LESS than 15 months to the end of his two-term tenure, the scorecard of the President, Major-General Muhammadu Buhari (retd.), in key areas of the economy, particularly privatisation, is piteous. Glaringly, the Buhari regime has snubbed the ground-breaking precedents of his predecessors on economic reform. The comprehensive undertaking of the Bureau of Public Enterprises under the Olusegun Obasanjo administration between 1999 and 2007 launched Nigeria on the path of the modern trajectory of private sector-led economy. Buhari has abandoned this progressive economic cause.
The open befuddlement about privatisation of public enterprises under the Buhari regime returned to the fore during the recent re-inauguration of the National Council on Privatisation board. With élan, Vice-President Yemi Osinbajo declared that the privatisation programme had boosted the economy by grossing N1 trillion since its inception. The celebratory mood is misplaced.
First, N1 trillion is a meagre sum. From the power assets privatisation undertaken by the inept Goodluck Jonathan administration in 2013 alone, Nigeria realised N528 billion, more than half of the N1 trillion. A former chairman of the NCP’s Technical Committee, Atedo Peterside, projected that if the 10 generating plants of the National Integrated Power Project were sold as planned, Nigeria would receive N1.3 trillion from the auction. But Buhari failed to consolidate on this after he succeeded Jonathan in May 2015. That is a retrogressive economic choice.
With all the low-hanging fruits available to Nigeria to boost its economy, the regime has notoriously failed to seize the moment. The depressed economy is the worse for wear for this. Between 1975 and 1995, Nigeria invested $100 billion in state-owned enterprises, says the BPE. Additionally, government spends $3 billion annually on the loss-making SOEs in grants, subsidies, import duty waivers and tax exemptions.
This is plainly bad economics. The Buhari regime needs to shift gear to free the economy from the restraining leash of state capitalism in many primary sectors. Nothing concrete has been done on the refineries despite face-saving promises. Already, the Nigerian National Petroleum Company has given the government a bill of N3 trillion to cover petrol subsidies for the months ahead. In 2011, the government incurred a dubious bill of N2.53 trillion on petrol subsidies. Apart from eliminating debt and petroleum products importation, all the public funds being wasted in this direction can be reserved for critical social projects. Most significantly, Nigeria’s treasury will continue to haemorrhage by importing petroleum products until the four refineries are privatised.
Other areas of concern are the railways, seaports, airports, and the steel sector. Operations at the Lagos ports are mainly manual, and cumbersome, recording losses of $55 million daily, says Dutch consultants, Dynamar. There is no reason not to privatise them. This is the modern tradition. Since 2010, Australia has privatised key seaports, including the Port of Darwin, auctioned to China’s Landbridge Group in 2015 for $506 million. Since 2006, the Dubai Ports World had bought over facilities in six United States ports: New York, Miami, Newark-Port Elizabeth, Philadelphia, New Orleans, and Baltimore.
While refusing to liberalise and privatise, the Buhari regime is shopping for a $36 billion loan to link Nigeria by rail. This reflects its utter confusion. The figure is about the size of the annual federal budget. Retention of SOEs is a massive constraint on the ability of the government to deliver much-needed infrastructure. On the contrary, it is not too difficult for global investors to fund the railway sector if it were to be liberalised. It is time for Buhari to side with progress.
Under Buhari, the major airports are shamefully decrepit, being run aground by government managers. A 2017 rating by the ‘Sleep in Airport’ website listed the Port Harcourt International Airport, and the Murtala Mohammed International Airport, Ikeja, among the top 20 worst airports in the world. Nothing much has improved, despite a $500 million Chinese loan taken under Jonathan to upgrade four airports. In contrast, research by the Brussels-based Airport International Council Europe indicated a dramatic rise in the private ownership of airports in Europe. Entitled ‘The Ownership of Europe’s Airports 2016,’ the results revealed that 41 percent of European airports, or 205 surveyed airports, had private shareholders, up from only 22 percent in 2010. “Close to 39 percent of these airports (79 airports) have full private ownership, while 61 percent (126 airports) are ‘public-private partnerships’ involving a combination of private and public shareholders,” the report said. It is the tested route to economic success.
Blessed with natural resources, Nigeria’s bumbling with SOEs has rendered the Ajaokuta Steel Company a devastating disaster. Since 1979 when it was initiated, it has not delivered expected outcomes. Government keeps going round in circles while neglecting the wise choice of privatisation.
The BPE lists “ongoing privatisation” to include the Tafawa Balewa Square, the FCT Water Board, Lagos International Trade Fair Complex, NIPOST and Bank of Agriculture. Although the list also has the Transmission Company of Nigeria, the major ones like the railways and the refineries remain in government hands. This is not going to work.
As this newspaper has advocated, Nigeria should put its best foot forward with swift privatisation; nothing else. It changed the game in the telecoms sector, which the state-owned NITEL dominated with no tangible progress until the Obasanjo administration liberalised it 2001. By 2004, NITEL recorded only 720,000 subscribers, said BPE. In December 2021, the Nigerian Communications Commission listed 195 million mobile lines. This is the difference an open economy gives a country. Between 2001 and 2021, the telecoms sector attracted over $70 billion investments, the NCC added.
The erroneous agitation by labour and some stakeholders that SOEs belong to a fictional “national patrimony” to be protected at all costs through continued ruinous state ownership is wrong and retrogressive. It should be defeated by selling them transparently to global players with the reputation and financial muscle to operate them optimally. The savings on SOEs will then go a long way in savings, attracting investments and creating jobs.
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