Nigeria: Economist canvasses for more privatization to open economy

A leading Economist and the Chief Executive Officer of Economic Associates, Dr. Ayo Teriba, has canvassed for Nigeria to open its economy, contending privatization stimulates foreign direct in-flow.

“Privatisation is the tool which most countries use to check their liquidity issue and beef up the economy and Nigeria can also do the same by privatising some of her key sectors”, Teriba stated, adding that a macro-economic approach to privatisation is ideal.

Speaking when he presented a paper titled:  Macro-economic Role of privatisation on the Nigerian Economy at a  one-day orientation programme for members of the Stakeholders Engagement Committee (SEC) of the National Council on Privatisation (NCP) held in Abuja on Thursday, May 31, 2018, Teriba explained that illiquidity is the country’s main challenge.

“To solve Nigeria’s liquidity problem, she needs foreign exchange inflow. Nigeria’s annual export revenue has been halved. Nigeria’s problem is that other problems are symptoms of the (liquidity) problem. Recession is reflecting liquidity shortage”, he said.

He pointed out that privatisation is now the trend the world over; and cited Saudi Arabia and India which plan to privatise some of their critical sectors to raise funds to develop their countries. Teriba said that Saudi Arabia for instance, plans to raise about $200 billion through the privatisation of 16 sectors ranging from healthcare, airports to education.

The renowned economist noted that the federal government   ownership of vast amounts of idle but valuable land and buildings means vast asset-conversion headroom.

“There is huge headroom for unlocking liquidity from state-owned assets to meet shortfalls. Nigeria’s massive non-financial assets are convertible into financial buffers. Saudi is exploiting this avenue to shore up its financial buffers with US$200 billion headroom. Nigeria can do much more than that, as we have much more non-financial buffers than Saudi”, he said.

He gave the options for Nigeria unlocking resources in a post-boom economy to include the 238 aging and uneconomic prisons; and the aging and uneconomic barracks across the country which could be leased to individuals to develop for economic value, citing India which has taken advantage of such venture.

Teriba said the Nigerian economy has gone from boom to bust, thus, dealing with shortfalls in reserves and prices of oil which Nigeria needs to work out a methodology to deal with the shortfalls.

He maintained that privatisation places a huge role to deal with the shortfalls and noted that the shortfalls are not temporary but permanent and that “it is better to deal with equity which is a permanent solution”, urging Nigeria to look at equity instead of going to other parties to borrow money.

“Nigeria has a huge head room to go for equity and should think of getting her own money and not relying on others” he stated. He gave an example of how private investors are earning handsomely in the Nigeria Liquidified Natural Gas (NLNG) and paying the country well.

The Economist called for the privatisation of the Transmission Company of Nigeria (TCN) as privatisation is the answer for the country’s economic development, stressing that the budget and expenditure of the Federal Government were shrinking and that “you don’t get saved by cyclical swings but buffers”.

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