Nigeria’s federal government has been advised to handover its refineries and other commercially viable projects to the private sector in order to reduce its debts and earn more revenue from the assets. The government was also advised to prepare for the future by investing more in human capital development in order to position its citizens as exportable ‘products’ and boost diaspora remittances.
These views were canvassed Thursday by Africa Tax and Legal Services Leader, PwC Nigeria, Mr. Taiwo Oyedele, and Partner/Chief Economist, PwC Nigeria, Dr. Andrew S. Nervin, during a webinar organised by the Lagos Chamber of Commerce and Industry (LCCI), in collaboration with PwC.
The seminar was titled, “2021 Mid-Year Economic and Business Outlook.”
The advice came as a new report by PwC disclosed that Chief Executive Officers (CEOs) of Nigerian-listed companies were among sub-Saharan Africa’s highest earners.
The federal government recently approved $1.484 billion for the rehabilitation of the Warri and Kaduna refineries.
But Oyedele said the government should be more concerned about strategic issues bothering the economy than approving projects and contracts that might turn out to be unprofitable.
He said, “I have my issues with the Federal Executive Council (FEC) that is just approving projects and contracts when we should be looking at more strategic issues to deal with in the economy. I do think that the amount of money we are spending on projects that are commercially unviable is unbelievable.
“Just yesterday, the approval for the turnaround of refineries for billions of dollars was given. These are refineries where we have recorded over N100 billion in losses and produce zero barrel of refined products.
“If we have given these refineries for free to the private sector, Nigeria would have been better off compared to close to N10 billion that we spend every month maintaining and running assets that are not producing.
“If we take something like rails, refining and the ports that are commercially viable and give to the private sector, they will bring money from within and outside Nigeria. They will do them better.
“They will make money. They will run them efficiently and pay taxes to the government. This is what we should do. It will not only reduce our debt and the cost of servicing them, it will also increase the overall efficiency of the economy.”
Oyodele also said Nigeria should be leading the African Continental Free Trade Area (AfCFTA) negotiation as the largest economy in Africa
“We complain over poor infrastructure, but Nigeria is largely a service-driven economy and should be more concerned about how to improve services and export them to the rest of Africa,” he stated.
He added, “The top import in Africa is petroleum products. Why can’t Nigeria refine and export to the rest of Africa?”
Nervin, in his own contribution, advised the Nigerian government to drive export and diversification of the economy through the service sector and human capital development.
He said, “Two thirds of the global economy is made up of the service sector, which has higher value added than goods. Nigeria’s creative and cultural industries presently play an important role and will generate $1 billion export revenue.
“Nigeria’s Nollywood is a good export to invest in.”
Nervin also pointed out that Africa was the only place with demographic growth in the world, stressing that this has big implications for the Nigerian economy.
“Nigeria can develop its human capital as its most strategic assets that can go abroad and earn foreign exchange.
“By investing in Nigeria’s young people and brains everything in the economy will take care of its self,” Nervin said.
He added that climate change would be a serious matter for Nigeria, and Lagos, especially, as the temperature is increasing and the sea level is rising.
CEO of Economic Associates Limited, Dr. Ayo Teriba, who moderated the panel discussion during the webinar, agreed with the perspective shared by Nervin that Nigeria might become the world’s most populous country in the next century. Teriba urged the government to develop the country’s human capital just as India and China did in the past century.
Teriba said, “Your perspective is that by the year 2100 Nigeria will have the largest population in the world, as India and China populations will be declining while Nigeria’s will be rising. So government must invest in them to generate more brains that will go to the Diasporas, like India and China have been doing, and earn big to remit billions of dollars.”
Emma Addeh in Abuja and Dike Onwuamaeze in Lagos