....Of The Sale Of National Assets & Surviving Recession

By Chukwunonso Ezeani

At the risk of sounding akin to a broken record, I excuse myself to disclose once again that Nigeria is in recession and plenty work has to be done if our negative ratings must improve in another 180 days. It's however saddening to realize that the Nigeria's central economic team headed by senior jurist and former university teacher, Vice-President 'Yemi Osinbajo has done more talking than it has acted in the last 30 days. By my estimation, Nigeria may slide into deeper crises unless urgent steps are taken to reverse the coming realities of our new economic status.

A damning report from the federal statistics bureau offered an elaborate explanation - In the Second Quarter of 2016, the nation’s Gross Domestic Product (GDP) declined by -2.06% (year-one) in real terms. This was lower by 1.70% points from the growth rate of –0.36% recorded in the preceding quarter, and also lower by 4.41% points from the growth rate of 2.35% recorded in the corresponding quarter of 2015.

Quarter on quarter, real GDP increased by 0.82% During the quarter, nominal GDP was N23,483,954.78 million (in nominal terms) at basic prices. This was 2.73% higher than the Second Quarter 2015 value of N22,859,153.01 million. This growth was lower than the rate recorded in the Second Quarter of 2015 by 2.44% points.

Recently, Forbes billionaire and Africa's richest man, Alhaji Aliko Dangote offered what in his view could serve as solution to Nigeria's economic quagmire. With tact, He suggested that choice assets of the government be disposed to buyers in exchange for cash which could be remitted into our depleated foreign reserves to shore it up. He said “What we need to do now in my own thinking… we have a lot of assets to sell. We can sell part of the joint venture; part of the shares. You know government normally owns 60 percent". Priority assets in this instance may include the country's Liguified Natural Gas with proven reserves of 5.1B cubic feets, the national oil corporation and perhaps, the ports.

While this suggestion may be handy, a new dimension has emerged in argument of how to reverse recession. Several Nigerians believe Alhaji Aliko may have commenced moves to persuade senior state officials to cause him to emerge preferred buyer. If this is true, it may fuel another round of crises in the impoverished Niger Delta region where armed groups hold a handful of key oil facilities after forcing IoC's to either cut supplies or discontinue further production. Already, social media enthusiasts from that region have commenced mobilizing support against the sale of marked assests which they call "Our Own" or "On Our Land".

A section of other Nigerians think the sale of crucial national assets will have far reaching economic consequences on Nigeria. Within circles of security high command, concerns are even higher which suggest that handing over the reins of Nigeria's economy to a few business men may make the country vulnerable to danger and government being held to ransom if loyalty of such business owners shift.

From a backdrop of initial strong denials, it was only a matter of time before the national economic council led by Vice President 'Yemi Osinbajo gave the nod for sales to commence but I think it is an economic blunder which should be quickly reversed. Member of minority ethnic group and national planning minister, Sen. Udoma Udo Udoma, is offering tonnes of expalnation side-by-side federal finance minister, Kemi Adeosun on why this option is appropriate.

Only time will suggest if council acted in good faith and in national interest because grapevine disclose that covert moves have commenced by senior officials of the presidency to garner support of principal officials of upper and lower houses in parliament ahead of open deliberations which though scheduled to hold have not held. This moves may be why CBN governor, Godwin Emefiele said “We actually commissioned some consultants that conducted the study and at the end of that study we were told that if we sold 10% to 15% of our holding in the oil and gas sector, we could realize up to $40b,”

This volte face in favor of key business owners and economy drivers is curious because it emerges from a key arm of the enlarged presidency led by President Buhari's who emphatically stated that “The Vice-President heads our Economic Management Team. You have Finance Minister, Budget and Planning Minister, Minister for Industry, Trade and Investments, Governor at the Central Bank, National Economic Adviser and others. Some still ask for a team. I don’t know how they define the word ‘team.’ We will listen to everybody but we are averse to economic team whose private sector members frequently steer government policy to suit their own narrow interests rather than the over-all national interest.”

Needless to suggest that this may be indication that high-wire politics is currently at play as less inlfuential members of the northern oligarchs have alleged that President Buhari has in recent time been hijacked and caged by a powerful cabal.

With certainty, I dare say that the Federal Government can reverse recession without reducing or disposing its interests in marked assets. I hold this position because all arguments backing the initiative suggest that government is in dire need of cash to stimulate the economy via implementing aspects of the 2016 wherein N1.75T was set aside to be spent on capital projects across Nigeria.

In 2015, the Ethiopia – Djibouti rail lines carried its first freight on the new standard gauge railway between Djibouti and Addis Ababa, arriving at a temporary unloading facility in Merebe Mermersa, 112 km south of Ethiopia's capital, on November 21. The first train was hauled by a diesel locomotive and took 16 hours to travel from the port to Merebe Mermersa. This is expected to reduce to between 10 h and 12 h when operation starts at full capacity with electric trains. The 756 km line replaces the out-of-use metre-gauge railway between Addis Ababa and the coast.

These are infrastructural interventions executed by the China Railway Group and the China Civil Engineering Construction Corporation at a cost of $1.2 billion with the Export-Import Bank of China financing 70 per cent and the Ethiopian government 30 per cent. It will be one of the first electric trains in East Africa. It will reportedly be easier and cheaper to maintain than the former French diesel locomotives, the last of which shut down in 2008, as it will be mechanized, relying on locally-produced hydro-power. This is a Chinese intervention which is however in sharp contrast to the shorter Lagos-Calabar rail line for which all Nigeria negotiated was a $800M cut tied to execution of stiff conditions.

From a straight perspective, Nigeria should reconsider full execution of capital projects. An independent look into our financial position tells glaringly that capacity is limited on the strength of contents of the TSA. How then can recession be reversed?

There's no better time than now to pursue genuine peace in the Niger Delta region. Government must speed up all non-military action towards causing armed groups to accept peace terms. Unless this happens with strong commitment from government and its agents like the NDDC and the environment department, oil and allied earnings will not improve. However, payment of cash to host communities through mediators like local chiefs, youth leaders and kings must be discontinued and cash provided for this purpose must be paid to marked communities via citing and execution of projects.

With this in place, our economic team must start talks with the governments of China, India and Brazil towards persuading them to fund and execute all capital projects captured in the 2016 budget on credit basis in exchange for exclusive access to OML's and OPL's which President Buhari must endorse via exercise of executive privileges. These licenses must mature within the tenure of the current administration. For once, wealthy Nigerians who have cornered crude oil earning should be left under the sun.

Beneficiary countries will be allowed under determined terms to derive crude oil under strict adherence to the PIB which must be endorsed by parliament. Derivation will be monitored by the NNPC and the Nigerian Navy. It will continue till they recoup their investments on our capital projects. the CBN will supervise this aspect. They will be barred from selling to third parties; especially our trading partners - the Department of State Security, Directorate of Military Intelligence and Nigeria Intelligence Agency will monitor this. The implication of this is that they will transport their earnings directly to their home countries for domestic use. Where they insist on selling to new buyers, applicable or negotiable tax rates will apply and the exact proceeds must be ploughed back into projects in host communities via CSR.

If this procedure is considered by the economic council and endorsed by parliament and the presidency, by virement, funds budgeted for capital projects will be emptied into our foreign reserves from the TSA. Our reserves will rise. Recession will be reversed and investors will find confidence in our economy.

In 2011 Fitch reported that over the previous decade the China Export-Import Bank had sealed more deals than the World Bank to sub-Saharan Africa. Watchers often talk of an “Angola model”: low-interest loans, using commodities as collateral. Oil-rich Angola has indeed received more Chinese loans than any other African country: it accounts for a quarter of the $86.9 billion lent to African governments and state-owned enterprises between 2000 and 2014.

We should learn from, adopt and deploy the "Angola Model".

Ezeani, Chukwunonso Elvis, a member of #TeamIfeanyiUbah tweets @NonsoEzeani1.

Resources Materials:
1. http://journal-neo.org/2016/04/13/china-railway-links-ethiopia-to-red-sea/

2. http://budgetoffice.gov.ng/index.php/downloads-budget-office

3. http://uk.businessinsider.com/nigeria-enters-recession-2016-8

4. http://guardian.ng/news/fg-ccecc-sign-11-117-billion-lagos-calabar-rail-contract/

5. https://www.thecable.ng/emefiele-saraki-back-dangote-on-sale-of-nlng-nnpc

6. http://www.nigerianstat.gov.ng/report/434

7. http://uk.businessinsider.com/nigeria-enters-recession-2016-8

8. http://punchng.com/why-i-excluded-private-sector-players-in-economic-team-buhari/

9. http://www.economist.com/news/finance-and-economics/21697856-new-data-suggest-china-lends-less-africa-commonly-assumed-credit

10. http://www.railwaygazette.com/news/news/africa/single-view/view/ethiopia-djibouti-railway-carries-first-freight.html

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