Former Governor of Central Bank, Prof. Charles Soludo has called on President Muhammadu Buhari to disregard recommendations that Nigeria sell its assets to raise funds to reflate the economy as a way out of recession.
Soludo on Monday dismissed the proposal as dangerous and troubling, and may amount to chasing pennies and losing pound. It would also be a historic mistake.
Those who have made the recommendation include the National Economic Council (NEC), the Senate President Bukola Saraki, Finance Minister Kemi Adeosun and Africa’s richest man, Aliko Dangote.
Soludo, who dismissed the proposal as largely self-serving, said the scheme would only be a win-win for government and its private sector collaborators, with Nigerians and the economy as the losers.
Although he noted that the recommendations remained mere advice subject to final approval by President Muhammadu Buhari, Mr. Soludo said he considered the proposal as fundamentally flawed and based on a false foundation.
The NEC, at the end if its retreat a fortnight ago, urged government to consider the sale of asset, including the Nigerian LNG, the four state-owned refineries, Nigeria’s equity in Africa Finance Corporation, AFC, and the airports.
The Council equally asked government to consider reducing government’s equity holdings in upstream oil and gas joint venture operations to build reserves to help reflate the economy on the path of recovery.
But, the recommendation has equally attracted criticisms from concerned Nigerians and groups like Nigeria Labour Congress, NLC, which described those behind it as “economic vampires government must beware (of).”
The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, on Sunday also labelled the recommendation as a self-destructive move Nigerians must resist.
Mr. Soludo, who said he had dismissed similar proposals in the past as a joke, said he decided to join issues with the Senate and NEC’s “convenient but flawed” call as a “resort to easy, albeit lazy approach to ‘quick fixes’.
Although the former CBN governor noted that in extreme, exceptional circumstances, sale of certain asset could be a last resort option, he was of the view Nigeria was currently not near the threshold, while the institutional framework for its effective use was also not in place.
“Any sale of asset now amounts to chasing pennies, when, by acts of omission or commission, we are losing pounds,” he said.
“Such a hasty auction of national asset can only benefit a privileged few with cash and access, while jeopardizing Nigeria’s long term economic interests. It will be a historic mistake.”
He faulted the objective of the policy for being identified with attempt to get the economy out of recession, which is a short-term problem.
He also criticized government’s $10-15billion valuation expected from the asset sales, arguing the revenue the country was losing daily in oil production/sales through disruptions in the Niger Delta would far exceed the expected revenue from asset sale.
“If building reserves or budget revenue is the objective (of selling asset), it seems to me we are chasing pennies through asset sale, while losing pounds,” he said.
“How much are we losing each day in oil production/sales through the disruptions in the Niger Delta? What does it cost to fund the security vessels to protect oil companies, vis-à-vis equipping the Navy to do its job, and how many billions of dollars can be saved from that over time?
“How many hundreds of millions or billions of dollars are being lost through inappropriate pricing and auctioning of the telecommunications spectrum assets? How much is being lost by way of portfolio/FDI inflows and export revenue due to the incoherent, inconsistent and distorting export and exchange rate policies?
“Indeed, the amount of capital flight out of Nigeria is estimated to be far in excess of the expected revenue from asset sales,” Mr. Soludo said.
He described as troubling the argument in favour of asset sale as the only way to reflate the economy out of recession, saying the argument “suffers what economists might call policy myopia or time inconsistency problem.”
