Connect with us

Markets

FG Spent N13tn to Set up 590 Dysfunctional Enterprises in 23 Years

Published

on

smes
  • FG Spent N13tn to Set up 590 Dysfunctional Enterprises in 23 Years

Between 1975 and 1998, a period of 23 years, the federal government spent N13 trillion to set up 590 public enterprises that hardly returned any reasonable profits or service gratification to it or Nigerians, the Bureau of Public Enterprises (BPE) has disclosed.

According to the BPE, these publicly-owned enterprises also employed a paltry 420,000 Nigerians out of the country’s population of 120 million people at the time, in addition to absorbing more than half of the monies the country earned from its sale of crude oil as well as accounting for over half of the debt Nigeria owed international lenders.

Speaking at a forum organised by Business Editors in Abeokuta, Ogun State, BPE’s Director of Development Institutions and Natural Resources Department, Mr. Joe Anichebe, in a paper titled: “Managing the Media in Nigeria’s Privatisation Programme,” explained that publicly-owned enterprises in Nigeria have grossly failed to live up to expectations.

Anichebe, gave reasons why the government chose to initiate its privatisation policy, and subsequently began to privatise its enterprises.

According to him, this was influenced by the global shift in macroeconomic policy that favored the transfer of state ownership of enterprises to private sector as witnessed in the Great Britain and then Union of Soviet Socialist Republics (USSR).

He said the decision was made rather too persuasive because those enterprises failed abysmally.

“We all know the truth, but let me restate it: our country’s publicly-owned enterprises have been – on the whole – grossly inefficient, corrupt, and wasteful. We have all witnessed with embarrassment, if not consternation, the crass incompetence and mismanagement, blatant corruption and crippling complacency of our public enterprises.

“Between 1975 and 1998, government spent about N13 trillion to set up and maintain about 590 public enterprises. Of these, 160 were in the business of selling goods or services – in other words, they were designed to make profit. The profit turned out to be tiny: about a half of one per cent.

“And all these government funds were tied up in businesses that supported just 420,000 employees – out of a population of then about 120 million. They had absorbed over half of the money that Nigeria earned from its huge oil sales in the early 1970s. And they also accounted for over half of the money Nigeria owed as international debt,” said Anichebe.

He noted that the real price the country paid for the poor performance of the state enterprises were not measured in the monetary values they failed to turn in, but in terms of the services that Nigerian citizens never received and the investments that never took place.

“These were denied to Nigerian citizens because the money that could have paid for them was swallowed up by our state enterprises,” he added.

Anichebe, stated that most Nigerians were divided over the necessity for privatisation, but that the candalous pillage, waste, decay and inefficiency of public enterprises strengthen the argument of those clamouring for privatisation.

He listed the performance of some privatised government enterprises such as the cement companies, oil marketing firms, banks and the petrochemical company in Eleme as some of the success stories of privatisation but added that there were exceptional cases of failed privatised
entities.

Further, Anichebe, noted that the BPE had developed a post privatisation monitoring process to track the progress of entities privatised by the government. Through this means, he said the agency would be able to drive up the gains of privatisation.

He equally disclosed that the government has submitted about seven bills to the national assembly which would when passed into law, support its privatisation programme.

“But then, whatever is the argument for or against, the underlying factor for the programme speaks to the purpose of government: governance and not business. At best, government can only provide the enabler for business in way of policies, regulations, infrastructures, and sometimes funds intervention in critical sectors that threatens overall economic growth of a nation. Government has no business in business.

“This administration is also determined to fast-track the process of getting all the sector reform bills presented to the National Assembly for passage to anchor all our transactions on law. Some of the bills which have already been presented to the National Assembly for passage are Federal Competition Commission Bill; National Transport Commission Bill; Ports and Harbour Authorities Bill; Nigeria Railway Bill; Inland Waterways Bill; Federal Roads Authority Bill; National Roads Fund Bill,” he added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Commodities

Economic Strain Halts Nigeria’s Cocoa Industry: From 15 Factories to 5

Published

on

cocoa-tree

Once a bustling sector, Nigeria’s cocoa processing industry has hit a distressing low with operational factories dwindling from 15 to just five.

The cocoa industry, once a vibrant part of Nigeria’s economy, is now struggling to maintain even a fraction of its previous capacity.

The five remaining factories, operating at a combined utilization of merely 20,000 metric tons annually, now run at only 8% of their installed capacity.

This stark reduction from a robust 250,000 metric tons reflects the sector’s profound troubles.

Felix Oladunjoye, chairman of the Cocoa Processors Association of Nigeria (COPAN), voiced his concerns in a recent briefing, calling for an emergency declaration in the sector.

“The challenges are monumental. We need at least five times the working capital we had last year just to secure essential inputs,” Oladunjoye said.

Rising costs, especially in energy, alongside a cumbersome regulatory environment, have compounded the sector’s woes.

Farmers, who previously sold their cocoa beans to processors, now prefer to sell to merchants who offer higher prices.

This shift has further strained the remaining processors, who struggle to compete and maintain operations under the harsh economic conditions.

Also, multiple layers of taxation and high energy costs have rendered processing increasingly unviable.

Adding to the industry’s plight are new export regulations proposed by the National Agency for Food and Drug Administration and Control (NAFDAC).

Oladunjoye criticized these regulations as duplicative and detrimental, predicting they would lead to higher costs and penalties for exporters.

“These regulations will only worsen our situation, leading to more shutdowns and job losses,” he warned.

The cocoa processing sector is not only suffering from internal economic challenges but also from a tough external environment.

Nigerian processors are finding it difficult to compete with their counterparts in Ghana and Ivory Coast, who benefit from lower production costs and more favorable export conditions.

Despite Nigeria’s potential as a top cocoa producer, with a global ranking of the fourth-largest supplier in the 2021/2022 season, the industry is struggling to capitalize on its opportunities.

The decline in processing capacity and the industry’s current state of distress highlight the urgent need for policy interventions and financial support.

The government’s export drive initiatives, aimed at boosting the sector, seem to be falling short. With the industry facing over N500 billion in tied-up investments and debts, the call for a focused rescue plan has never been more urgent.

The cocoa sector remains a significant part of Nigeria’s economy, but without substantial support and reforms, it risks falling further into disrepair.

Continue Reading

Energy

Nigeria’s Power Sector to Get $7.5bn from $30bn African Electrification Initiative, Says Minister Adelabu

Published

on

Power - Investors King

Minister of Power Adebayo Adelabu has said that Nigeria is set to receive a portion of a $30 billion investment aimed at electrifying Africa.

During a visit to Splendor Electric Nigeria Limited, Adelabu revealed that the World Bank and the African Development Bank (AfDB) have committed to this ambitious initiative with Nigeria slated to receive approximately $7.5 billion, or 25% of the total fund.

The groundbreaking initiative is designed to extend electrification to an additional 300 million Africans over the next five years.

This large-scale project aims to address the energy deficit that has long plagued the continent and is expected to transform the power infrastructure significantly.

Adelabu expressed optimism about Nigeria’s role in the project, citing the country’s large population and ongoing power sector reforms as key factors in securing a substantial share of the funds.

“I want to inform you of the proposal or the intention, which is at an advanced stage, by the World Bank and the African Development Bank to spend about $30 billion to extend electrification to an additional 300 million Africans within the next five years. Nigeria is going to participate fully in this. I am confident that nothing less than 20% or 25% of this fund would come into Nigeria because of our population,” Adelabu stated.

The minister’s visit to Splendor Electric Nigeria Limited, a porcelain insulator company, underscores the government’s commitment to involving local businesses in the electrification drive.

The investment will focus on enhancing and upgrading power infrastructure, which is crucial for improving electricity access and reliability across Nigeria.

Despite the promising news, Nigeria continues to face significant challenges in its power sector. The country’s power grid has suffered frequent collapses, with the Nigerian Bureau of Statistics reporting less than 13 million electricity customers and frequent nationwide blackouts.

The International Energy Agency highlighted that Nigeria’s national grid experienced 46 collapses from 2017 to 2023, exacerbating the nation’s energy crisis.

To combat these issues, the government is also advancing the Presidential Power Initiative, a project in collaboration with Siemens, which aims to build thousands of new lines and numerous transmission and injection substations.

Adelabu noted that the pilot phase of this initiative is nearing completion and that Phase 1 will commence soon.

With over 200 million people and a chronic energy shortfall, Nigeria’s power sector is in urgent need of overhaul.

The additional $7.5 billion from the African Electrification Initiative represents a critical step toward achieving reliable and widespread electricity access.

The investment is expected to stimulate not only infrastructure development but also economic growth, creating opportunities for local companies and improving the quality of life for millions of Nigerians.

Continue Reading

Crude Oil

Oil Prices Climb as Markets Eye Potential US Rate Cuts in September

Published

on

Crude oil - Investors King

Oil prices rose during the Asian trading session today on speculation that the U.S. Federal Reserve may begin cutting interest rates as soon as September.

Brent crude oil, against which Nigerian oil is priced, increased by 32 cents to $82.95 a barrel, while U.S. West Texas Intermediate crude oil climbed 34 cents to $80.47.

The anticipation of rate cuts stems from recent U.S. inflation and labor market data indicating a trend towards disinflation and balanced employment, according to ANZ Research.

The Federal Reserve is set to review its policy on July 30-31, with expectations of holding rates steady but providing clues for potential cuts in September.

The potential rate cuts could stimulate economic activity, increasing demand for oil. This optimism has been partially offset by recent concerns over China’s slower-than-expected economic growth, which could dampen global oil demand.

President Joe Biden’s announcement to not seek re-election and endorse Vice President Kamala Harris had minimal impact on oil markets.

Analysts suggest that U.S. presidential influence on oil production is limited, although a potential Trump presidency could boost oil demand due to his stance against electric vehicles.

In response to economic challenges, China surprised markets by lowering key policy and lending rates. While these measures aim to bolster the economy, analysts remain cautious about their immediate impact on oil demand.

With OPEC+ production cuts continuing to support prices, the focus remains on the U.S. Federal Reserve’s next moves.

Any decision to cut rates could further influence oil prices in the coming months, highlighting the interconnectedness of global economic policies and energy markets.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending