Charles Abuede
A recent report by Nigeria’s financial rating agency, Agusto & Co says the federal government of Nigeria will have to spend the entire N13.58 trillion in the fiscal year 2021 budget continuously over the next century on capital expenditure in order to meet the target or bridge the gap. With Nigeria’s declining revenue base placed at N8 trillion and her budget deficits continue to widen beyond N6 trillion as found in the 2021 budget, it becomes obvious that Nigeria’s current fiscal position has left no or little room for investments in infrastructure, which is a vital expenditure for an emerging economy.
The report by Agusto & Co recognizes positively the role that the National Council on Privatization (NCP) through its secretariat, the Bureau of Public Enterprises (BPEs) plays in driving the Federal Government’s programme of privatizing public enterprises, carrying out sector reforms and liberalizing key economic sectors especially the infrastructure sector. It also pointed out some of the bills already passed into the Law in this respect are the Electric Power Sector Reform Act, the Telecommunications or NCC Act, the Pension Reform Act, the Debt Management Office (Cross Debt) Act and the Solid Minerals Act. These reforms have contributed notably to major breakthroughs in the telecommunications, power, oil and gas and financial sectors. Furthermore, the report which focused on Nigeria’s infrastructure development highlighted some historical major models used by the FGN alongside the lessons from those models. These include concessions; outright sale to the private sector; private sector participation and public-private sector partnerships.
According to Agusto, it asserted that FG’s handing off of the country’s certain critically dormant assets will positively yield an impact on the country’s budgetary allocation considering the fact that the current administration has less than 2 years in power while the year 2022 fiscal year will be politically dominated as Nigeria prepares for another round of elections.
Meanwhile, the rating agency also recommended a potential increment in tax collection from private sector firms in the medium term if those critically dormant assets are sold off and run successfully by the private investors. Further highlighting some benefits of relinquishing control to the private sector, it stated that increased employment and service quality, the encouragement of private firms to list on the local bourse will be highly beneficial to the Nigerian financial ecosystem as savers will have more investment outlets to channel their funds and therefore resulting in a deeper financial market.
Problem with Nigeria Revision of first-hand account of the AGSMEIS programme (2)