Obasanjo: FG Needs to Spend Less, Earn More, Borrow Way out of Recession

• Backs asset sale through IPOs as Senate rejects proposal

Omololu Ogunmade in Abuja and Sheriff Balogun in Abeokuta
Former President Olusegun Obasanjo on Tuesday made a number of recommendations to the federal government as the surest way of getting out of the current economic downturn, saying that the government needs to spend less, earn more, and borrow its way out of the recession.

Obasanjo spoke in Abeokuta, the Ogun State capital, yesterday at the National Council on Finance and Economic Development (NACOFED) conference with the theme: “Enhancing Revenue Generation and Obtaining Best Value for Money in Expenditure”.

The former president said: “We are spending more than what we earn, so we must borrow as quickly as possible. Let us meet with those who can lend us under reasonable interests rates.”

He said that what the country was witnessing was not unexpected, adding: “I foresaw it two years go. So let us find out the things we can do without, we should instill discipline to cut spending. Also, when we have inflation, it affects everything including local production.”

He observed that the major problem with Nigeria stemmed from the fact that the country spends more than it earns and had not been able to save for the “rainy day”.
He, however, pointed out that funds could be sourced from outside the country and advised Nigeria to approach its allies that could lend to the country under reasonable terms.

He warned, however, that no nation would part with its funds without observing that the federal government was taking practical steps to institute critical reforms, saying that Nigeria must encourage production to earn more and broaden its revenue base.
He said since the nation was not in control of oil prices, it needed to diversify the economy and concentrate on the things it could control.

Obasanjo, who also spoke on the need to develop agriculture, frowned at policies which had turned the nation into a dumping ground for other countries’ products.

The former president, however, endorsed the proposal on the sale of Nigeria’s strategic national assets in order to get out of the current economic hardship.

According to him, the Nigerian National Petroleum Corporation (NNPC) was run as a personal fiefdom and even the Central Bank of Nigeria (CBN) was run in the same manner, saying: “They (government officials) write notes to the central bank to release funds anytime they need it. But we cannot run the country this way.

“We started NNPC about the same time Norway started Statoil and look at where we are. I said it this morning, two institutions that were not tampered with badly or not tampered with at all in the last six years, is the Nigerian Liquefied Natural Gas (NLNG) company.

“The second one are the pension funds which is going to hit N6 trillion and has captured only 7 million people out of over 20 million wage earners, if we can even double that, you imagine what that can be.”

Continuing, he added: “I see no reason why 49% of NNPC cannot be privatised; don’t give it out to cabals, friends, relations or kith and kin, let it go public so that even my driver can buy 10% of NNPC and if there is a limit to the shares any individual or any corporate organisation can buy, there is nothing wrong with that.

“If this happens, NNPC will then be run like NLNG. NLNG is doing wonderfully well and NNPC was doing very well until we started running it not the way it should be run and if it was run properly in the past, who says it cannot be run that same way in future, so we must prevent recurrence.

“Many people think selling is a bad thing. But I disagree, as you will be restructuring the sector, that is all it is, you’re reorganising the sector.
“You talk of assets that are not doing well, no, if you have to earn money to get yourself out of the situation you are in, you can even sell good assets. So the only thing to sort out is how to go about selling them?

“What worries many Nigerians is their focus on what happened in the past. I wouldn’t be particular, but there are concerns that we sold things before and after that we got ‘K’ leg (local parlance for complications).

“But this one should not have ‘K’ leg because it will be on the stock exchange, you will buy and they will assess how much should be sold.

“May be they want to privatise the ports, I don’t know, but these are things we can look at and get people. The only fear the people would entertain is the ‘mago mago’ (local parlance for fraud), but if there is no mago mago and it is transparent, then there are some advantages to this.”

Obasanjo, however, cautioned that when funds are raised from the asset sales, the manner they are spent and managed by government is just as important.

Senate Rejects Asset Sale

But as Obasanjo threw his weight behind proponents of the sale of the country’s national assets, the Senate yesterday unanimously rejected the proposal and called on President Muhammadu Buhari to, as a matter of urgency, send an Economic Stimulus Bill to the National Assembly.

The bill, according to the senators, should contain provisions such as a fiscal stimulus package, investment plans and incentives designed to pull the country out of the current recession.

The resolution was the fallout of the adoption of the report of a six-man ad hoc committee set up last week by the Senate to collate all suggestions made by senators during a two-day debate on the state of the economy and mandated to come up with recommendations to be sent to the presidency on the way out of the recession.

In rejecting the calls for the sale of assets, the Senate warned against disposing of of the nation’s collective heritage.

“Being a sensitive issue, it should be approached from a commitment to protecting the common patrimony of Nigerians by preventing the assets from falling into the hands of sharks, assets strippers and canibalisers while also guarding against the fuelling of further inequities in the society and polity,” it said.

The Senate also resolved to summon the Financial Reporting Council of Nigeria (FRCN) to appear before it and brief it on the true state of the economy.

Other resolutions made by the Senate included a constant meeting of fiscal and monetary authorities for harmonisation of all policies by the executive, particularly the consideration of lower interest rates for genuine investors as well as medium and small-scale farmers and agribusiness processors.

It also advised the federal government to engage in meaningful and inclusive dialogue with aggrieved Niger Delta militants with a view to averting the escalation of the unrest in the region and simultaneously ensure the protection of Nigeria’s oil and gas assets to facilitate increase in oil production and boost revenue therefrom.

The Senate also advised the president to urgently appoint a Senior Special Assistant with the mandate to lead a team to coordinate government’s engagement with all stakeholders in the Niger Delta, emphasising that the team should include senators from the zone.
It also tasked the president to immediately reconstitute the board of the Central Bank of Nigeria (CBN) and other critical agencies so that their operations comply with the enabling laws.

To ensure that Nigeria saves for “the rainy day”, the Senate also resolved to amend Section 162 of the constitution to pave the way for robust savings by the federation as against the current trend which allows all revenue to be shared among the three tiers of government.

The senators also want the section amended to empower the president to first of all save a prescribed amount of money before sharing the rest with the states, saying the present clause in the constitution does not encourage savings.

The Senate also resolved that its suggestions on the way out of the recession should be personally delivered to the president by Senate President Bukola Saraki.
In his remarks after passing the resolutions, Saraki lauded the decisions, describing the Senate’s action as democracy in action.

Having adopted the suggestions, the upper legislative chamber yesterday adjourned plenary to Thursday because Saraki and his deputy, Ike Ekweremadu, are billed to appear in court where they are standing trial for alleged forgery of the Senate Standing Orders.
The adjournment became imperative because only Saraki and Ekweremadu can preside over the Senate.