Nigeria Must Sell Stakes In State-Owned Assets - Saraki

Recession-hit Nigeria has no choice but to sell shares in state-owned assets, including joint ventures with oil groups, to raise capital and avoid a prolonged fiscal crisis, one of the country’s most senior politicians has said.

“We are in an economic emergency and our options are limited,” Bukola Saraki, Senate president and Nigeria’s third-most senior politician, said in an interview on Monday. Funds were badly needed to implement the $30.6bn budget for 2016, Nigeria’s largest ever, and for planned heavy spending on infrastructure projects aimed at reviving the economy.

But none of the external borrowing options the government has been pursuing all year — loan talks with the World Bank and African Development Bank and possibly tapping the Eurobond, Chinese, or Japanese bond markets — had “come through”, he said. Asset sales could help avoid a worst-case scenario of entering an International Monetary Fund programme, he added.

“The singular strategy we are using of borrowing obviously is not working,” he said, adding that the authorities needed to “look for alternative ways” to plug a deficit of more than $11bn.

Low oil prices have exposed the fragility of an economy that gains 90 per cent of its export earnings from crude. A resurgence of militancy in the Niger Delta, the country’s main oil-producing region, has made matters worse and the country officially entered recession last month after two quarters of negative growth. Inflation is above 17 per cent and the value of the naira has plummeted.

Meanwhile, portfolio investment declined 84 per cent in the second quarter of the year compared with the same period in 2015, according to the national statistics office. Foreign direct investment fell to $184m in the second quarter, compared with $211m in the second quarter of 2015.

President Muhammadu Buhari was elected on a wave of optimism last year but his administration now faces criticism for worsening the crisis with a slow and inadequate policy response.

Foreign reserves this month dropped to below $25bn, less than five months’ import cover, from above $40bn before the oil price crash, and Mr Saraki said the real figure was closer to $20bn.

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