When the highly revered mogul and business tycoon, Alinko Dangote, suggested the sale of certain national assets as a precursor to economic resurgence, one had hoped that he was a lone wolf propagating a personal idea. Amazingly, nevertheless unsurprising, this proposal for the sale of national assets, particularly the government’s majority shares in NLNG, has received endorsements from the Senate president and more recently the National Executive Council. However, to be fair to the president, he hasn’t given a modicum of support to this idea, even the minister for budget and national planning, Senator Udo Udoma was on record stating clearly that the sale of national assets was not being considered by the president. Even the instigator in chief, Dangote has also refuted claims of any such interest in the purchase of the NLNG shares.
To justify one’s exasperation with the contemplation of the sale of such a performing asset, it is imperative to consider the integrity of the advocates, the historical antecedents of government dealings with respect to privatization and the economic promise such proposal holds. Perhaps, it is fair to say that we have seen this movie a thousand times over and we know how it ends. I will, however for the sake of this piece narrow in on government’s antecedents and the case for the economy.
The sale of our National carrier, Nigerian Airways, was purported to redeem our lost glory in the skies and make a strong push for continental if not global market leadership. It was sold and the rest is history. The same fate befell NITEL, Jos Steel Rolling Mills (sold for about 900 million 10 years ago when its estimated book value was over 8 billion naira) and even more recently the DISCOS of the power sector. The assets are bought by a privileged few way below the book value, whereas the monies from the transaction is hardly ever channelled to anything productive and in many cases are unaccounted for. Even a man condemned to folly can smell the rat in such an unholy counsel to forfeit our majority shares in NLNG.
One hardly needs a professorial degree to understand what is at play here, and if you will indulge me, let us borrow a page from the book of common sense. Firstly, selling an asset when your back is perceived to be against the wall means you will end up with the short end of the bargain stick, no one is going to pay for the original value which means accruing far less than envisaged. Secondly, why sell an asset that is performing tremendously with the last dividends paid to government totalling about 2 billion dollars. Whether the federal government received that dividend and if the total accrued amount can be accounted for is a different kettle of fish. The point is, no one ever sells a cash cow, at worst one is advised to borrow against the cash flow and predictable future earnings.
Thirdly, it is said that the country needs about 15 billion dollars to inject into the system to save the economy from heading south, my argument is that this thinking is aimed at addressing a symptom in the very short term without challenging the root causes of the problem, meaning that if faced with a similar shock in future (quite unavoidable in such turbulent times in the global economy) we will have no real productive asset to sell or borrow against. How does one then explain the sale of an asset that will generate billions for Nigerians unborn to a few profiteers that will only further empower them to retain their horrendous grip on this nation, impeding its growth and development?
It is however instructive to point out that Nigeria is more than able to borrow externally to meet both short and long term obligations as long as these funds are injected into the productive sector and not to service our insatiable appetite. Nigeria’s debt to GDP ratio is only about 2.24% compared to the threshold for external debt which stands at 40%. Worthy of note also is that external debt service accounts for an insignificant proportion of the total public debt service expenditure. In fact, our capacity to service external debt is 7 times stronger than the applicable threshold. The Director General of the Debt management office, Dr Abraham Nwankwo echoed the voice of the gods when he stated unequivocally that “Nigeria debt is indeed of top class grade, it is adequately insulated from shocks, even deep ones”.
I therefore urge the president to resist the pressure to sell our collective future. It is said that only a righteous man lives an inheritance for his children’s children.