The Lagos Chamber of Commerce and Industry (LCCI) has said that the Nigerian government needs to commercialize public assets that have been underperforming.
This is would accelerate post-COVID-19 economic recovery; increase the country’s revenue generation and foreign exchange (FX) inflows amid a debt of N33.1 trillion.
In a statement signed by Chinyere Almona, director-general, LCCI, the chamber noted that concerns are being raised regarding Nigeria’s fiscal and financial challenges, especially as the government has increasingly resorted to debt, to finance recurrent and capital obligations in the face of dwindling revenue.
She added that the country’s debt service to revenue ratio for the period of January to May 2021 stood at about 98 percent, as against the 83 percent recorded in 2020 according to the budget implementation report; hence Nigeria’s debt situation has also become worrisome.
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Almona said Nigeria is an asset-rich nation however these assets are grossly underutilized and contribute too little to the country’s fiscal and financial situation, because the market values of the assets are unknown hence, they cannot be securitized to raise debt/equities or commercialized to generate revenue.
As a recommendation, she said Nigeria needs to do an official identification of its corporate, physical, intangible, and human capital assets in terms of location, purpose, and usage contained in a national asset register.
“Beyond the revenue gotten from oil proceeds and tax payments, the government should take proactive steps to establish the market values of the country’s assets securitize the corporate assets and commercialize the real estate assets to raise revenue for the government and foreign exchange inflows for the country,” she said.
She added that Nigeria’s corporate assets should be securitized via public share issuance to raise equities, taking a cue from Saudi Arabia, which raised $25.6 billion from its 2019 Saudi Aramco’s IPO, where the oil firm sold a 1.5 percent stake to private investors, thereby establishing the value of Aramco to be over $2 trillion.
“There is a need to replace existing debt stocks with asset-linked debt to ease the debt servicing burden; attract greenfield FDI into publicly-listed state-owned companies; generate new revenue streams from commercialized real estate portfolios,” she added
Speaking on the physical assets, she said idle or under-utilized properties could be repurposed and redeveloped for commercialization to generate revenue while Intangible assets should be liberalized for investors to commit equity funds into these sectors, such as breaking government monopoly in the infrastructure sector.
“The financialization of Nigeria’s human assets will boost net foreign income and remittance inflows into the economy, this can be achieved through massive investment in skill and talent development to increase the pool of the country’s human capital,” she said.
She further advised that a dynamic online digital platform is established where the financialized and commercialized assets can be offered for investment as it will avail private investors of relevant investment opportunities in those assets.
