The Chairman, Stanbic IBTC Holdings Plc, Mr. Atedo Peterside, has said the Federal Government must consider the urgent sale of some critical national assets as a way of getting out of the present recession, adding that the nation can earn between $15bn and $20bn from the sale.
Peterside, who is also the Chairman of Cadbury Nigeria Plc and founder of the ANAP Foundation, made these known in a presentation titled: ‘Beyond recession: Towards a resilient economy’.
He said, “We should simultaneously embark upon some asset sales, which improve long-term efficiency and will yield foreign currencies. The Federal Government’s share of the major oil Joint Ventures should be sold down to 40 per cent or no more than 49 per cent.
“This will represent a replica of the highly successful Nigeria LNG model that provides a healthy dividend stream for the government. If it is good for the NLNG, then it should be good for the IOCs too. Asset sales can yield $15bn to $20bn over the course of the next two years if planned carefully;
“We urgently need to deregulate the entire downstream petroleum sector and also privatise the NNPC’s three refineries plus the depots, pipelines and domestic gas.”
Peterside said the Federal Government had made significant attempts to enhance economic recovery but noted that certain critical steps had yet to be taken.
This, he said, was the reasons why the efforts being made by the Economic Management Team had not yielded the desired results.
He said, ‘”The Federal Government of Nigeria is doing some things right, such as the effort to curb overhead expenditure and to be more frugal than past administrations, but then, they are also doing many things wrong. There is a reluctance to completely break from the past and embrace significant economic reforms, even when our present predicament clearly warrants same.
“We are now facing an economic crisis. A crisis is an inflection point. It is that point when multiple outcomes become possible. The year 2017 represents the last full calendar year that this administration has within which it must embrace major economic reforms, if it expects to still attain many of the more palatable economic outcomes.”
According to him, the economy is underperforming because the country has been caught in “a low foreign exchange trap.”
As a result, he said borrowing in foreign currencies without instituting necessary and crucial economic and structural reforms could put the country in greater trouble.
He said, “Our economy is under performing because, amongst other things, it is caught up in a low foreign exchange trap. Borrowing forex without instituting necessary and badly needed economic and structural reforms is akin to suicide.”
“Those who are canvassing for more foreign debts simply because our debt/GDP ratio is low are overlooking the fact that our debt service ratios are already high.
“Our debt service ratios are high because our tax to GDP ratio at six per cent is exceedingly poor; and so, it will require a few years of concerted action to raise it significantly. Relying on debt alone to ease the forex trap is, therefore, a high risk strategy.”