The Federal Government is ready to offer more of its assets for sale soon, under the ongoing privatisation programme aimed at raising more money to implement the country’s 2018 deficit-based budget. Just recently, the Nigerian Security Printing and Minting Company Limited Plc was offloaded, with the Central Bank of Nigeria (CBN), which already has a majority stake, emerging the preferred buyer, given the company’s security status.
CBN Governor, Godwin Emefiele, who made the disclosure while briefing the Nigerian delegation at the end of the International Monetary Fund/World Bank Group meetings in Bali, Indonesia, yesterday affirmed that more assets are in the offing.
“I am aware, as a member of the National Council on Privatisation, that more are coming and I believe in due course that the Bureau of Public Enterprise (BPE) will make this available for us. I am aware of the situation of Ajaokuta Steel Company of Nigeria. It is also on the cart, first for a total review of the process of privatisation and payment, so that our aluminum sector can eventually come alive,” he said.
Also, the CBN told investors that it would continue to defend the local currency through exchange rate interventions, to maintain price stability and avoid currency depreciation.Assuring stakeholders that the country’s fundamentals support the move, the apex bank noted that it is also a way of protecting financial institutions that would record increased non-performing loans in currency depreciation.
According to Emefiele, despite the increasing capital reversal, Nigeria has lost reserves only by a margin, compared to other countries. But at the same time, it has sustained stability in foreign exchange market.
“I think we have done a very good job, not only in trying to maintain a stable exchange rate but also trying to avoid depreciating our currency so far in these early days of global normalisation. We are going to need to build buffers but unfortunately I must say that we are in a period where it is difficult to talk about building reserves. You can only build reserve buffers if you want to hold on to the reserve, while allowing your currency to go. And wherever it goes is something else.
“It is a choice we have to make. And at this time, the choice for Nigeria is to maintain a stable exchange rate, so that businesses can plan and we don’t create problems in the banking system assets. Naturally, when this happens, it results in weakening of assets, raising of non-performing loans and other wide implications. This is why we will maintain the posture we have and we believe that it is sustainable in the short run,” he said.
But Emefiele’s disclosure on Ajaokuta Steel Company elicited mixed reactions. According to Prof. Ken Ife, a macroeconomic policy analyst, “The decision to privatise it is a wise one because the complex remains one of the white elephant projects we have in Nigeria. We need to look for a competent investor with a large war chest who can inject the needed funds to revatilise it, so that it can play its role in the country, providing the necessary steel derivatives for the rail, auto, manufacturing, building and construction industries across and beyond the country.”
But a development economist and public analyst, Mr. Odilim Enwegbara, disagreed, saying: “This administration cannot embark on the sale of a key strategic asset like Ajaokuta when it has less than a year to the end of its tenure. It should wait until after election. If it wins again, then it can do that. Besides, the executive lacks the power to sell such a critical national asset without the approval of the legislature. Let them look for funds elsewhere to fund the budget. They cannot sell a key national asset like that to fund one fiscal budget. What happened to the recovered loot they got?”
A recent audit report meanwhile revealed that a reactivation of the steel company would cost $652 million.Also in Indonesia, the Minister of Finance, Mrs. Zainab Ahmed, revealed that the Nigerian National Petroleum Corporation (NNPC) would soon get a new reporting template that would ensure more transparent deals with public funds.
The template, she said, would have to be agreed upon. Then NNPC would start reporting in that template with the goal of making NNPC’s reporting simpler and understandable, so that more information would be provided on revenue generated and cost incurred.
The state oil company, which has been embroiled in allegations of financial overstatements, according to the minister, is now in discussion with a committee set up by President Buhari on revenue mobilisation.
“One of the intentions is to ensure that all revenues are reported in a transparent manner, while the committee is working to support the Federal Accounts Allocation Committee. They all have agreed on a new reporting template for NNPC. We hope that in the next few weeks, it will be concluded and the new reporting template will take effect,” she said.
The minister further dismissed the possibility of a debt crisis, insisting that Nigeria has no problem in respect of obligations, because at the ratio of three per cent of Gross Domestic Product, it has one of the lowest debts among the comparative countries.
However, she admitted that the country has a revenue problem and “we need to work to increase our revenue, to ease our debt service obligations. We have to enhance our domestic revenue mobilisation, so that we can ease the debt service burden that we now carry. We have a lot of headroom to borrow, but we are not rushing to borrow more because we have to consider the foreign debt service that we carry.”