Nigerian Government to generate $16.4bn through sale of assets

The Federal Government plans to generate up to $16.4 billion through asset sales in the next four years to reduce the burden on the nation’s budget.

A document obtained by Bloomberg from the Ministry of National Planning, which outlines the country’s plans for economic recovery from 2017 to 2020, revealed that the sales was to help tackle inefficiencies and stem “corruption in public enterprises”, though assets to be sold were, however, not named.

It was gathered that President Muhammadu Buhari will introduce the proposal later this month.

Nigeria estimates its economy contracted 1.5 percent in 2016, partly because of a decline in the price and output of oil, the country’s biggest export and revenue generator.

The Federal Government proposed a 20 percent increase in this year’s budget to stimulate the economy and help gross domestic product expand by an average of 4.7 percent annually over four years and reach 7 percent in 2020.

Pabina Yinkere, Head of Research at Vetiva Capital Management Ltd., told Bloomberg: “They could look at reducing government stakes in oil joint ventures from around 55 percent to 40 percent or 45 percent.

‘’That alone can generate over $10 billion.   Non-oil assets like concession of airports are a more difficult sale because they would involve a lot of transactions.”

The government targets oil production of 2.5 million barrels a day by 2020 to boost export earnings, it said in the document.

Output declined to an almost three-decade low of 1.4 million barrels per day in August after militants in the Niger Delta bombed pipelines to demand more benefits from the resource.

Overall, the Federal Government is said to have developed 59 strategies for implementation to achieve the strategic objectives of the Economic Recovery Growth Plan that will be launched in the next few weeks.

The document, which is awaiting Federal Executive Council’s endorsement, has twelve strategies that have been prioritised based on their importance to the success of the government recovery plan.

Those working on the document said the plan would accelerate non-oil revenue generation through expanding the tax base, blocking leakages in tax avoidance and non-payment.

The plan is expected to drastically cut cost and align monetary and fiscal policies. The government also during the plan period, will spend heavily to expand critical infrastructure, especially power, roads and rail.

Another strategy in the recovery plan is government’s intention to revamp the four existing refineries to ensure local supply of petroleum products in order to conserve foreign exchange.

It is also stated in the document, government’s intention to expand its social investment and deliver on agricultural transformation.