he is part, auctions airports, refineries, upstream oil assets, etcetera.
In the age of liberalisation, the temptation to sell off state assets will remain, but you don't sell off all your assets as a government because you are broke. They are called assets for a reason. Assets are enduring, long term money churning infrastructure. You should maintain and keep them as going concerns, not dispose of them to the cheapest bidder at the slightest hint of a recession.
Government should continue to retain a stake in critical sectors of the economy for the good of the average consumer. The sale of Nigeria's power assets to private investors hasn't really yielded that much electricity to the grid, for instance.
Yes, privatization is a good thing but the Dangotes of this country should be looking at building their own airports and refineries, not looking to take advantage of government's poor finances.
To sell off your assets because you are broke is short-term, myopic thinking. It's knee-jerk stuff. It's a lazy man's way out of a problem.
The National Assembly should concern itself with the more rigorous and laudable task of formulating laws that will get us out of this recession and not propose that we auction assets to survive.
Saraki, Dangote and Emefiele are wrong on this one and the Muhammadu Buhari led administration will do well to send their proposals to the Aso Villa trash cans where they really belong.
When you consider that individuals who'll end up purchasing these assets will be cronies of the Sarakis, Dangotes and Emefieles, you can't but wonder if the proposal isn't a self-serving one.
Yes, we are in an economic recession, but getting out of it will require some creative, out of the box thinking. Selling national assets doesn't strike anyone as creative in any way.