Selling National Assets To Fund 2018 Budget: Signs Of The End For Nigeria

By Arthur Agwuncha Nwankwo
Nigeria is in serious difficulty now as never before. This assertion may not be politically correct but certainly it is empirically correct. Irrespective of your political leaning, truth is that Nigeria is in dire straits. Since Nigeria’s political independence, many people have doubted the capacity of the leadership to take Nigeria to safe shores.

This pessimism is anchored on the fact that some of our leaders, even from pre-independent times, demonstrated obvious incapacity to offer genuine leadership. This leadership deficit was worsened by the forceful intrusion of the military into political leadership of the country; the worst period being from 1983 when Muhammadu Buhari and his fellow coupists overthrew Shagari’s administration to 1999 when the northern-dominated military cabal ran the country aground in a relay-like manner. Nigeria’s economy was irreparably destroyed, and corruption was entrenched as an article of faith in the governance process.This leadership inertia has continued till date even with the present federal government. In all these years many Nigerians and even non-Nigerians have prophesied that Nigeria would not last the distance as a united country. Their prophecies, which certain vested interests described and dismissed as evil, were based on certain patterns of events in the new country. For instance, in a country as diverse as Nigeria, the requiem is usually sign-posted by ethnic cleansing; the promotion of pariah values at the expense of values that promote integration and collectivity. Such country is doomed when there is deliberate official policy of hatred and alienation of one of the constituent parts of the country; when corruption has become a way of life and collective engagement; when the political leaders remain en-fooled decade after decade- preferring to be impervious to the lessons of history.

All these have given rise to intense agitations for self-determination by various ethnic nationalities in Nigeria. Today you have people agitating for fiscal restructuring of the country; others have even taken the extreme option of agitating for independence. In the midst of all these so many have expressed serious concern about the unity of the country. Along this trajectory of uncertainty, the country’s economy has plummeted to recession; and in an effort to fund the national budget, the present federal government has hit on the expediency of selling off critical national assets.

Every event happening before us today appears to confirm the prediction that Nigeria is on her last lap of descent into disintegration. This is certainly not what the founding fathers on this country wished for her. Of our own volition and free-will we have chosen the road to perdition. The last turn which any nation takes before perdition is economic collapse and hardship on the people. At such time, the love of people for what is good and godly will wax cold. Nigeria is on that dangerous turn now. The decision of the federal government to sell off critical national assets to fund the 2018 budget appears to be the death knell on Nigeria’s coffin. 

I have watched with dismay the argument in certain quarters that the reason for the sale of our critical national assets to finance our budget deficit is to stimulate economic recovery. Curiously, this argument has been endorsed by the National Economic Council comprising the Vice President and the 36 State governors. Despite earlier Ostrich denials by the political leaders, it is no longer a secret that Nigeria’s economy is in recession. Today, Nigerian governments at all levels are no longer able to meet their recurrent expenditure including payment of salaries. Recently, the government came out with the news that Nigeria’s foreign reserve has hit an all-time high of $31.22 billion but did not tell us that the Central Bank has injected a cumulative sum of $3.61 billion between February and April 2017.

The government has also not told us that as at June this year, Nigeria’s total domestic and foreign debt stocks stood at about $15.1 billion and N14.1 trillion respectively. A review of the total foreign debt profile of the Federal and the 36 states governments and the FCT also shows a continuous rise since the coming of the present administration, from $10.718 billion in 2015, to $11.406 billion in 2016 and $15.047 billion in 2017. Out of the current total figure of $15.047 billion, the Federal Government accounts for $11.106 billion, or about 74 per cent, while the 36 states of the federation and the Federal Capital Territory, FCT, Abuja owe about $3.94 billion, or 26 per cent. The Federal and State government shares of the debt stock grew from $7.349 billion and $3.369 billion in 2015, to $7.84 billion and $3.568 billion in 2016, and $3.94 billion and $11.106 billion in 2017 respectively. Domestic borrowing is at an all-time high of N10.61 trillion made of 70.46% Government Bond, 27.36% Treasury Bill and 2.18% Treasury Bond. These high domestic borrowings have significantly reduced lending to the Real Sector, which is the driver of our diversification efforts, the generator of economic activities and creator of real growth.

As bad as things are, further pressure will come to play as a result of government plans to refinance well over 30% of domestic debts due within the next 12 months. A refinancing that will imply a higher interest rate for a foreseeable future and a stagnation of private sector economy growth without which unemployment will remain high. These are the stack realities of our times that calls for a pro-active and effective action plans; actions plans that require knowledge and better understanding of the workings of government budget, its financing and the components parts.

The question that has bothered most well-meaning Nigerians is: what brought us to this point? One answer to this question, which may appear pedestrian is “poor or lack of prudent management of resources on the part of those that manage our resources”. I am not an economist but I do know that even individuals and families have multiple streams of income and profile their spending patterns so that they do not outstrip their income. I know that government classify their income as revenue or capital receipts. These revenue receipts are made up of tax and non-tax receipts. Capital receipts is a combination of government borrowings plus other receipts like privatization and sale of assets. Out of these receipts, the government is able to meet all its expenditures which is made up of recurrent and capital expenditures.

The recurrent expenditures include salaries, pensions and gratuities, interests on government loans, refuse collections etc; while capital expenditures are those government policies that increase productivity and stimulate the growth of the economy, which include roads, power, hospitals, schools, etc. In simple economic terms, where total revenue receipts is not enough to meet total expenditure requirements, we are faced with a deficit budget as is our current situation.

The question we must ask is: why are we not able to meet our expenditure. We can explain this in several ways but in our own circumstances the reason includes the fall in global oil prices, low tax collection, revenue leakages, corruption and many more. In the case of Nigeria, the federal government has demonstrated embarrassing lack of creativity to increase its revenue receipts from various tax and non-tax sources. The proposed 2018 budget of N8.6trillion has about N3.3trillion deficit, according to the details of the 2018-2020 Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP). It is indeed sad that the government sees the selling of its stakes in oil ventures and such other critical national assets like the National Theatre Iganmu as the only means to increase its revenue receipts in order to reduce the deficit for the 2018 budget. For me this amounts to one selling his father’s homestead to get a wife.

I am not surprised that the Buhari administration has taken this defeatist route to financing the 2018 budget. Like I have always maintained, a man cannot get farther than his intellect can carry him. Former President Obama was able to get the US economy out of recession because he is endowed with superior intellect, which made him to understand that selling off America’s critical national assets was not an option. Obama explored the option of injecting stimulus and expanding the revenue base of the government; as well as reforming banks and the real estate sector. Obama focused on the organized private sector to create more jobs and by extension expanding the tax base of the economy. This is not the case in Nigeria. Here we have tried the option of injecting stimulus which we call “bailouts” and today the state governments see bailouts as monthly rituals. These bailouts have only exacerbated corruption in the land. Just as the bailouts have increased corruption in Nigeria, the idea of selling off Nigeria’s critical assets to fund the budget is simply a ploy by the government to appropriate our commonwealth to its cronies and further impoverish majority of Nigerians. History cannot afford me any parallel where nations stimulated their development by selling all its national assets to fund a budget. This amounts to mortgaging the future of Nigerians; and I dare say that this is not the way to go.