The governor of Central Bank of Nigeria, Godwin Emefiele, has disclosed that the country will soon commence the sale of about 15 per cent of its oil assets held by the Nigerian National Petroleum Corporation (NNPC), which is expected to yield an inflow of $10 billion to the country. This is part of efforts to reflate the nation’s receding economy. This is coming as the federal government has demanded $635 million from two multinational oil companies, Agip and Total, for undeclared crude oil shipped out of the country between 2011 and 2014.
Two cases have been filed at the Federal High court in Lagos by senior lawyer and Senior Advocate of Nigeria (SAN), Professor Fabian Ajogwu, who had handled several cases for the federal government on aviation, defence, energy, and financial services. Emefiele, while speaking at an interactive session with top media executives in Lagos, said the expected income would have been up to $15 billion if the assets were sold earlier in the year. He also disclosed that a team of consultants had been commissioned to carry out a study on the proposed sale.
Recall that business mogul, Aliko Dangote, had, at the weekend, urged the federal government to sell some national assets, saying it was a better option for the country rather than borrowing money from the World Bank or IMF. According to him, what the nation needs now is to beef up its reserves. He particularly advised the government to outright sell the Nigeria Liquefied Natural Gas Ltd. “My own suggestion before was that they should even sell 100 per cent of NLNG. I don’t think government should be in any business of investing in sectors of LNG. A company like that, with earnings of $1.5 billion on the average, they should get anywhere between $12 billion and $15 billion,” Dangote said.
The nation’s forex market has been hit with scarcity as the nation continues to face dwindling income from sale of crude oil, the mainstay of its economy. However, the apex bank has over the past few months been managing the issue. The CBN eventually lifted its peg on the naira after about 18 months when it decided to adopt a floating policy of the currency on June 20, 2016. It had pegged the naira at N197 to $1, which put a strain on the country’s foreign exchange reserves.
Emefiele, at the session, also disclosed that the apex bank had made several adjustments in order to deepen the supply of forex in the country, which are yielding positive results. According to him, the nation’s forex market recorded an inflow of $1billion in the last two months since the liberalization of forex was carried out.
He pointed out that the only way to improve the supply of forex is to liberalise the currency and encourage portfolio investors, adding that the country recorded additional inflow of $20billion monthly into the forex market from diaspora remittances.
Also, in order to empower Nigerians as part of efforts to ease the effect of the economic hardship, the CBN governor said one million women across the nation will soon benefit from a subsidised loan under the Micro, Small and Medium Enterprises (MSMES). He added that the apex bank will continue to make such interventions in the economy as it is in discussion with relevant government officials to realise the policy. He further revealed that the MSMEs fund had grown to N220 billion.
According to him, as an alternative to the importation of rice into the country, the rice farming programme in Kebbi, which was yielding 1.5 metric tonnes per hectare, had risen to 5.5 metric tonnes per hectare within four months, owing to the apex bank’s intervention. He said, “Actions on the economy are deep enough. What to do when you are in a recession is to spend your way out of it. For the first time in my life, I saw the first toothpick produced in Nigeria last week in Sango Otta, Ogun State. We must embrace structural reforms.”
Emefiele further disclosed that long procurement process had been a hindrance to the government’s efforts to jumpstart the economy through its spending stimulus policy, and said the Emergency Bill sought by the president was now ready for the National Assembly. According to him, the government needs to remove the long process of procurement so that it can go directly and spend money. The governor noted that the federal government will stimulate the economy by spending another N370 billion-N400 billion this week to boost the economy in addition to the N420 billion that had been spent. “About N370billion will be injected into the economy from this week. We have reached the bend and I can assure you that, going forward, you will see spending that will stimulate the economy,” he stated. Speaking on impact of spending on inflation, he said by December 2015, the inflation rate in the country was 9 per cent but that by March 2016, it had risen to 17 per cent, adding that government needed to weigh the balance between growth and inflation. He remarked that the president had been meeting with private sector leaders, an indication that government was ready to fraternise with the private sector. “We are in the valley; the only direction is to go up the hill. I am optimistic that by the actions that are being taken, by the fourth quarter of this year, we’ll see result that we are moving out of recession. The worst is over,” Emefiele assured.
Meanwhile, hearing in the case between the federal government and the oil companies will begin next week before Justice Olatoregun Isola. There are indications that Ajogwu will also be filing claims against other multinationals such as Chevron and Exxon-Mobil