To sell or not to sell?

Last week Africa’s top business mogul, Aliko Dangote, along with Emir of Kano and former governor of Nigeria’s central bank, Malam Mohammed Sanusi II, stirred the hornet’s nest when they proposed that government should sell off some of its assets to plug the huge gap in its revenue stream caused by the collapse in oil price and of oil production.

In this, the two were supported by another business mogul, former Chairman of United Bank of Africa, Tony Elumelu, and by the bank’s former managing director under Elumelu and now the central bank’s governor, Godwin Emefiele, and even by the Senate President, Dr. Bukola Saraki.

Predictably Dangote and Co.’s proposals have come under heavy public criticisms, if hostile opinion in the mass media is something to go by. It seems even the Senate president’s distinguished colleagues led by his deputy, Ike Ekwerenmadu, are also opposed to their leader’s stance.

Even more predictably the labour unions, led by the Nigerian Labour Congress, have not only condemned the proposals. They have threatened to shut down the country if government goes ahead to implement them.

Remarks over the weekend by the minister of fInance, Mrs. Kemi Adeosun, suggests that Dangote and Co. were merely floating a kite for a decision that government may have already taken.

‘‘I think,” she told finance reporters in Abuja, “when you are looking for money, some things that government is sitting on, we don’t have money to do them and so it makes sense for me to unlock those things as it will bring money to the economy at these difficult times so that we can move forward.”

The minister was careful enough to point out that government has not yet finally decided which assets to sell beyond saying they would be “idle assets” and that some of them would merely be leased out rather than sold.

In justifying government’s putative decision to sell or lease, the minister pointed out that even Saudi Arabia, the world’s biggest oil producer, has been selling some of its assets.

The main problem, Madam Finance Minister, is not the sale of public assets as such, even though there are those like the NLC and public sector workers that, for sound ideological reasons, would be opposed. The main problem, Madam Finance Minister, is the history of privatization in this country – and also elsewhere – going all the way back to the country’s first privatisation exercise in 1976.

Here two examples readily come to mind: the sale of NITEL and PHCN under Presidents Olusegun Obasanjo and Goodluck Jonathan. In both cases conflicts of interests were put on naked display as companies in which very senior government officials, and/or their cronies, had interests were sold the parastatals, in whole or in bits, at prices that had absolutely no bearing to their net asset values. Today the beneficiaries of these fire sales have been living it off even when the quality of services the privatized companies have been providing are little better than when they were publicly owned. And when they are, they hardly provide value for their charges.

Most people, I suspect, would support the minister if government decides in the end to sell off “idle” assets because it’s only sensible to do so. But then she has to make it clear to then public which assets are idle and why it’s impossible to make them active.

All of which point to three things, at the least. First, there must be no viable options to the sale. Second, the sales must be transparent and competitive. Third, the prices must reflect the net assets of the parastatals.

In this respect, before Madam Minister embarks on her sales, if she must, it would be worth her while – and worth the while of her colleagues on her economic team, and even that of her oga at the top – to read, or at least flip through, a 2007 book by an award winning reporter, Naomi Klein, titled “The Shock Doctrine: The Rise of Disaster Capitalism.”

Ditto, our federal legislators as they set about enacting the economic laws and policies that should get us out of our current economic predicament.

The book is about how government abroad, notably in the USA and the UK, have used what Klein called “the shock doctrine,” as a principle of state policy, shock doctrine defined as “the use of public disorientation following massive collective shocks – wars, terrorist attacks, natural disasters – to push through highly unpopular economic shock therapy.” Klein called the outcome “disaster capitalism,” i.e. “the rapid-fire corporate re-engineering of societies that are reeling from shock.”

Since late last year Nigerians have been reeling under the shock of the man-made disaster the erstwhile ruling Peoples Democratic Party had plunged this country into which some people would rather no one talk about in their attempt to exonerate the party and its leaders of their culpability for our economic recession.

Several of these people remain in positions of authority either by changing their political hoods or by disguising themselves as so-called technocrats.

President Muhammadu Buhari must be vigilant as he considers policy recommendations from such people. He must learn his lesson from their antics as they disown the decisions of his predecessor when they never objected to those decisions and even when they were actually based on their self-serving advice.

Chances are Mr. President, Madam Minister and her colleagues, and our federal legislators, do not have the time to read Klein. In that case they should spare the little time required to read a section of this year’s edition of The Economist’s “THE WORLD IF” dated July 16. The pullout is the magazine’s annual collection of its editors’ suppositions about a world different from what it is.

The section in reference wondered what the world would look like were China to embark on mass privatization of its huge state owned enterprises (SOEs). The article said a successful sale must learn lessons from the fire sales of SOEs in Russia following the collapse of the Soviet Union in the nineties that led to the emergence of well-connected oligarchs who virtually became laws unto themselves.

For its privatization to succeed, China, the magazine said, must be  “bold, transparent and long term.”

I don’t know about “bold.” But there is no gainsaying that if we must privatize at all we must learn from the lessons of the past at home and from abroad by making sure the sales of public assets are transparent and gradual.