• Backs asset sale through IPOs as Senate rejects proposal
Former President Olusegun Obasanjo on Tuesday made a number of recommendations to the federal government as the surest way of getting out of the current economic downturn, saying that the government needs to spend less, earn more, and borrow its way out of the recession.
Obasanjo spoke in Abeokuta, the Ogun
State capital, yesterday at the National Council on Finance and Economic
Development (NACOFED) conference with the theme: “Enhancing Revenue
Generation and Obtaining Best Value for Money in Expenditure”.
The former president said: “We are
spending more than what we earn, so we must borrow as quickly as
possible. Let us meet with those who can lend us under reasonable
interests rates.”
He said that what the country was
witnessing was not unexpected, adding: “I foresaw it two years go. So
let us find out the things we can do without, we should instill
discipline to cut spending. Also, when we have inflation, it affects
everything including local production.”
He observed that the major problem with
Nigeria stemmed from the fact that the country spends more than it earns
and had not been able to save for the “rainy day”.
He, however, pointed out that funds could be sourced from outside the country and advised Nigeria to approach its allies that could lend to the country under reasonable terms.
He, however, pointed out that funds could be sourced from outside the country and advised Nigeria to approach its allies that could lend to the country under reasonable terms.
He warned, however, that no nation would
part with its funds without observing that the federal government was
taking practical steps to institute critical reforms, saying that
Nigeria must encourage production to earn more and broaden its revenue
base.
He said since the nation was not in control of oil prices, it needed to diversify the economy and concentrate on the things it could control.
He said since the nation was not in control of oil prices, it needed to diversify the economy and concentrate on the things it could control.
Obasanjo, who also spoke on the need to
develop agriculture, frowned at policies which had turned the nation
into a dumping ground for other countries’ products.
The former president, however, endorsed
the proposal on the sale of Nigeria’s strategic national assets in order
to get out of the current economic hardship.
According to him, the Nigerian National
Petroleum Corporation (NNPC) was run as a personal fiefdom and even the
Central Bank of Nigeria (CBN) was run in the same manner, saying: “They
(government officials) write notes to the central bank to release funds
anytime they need it. But we cannot run the country this way.
“We started NNPC about the same time
Norway started Statoil and look at where we are. I said it this morning,
two institutions that were not tampered with badly or not tampered with
at all in the last six years, is the Nigerian Liquefied Natural Gas
(NLNG) company.
“The second one are the pension funds
which is going to hit N6 trillion and has captured only 7 million people
out of over 20 million wage earners, if we can even double that, you
imagine what that can be.”
Continuing, he added: “I see no reason
why 49% of NNPC cannot be privatised; don’t give it out to cabals,
friends, relations or kith and kin, let it go public so that even my
driver can buy 10% of NNPC and if there is a limit to the shares any
individual or any corporate organisation can buy, there is nothing wrong
with that.
“If this happens, NNPC will then be run
like NLNG. NLNG is doing wonderfully well and NNPC was doing very well
until we started running it not the way it should be run and if it was
run properly in the past, who says it cannot be run that same way in
future, so we must prevent recurrence.
“Many people think selling is a bad
thing. But I disagree, as you will be restructuring the sector, that is
all it is, you’re reorganising the sector.
“You talk of assets that are not doing well, no, if you have to earn money to get yourself out of the situation you are in, you can even sell good assets. So the only thing to sort out is how to go about selling them?
“You talk of assets that are not doing well, no, if you have to earn money to get yourself out of the situation you are in, you can even sell good assets. So the only thing to sort out is how to go about selling them?
“What worries many Nigerians is their
focus on what happened in the past. I wouldn’t be particular, but there
are concerns that we sold things before and after that we got ‘K’ leg
(local parlance for complications).
“But this one should not have ‘K’ leg
because it will be on the stock exchange, you will buy and they will
assess how much should be sold.
“May be they want to privatise the
ports, I don’t know, but these are things we can look at and get people.
The only fear the people would entertain is the ‘mago mago’ (local
parlance for fraud), but if there is no mago mago and it is transparent,
then there are some advantages to this.”
Obasanjo, however, cautioned that when
funds are raised from the asset sales, the manner they are spent and
managed by government is just as important.
Senate Rejects Asset Sale
But as Obasanjo threw his weight behind
proponents of the sale of the country’s national assets, the Senate
yesterday unanimously rejected the proposal and called on President
Muhammadu Buhari to, as a matter of urgency, send an Economic Stimulus
Bill to the National Assembly.
The bill, according to the senators,
should contain provisions such as a fiscal stimulus package, investment
plans and incentives designed to pull the country out of the current
recession.
The resolution was the fallout of the
adoption of the report of a six-man ad hoc committee set up last week by
the Senate to collate all suggestions made by senators during a two-day
debate on the state of the economy and mandated to come up with
recommendations to be sent to the presidency on the way out of the
recession.
In rejecting the calls for the sale of assets, the Senate warned against disposing of of the nation’s collective heritage.
“Being a sensitive issue, it should be
approached from a commitment to protecting the common patrimony of
Nigerians by preventing the assets from falling into the hands of
sharks, assets strippers and canibalisers while also guarding against
the fuelling of further inequities in the society and polity,” it said.
The Senate also resolved to summon the
Financial Reporting Council of Nigeria (FRCN) to appear before it and
brief it on the true state of the economy.
Other resolutions made by the Senate
included a constant meeting of fiscal and monetary authorities for
harmonisation of all policies by the executive, particularly the
consideration of lower interest rates for genuine investors as well as
medium and small-scale farmers and agribusiness processors.
It also advised the federal government
to engage in meaningful and inclusive dialogue with aggrieved Niger
Delta militants with a view to averting the escalation of the unrest in
the region and simultaneously ensure the protection of Nigeria’s oil and
gas assets to facilitate increase in oil production and boost revenue
therefrom.
The Senate also advised the president to
urgently appoint a Senior Special Assistant with the mandate to lead a
team to coordinate government’s engagement with all stakeholders in the
Niger Delta, emphasising that the team should include senators from the
zone.
It also tasked the president to immediately reconstitute the board of the Central Bank of Nigeria (CBN) and other critical agencies so that their operations comply with the enabling laws.
It also tasked the president to immediately reconstitute the board of the Central Bank of Nigeria (CBN) and other critical agencies so that their operations comply with the enabling laws.
To ensure that Nigeria saves for “the
rainy day”, the Senate also resolved to amend Section 162 of the
constitution to pave the way for robust savings by the federation as
against the current trend which allows all revenue to be shared among
the three tiers of government.
The senators also want the section
amended to empower the president to first of all save a prescribed
amount of money before sharing the rest with the states, saying the
present clause in the constitution does not encourage savings.
The Senate also resolved that its
suggestions on the way out of the recession should be personally
delivered to the president by Senate President Bukola Saraki.
In his remarks after passing the resolutions, Saraki lauded the decisions, describing the Senate’s action as democracy in action.
In his remarks after passing the resolutions, Saraki lauded the decisions, describing the Senate’s action as democracy in action.
Having adopted the suggestions, the
upper legislative chamber yesterday adjourned plenary to Thursday
because Saraki and his deputy, Ike Ekweremadu, are billed to appear in
court where they are standing trial for alleged forgery of the Senate
Standing Orders.
The adjournment became imperative because only Saraki and Ekweremadu can preside over the Senate.
The adjournment became imperative because only Saraki and Ekweremadu can preside over the Senate.
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