• Thursday, March 28, 2024
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BusinessDay

With elections over, here comes the hard part

Buhari blames insecurity on failure of local intelligence gathering

Nigeria’s President Muhammadu Buhari secured a second term in office last Wednesday, defeating his main challenger, Atiku Abubakar, by a margin many had predicted to be slim but turned out quite significant.
Beyond the rejection of the election results by Atiku, which is unlikely to change much, Buhari gets a second chance to fix an economy caught in the middle of weak growth and rising unemployment. He also gets a chance to leave a lasting legacy.  
In his first four-year term, Buhari had a go at decades-old problems in Nigeria, from poor infrastructure to a scarcity of jobs and endemic poverty.  
Buhari’s supporters say his intentions are good while critics contend that his statist economic policies are stumbling blocks and are doing the economy, and the same poor he is desperate to protect, more harm than good.
Critics are quick to point out the 76-year-old’s perceived disdain for private capital and are worried his good intentions may lead nowhere, unless there is a change of economic ideology where private capital is allowed to unlock wealth and create jobs, thereby reducing poverty.
Buhari is convinced that his socialist programmes are enough, but the critics say the government’s limited resources lack the capacity to make a dent.
Now faced with a second four-year term, he could either sink deeper into his errors or borrow a leaf from Ethiopia’s 42-year-old prime minster, Abiy Ahmed.   
In a recent interview with the Financial Times, Ahmed said his model to awaken Ethiopia, described by investors as Africa’s sleeping giant, was capitalism.
Ahmed will achieve this by bringing down age-long barriers to private capital.
Ethiopia aims to complete a multibillion-dollar privatisation of its telecoms sector by the end of this year, followed by a sell-off of stakes in state energy, shipping and sugar companies.
Buhari’s track record implies a lack of belief in privatisation.
Since inception, the Bureau for Public Enterprises, the agency that handles the sale of state assets, has privatised some 142 enterprises, but not much privatisation has happened since 2015 when Buhari came to power, a period that coincides with acute revenue shortfalls.
In two years, 2016 and 2017, the FG only managed to raise N5 billion (USD$16 million) in privatisation proceeds, according to the Central Bank of Nigeria, 14 times less than it raised from the single sale of Eleme Petrochemicals as far back as 2006.
Sources say Buhari’s lack of trust in private investors is responsible for his reluctance to embark on any meaningful privatisation. Also, some Nigerians hold the view that past privatisation efforts have been dogged by corruption.  
For Ahmed, he would proceed cautiously on privatisation in order to avoid any hint of corruption.
“We do telecom, we learn something, we evaluate seriously, we continue,” he said.
Ahmed’s policies mark a break with the previous administration, which emphasised controlling the economy’s “commanding heights” and reinvesting profits in infrastructure, health and education.
Opportunities abound in Nigeria to raise equity capital, whether it’s relocating idle government assets like the Federal Secretariat in Ikoyi or Dodan Barracks, both in Lagos, from the prime locations they are situated before leasing the land out to private investors to generate substantial rental income like Hong-Kong does, or selling some stake in state-owned Nigerian National Petroleum Corporation (NNPC) like Saudi Arabia plans to do by selling 5 percent of Saudi Aramco.
Other public assets that can be privatised include the Nigerian Postal Service (NIPOST), Nigerian Commodities Exchange, the national stadium, and the Nigerian Security and Minting Company.
This move will not only yield revenue for government and lighten its debt burden, but will also ensure that some of the public assets which are under-utilised are fully utilised, analysts say.
Experts cite examples of countries, especially Hong Kong and China, where a significant portion of government budget comes from rents on public assets. They advise that a special purpose vehicle (SPV) should be created to handle the relocation of public assets on prime land on which luxury apartment blocks could be developed and given out for rents.
These are hardly new counsels, but they fell on deaf ears during Buhari’s first term.
Many will hope he has a change of heart and learn from the most-talked-about African president today, Ahmed.
In the face of intense competition for private capital, Nigeria risks another four years lost if nothing happens to change Buhari’s belief on privatisation.

LOLADE AKINMURELE