Nigeria has an intricate fabric of economic challenges, accentuating the failures of numerous state-owned enterprises (SOEs) and the need for effective solutions to these challenges is ever more glaring by the day. The Federal Government’s ambitious proposal to sell its majority stakes in at least 20 state-run companies stands as a beacon of hope, with the potential to catalyse economic growth, attract key foreign investment, enhance governance and bolster national security. Here, I intend to project that the Federal Government also extends the sale or divestment to some real estate assets littering all over the country and judiciously utilise funds generated for the transformative impact on Nigeria’s economic trajectory.
It comes as no surprise that the country’s economic journey has been plagued by slow growth and turbulence. The intricate interplay of governance complexities, global economic shifts and internal challenges has often led to inefficiencies and mismanagement within state-owned enterprises (SOEs). The ripple effects of these challenges have resonated across economic sectors, hindering growth and development. The proposed divestment of government stake in these select assets as announced by the chief executive officer at the Ministry of Finance Incorporated, Armstrong Takang, is a strategic endeavour to reshape the economic landscape, ensure national security, and propel the country towards sustainable development.
The annals of Nigeria’s economic history are replete with poignant examples of SOE failures. Nigeria Airways, once a symbol of national pride, crumbled under the weight of financial mismanagement, corruption, and operational inefficiencies. The Nigerian National Shipping Line (NNSL) faced an inglorious fate, characterised by mismanagement, financial constraints, and obsolete infrastructure. The National Electric Power Authority (NEPA) grappled with corruption, inefficiency and inadequate power supply, ultimately necessitating restructuring. The long moribund petroleum refineries and the saga of the Ajaokuta Steel Company epitomises a journey fraught with mismanagement, funding deficiencies and technical hurdles. The case was no different with NITEL, which could not innovate fast enough to keep up with the times from its origin as the best on the continent. These instances underscore the urgency of reforming the management and operations of SOEs.
The repercussions of poorly run public companies extend far beyond financial losses. These entities often become breeding grounds for corruption, nepotism, and inefficiency. Mismanagement of public funds and lack of accountability not only erode public trust but also divert resources away from critical sectors, such as healthcare, education and infrastructure. The inefficient use of resources translates into substandard services and products, hindering societal progress and impeding economic growth.
The government’s proposal to divest some of its ownership stakes in these assets is a transformative step towards economic revival. Among these entities, the Nigerian National Petroleum Corporation Limited (NNPCL) assumes prominence. I am still shocked that the current management of the corporation remains in office despite their proven inefficiencies.
In moving for the divestment, I think the Federal Government’s vision should extend beyond financial gains but encompass improved governance and efficiency within these enterprises. Strategies such as strategic sales and initial public offerings will attract private sector participation, thereby infusing fresh perspectives, innovation, and dynamism.
The confluence of effective privatisation and a government committed to the rule of law and respect for the judicial process can have a cascading impact on national security and stability. As the business environment becomes more conducive and predictable, foreign investors gain confidence in the stability of legal and regulatory frameworks. This augments overall security, instilling faith in the sanctity of contracts, property rights, and dispute resolution mechanisms. The intersection of privatisation with a robust judicial system fortifies the country’s investment climate, fostering a sense of security and trust among both domestic and foreign investors.
The privatisation of state-run entities can provide a formidable impetus to power generation and infrastructure development. The country continues to struggle with power generation and distribution. Adequate power supply is pivotal for economic growth, industrialisation, and job creation. By introducing private sector efficiencies, technological advancements and capital infusion into power generation and distribution projects, Nigeria can surmount its energy challenges and spur economic activities. The monies earned from the divestments can be strategically channeled into bolstering infrastructure, resulting in improved connectivity, transportation, and overall economic resilience. The rest of the funds can be reinvested into other strategic stakes with private sector partners in profitable ventures to keep reaping returns to government’s coffers.
Some of the revenues can also be directed towards sectors, such as healthcare and education, bolstering human capital development. Improved healthcare services and educational opportunities uplift the standard of living, equipping citizens with the skills needed to participate in a modern economy. The resultant inclusive growth reduces inequality and ensures that economic progress resonates across all strata of society.
Amidst the panorama of state-run entities, the Nigerian Liquefied Natural Gas (NLNG) stands as a beacon of success in the realm of public/private sector business partnership.
The NLNG, a joint venture between the Nigerian National Petroleum Corporation (NNPC), multinational oil companies, and foreign investors, has harnessed Nigeria’s vast natural gas resources to drive economic growth. Operating a liquefied natural gas plant on Bonny Island, NLNG has not only bolstered the country’s revenue but also served as a testament to the potential of strategic partnerships between the public and private sector in critical sectors. Its success underscores the transformative impact of PPP when harnessed to tap into Nigeria’s abundant resources and unlock their potential for economic prosperity.
I personally do not believe that the government and its employees have the capacity to effectively run or manage any revenue generating enterprise effectively. We have been down this road multiple times and have ended up with the same tales of woe, pain and grave losses. This is why President Tinubu must sell everything that is state-owned and let the Federal Government have minority interests in these assets.
My proposal is to sell down at least 80 percent stake in all our state-owned assets and hold only 20 percent. We will raise billions of dollars instantly from these sales and subsequently rake in millions of dollars annually as profits from our remaining positions.
Nigeria is a very endowed and beautiful country, a natural investment destination for investors. But for self-inflicted wounds and woes, we have remained unattractive because of poor choices by previous Presidents and state governors. We have all the resources (human and natural) we need and the market. We can begin to correct these now and in a decade or two, become the global powerhouse that we ought to be.
A government committed to effective private sector participation, respect for the rule of law, security, power generation, and welfare can act as a magnet for foreign investments. The confluence of these factors enhances Nigeria’s investment climate, positioning the country as a lucrative destination for capital inflows. Foreign investors are more likely to commit resources when they witness a favourable business environment, robust legal protections and a focus on security and welfare. The privatisation narrative, intertwined with a holistic approach to economic governance, amplifies Nigeria’s global attractiveness as a competitive investment hub.
As Nigeria embarks on the journey of reducing its equity and control in public assets and reshaping its economic landscape, my hope is that it serves as a beacon, illuminating the path towards a vibrant, diversified, secure, and globally competitive nation.
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