LAGOS SEPTEMBER 27TH (URHOBOTODAY)-The Centre for Global Solutions and Sustainable Development (CENGSSUD), strongly oppose the proposed sales of National asset to fund 2016 budget and sustain the foreign reserve. The call is not only short-sighted, but unsustainable.
While we sympathise with the Federal government on the unstable economic situation it has found itself which has led to recession, and its efforts to boost its revenue base, by diversifying and improving taxes and rates generation, the government should be cautious not to be too desperate in getting out of recession on time by adopting quick and short-cut fixes which may address the needs of the nation today, but may not be visible and viable to address the needs tomorrow.
In this past, similar assets have been sold such as Power Holding Company of Nigeria, NITEL etc. and did not yield positive results, but rather, proceeds of sales were squandered and unaccounted for. Many Nigerians also lost their jobs as a result of these sales. So how can a government that is determined to solve unemployment problem take decisions that will worsen it?
It is also disheartening and worrisome that viable asset like the NLNG that rescued Nigeria in mid-2015 when 27 of the 36 states in Nigeria were unable to pay workers’ salaries, is up for sales. The Proceeds from NLNG amounting to $2.1billion (N413.7 Billion) was used as a bailout fund to various states. The asset also yields over $1 billion to the nation every year and has been doing so in the last 12 years which shows how viable and valuable such asset is. The question is: If the NLNG and other national assets have been sold by previous administrations, what would have bailed Nigeria out in 2015? Or if all assets have been sold, will this present government have anything to turn to in-terms of sales? Also if assets sold today, do we have perfect and systemic institutional framework in-place for the effective usage of the funds?
Even selling of oil assets in the era of drastic decline in the international price of crude oil would amount in a great loss to the nation. The CBN Governor, Godwin Emefiele also recently admitted that if the oil assets have been sold like two years ago, we could realise up to $40 billion, but now, if we sell, we can hardly realize between $10 to $15 billion, so why the rush to sell our valuable national asset at a loss and giveaway prices? This is simply penny-wise and pound-foolish.
We are also not comfortable with call by the FG that proceeds from asset sales will be used to fund the 2016 budget because all the mechanisms proposed by the government to fund the 2016 budget are still in place but only the oil revenue drops as a result of the economic sabotage and activities of the Niger Delta Militants. It is important to remind the FG that the oil-related funding component of the proposed budget is just N820bn, representing 13% of the entire spending plan of N6.08 trillion. So if the non-oil revenue such as Company Income Taxes (CIT), Value Added Tax (VAT), Customs and Duties, FG independent Revenue, internal and external borrowing, recovered funds from looters etc. are still in-place and covering about 87% of the funding for the budget, so why will sector with only 13% funding projection hold our budget to ransom and necessitate selling our important national asset? Even the oil revenue which the FG has been using as excuse has not completely stopped, the income only reduce by half, so we still realise income that can take care of at least 6.5% of the projected 13% we need from oil.
It is also important to remind the government that our appetite for foreign goods and importation is still very high, even importation of refined oil is our biggest headache and uptill now; the government is unable to address that problem. 90% of our foreign exchange from exports comes from oil, and Nigeria is not yet an exporting Nation. So if we sell our National assets and raise like $20 -$25 billion to boost our foreign reserve and our appetite for importation has not reduced by now, export not yet improved, with the present conflicting forex, monetary and economic policy frameworks, then the reserve will be dried-up again and fund realized from asset sales may go into extinction and we will be back to square one, or if we sale national assets to fund 2016 budget and economic problems still persist, what do we sell to fund 2017 and 2018 budget?
So the question here is: Is the asset sales the solution to Nigeria’s economic problem? The answer is CAPITAL “NO”
SOLUTIONS
The urgent need to concession the four refineries to private operator to develop (or upgrade), operate and maintain the ailing infrastructures for production of crude oil to achieve their maximum capacities is crucial at this time, as this will reduce our need for forex for fuel importation and solve drastic fall in the Naira value. The Government also needs to put all measures in-place to solve the crisis in the Niger delta region as military option may not be practical and workable. If previous governments from Late president Yar’ Adua can do it, former president Jonathan can achieve peace, then Buhari should not be an exemption.
The need to immediately reduce Nigeria’s running cost is also important as we are running a very expensive political system, 58% of the nation’s allocation is spent at federal level, while 32% goes to the 36 states and 10% for the 774 Local Government Areas; a larger percentage of this revenue goes to governance like fat allowances, large entourages and aids, estacode, N9bn as legislators’ annual ward-robe allowance, N500m security vote monthly to state governors, pension for life for governors/deputy governors after serving four or eight years among others. Our National assembly is the highest earners in-terms of emoluments in the world, so there is urgent need to reduce all these spending by half across all the governing classes and structures. The sales of about 4-5 presidential fleets will also give us the funds we need to diversify and fund the budget, Government can also concession other non-functional assets like Surulere National Stadium, amongst others .
The immediate need to diversify Nigeria’s economy from consuming nation to producing one through agriculture and solid mineral is compulsory. Economic restructuring is also needed as it will encourage fiscal federalism in ways that allow states to have greater control of their resources. The government just need to put in place an evolution of a master plan and macroeconomic policies to stabilise the economy and boost investment that encourage import substitution and mass export oriented industrialization that answers the economic questions and realities of today and set us on adaptive and sustainable part for tomorrow.
While still reiterate our support for the present government towards the anti-corruption drive in blocking all leakages, FG should further strengthen the revenue drive through taxes and duties, invest more on infrastructural and human development, use funds from the Treasury Single Account (TSA) to strengthen the banking sector to be empowered to lend the private sector loans at single digit rates, we also call on the federal, State and Local governments to start without delay, the implementation of the newly adopted United Nation’s Sustainable Development Goals (SDGs) which are the global agenda for the next 15 years, and they are the goals that will move us to a more Just, peaceful and a sustainable path.